Appeal No. UKEAT/0245/06/DA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 14 September 2006

Before
HIS HONOUR JUDGE PUGSLEY
MR C EDWARDS
MR T MOTTURE

MR J PERIES	APPELLANT

WIREFAST LIMITED	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR AYOADE ELESINNLA
(of Counsel)
Instructed by:
Messrs J R Jones 
Solicitors
58 Uxbridge Road
Ealing
LONDON
W5 2ST	
For the Respondent	MR DAVID MARK CRAIG
(of Counsel)
Instructed by:
Messrs Salans
Solicitors
Millennium Bridge House
2 Lambeth Hill
LONDON
EC4V 4BG	

SUMMARY

Breach of contract.  Whether a policy expressed not to be part of the contract had acquired contractual status.

HIS HONOUR JUDGE PUGSLEY

1.	As Mr Craig, who appears for the Respondent, must at times have felt that he was like a member of the infantry advancing towards the guns on 1 July 1916.  Whilst we applaud his tenacity, but quite simply, we think this case must be allowed.

2.	We want to issue if we may a real warning.  This is a case which has grown out of all proportion.  In a nutshell, this was a case involving unfair dismissal for wrongful selection for redundancy and another matter, namely a breach of contract.  Now, the Tribunal found that the Claimant’s claim for unfair dismissal was dismissed.  They found there was nothing unfair at all about the decision to dismiss.  There is no appeal from that finding.  It is easy at the appellate stage to focus on a particular aspect of a case and criticise the way it was dealt with and to fail to recognise that at the time the matter was being dealt with that was very much a peripheral matter and not part of the main central drama.  Moreover, neither the Claimant nor Mr Melville, the director of the Respondent company, were represented professionally. 

3.	The real issue arises out of the contract of employment.  Cable & Wireless had issued a document in 2003 and that document had used the mantra that it did not form part of the contract.  The Appellant claims that by virtue of Cable and Wireless C&W’s policy he was entitled to 12 weeks redeployment pay and the services of a professional outplacement advisor.

4.	It is the Respondent’s case that as the original matter which gave the outlines and details was in a handbook that had the logo on it ‘this is not part of your contract’, that therefore it is said it cannot be something that can change into having contractual status.

5.	We profoundly disagree with that and base that on the experience of both members who, have years of experience of the practical application of the general principles of employment law.

6.	The general principles of employment law are, of course, contractually-based but over a period of time something which starts off as a concession can ripen by custom and practice into a contractual right.  In the case to which we are grateful we have been referred of Albion Automotive v Graham Walker & Ors. 202 EWCA Civ 946, Lord Justice Peter Gibson points out that in 1996 after Albion acquired the site, five employees were made redundant but did not receive the enhanced redundancy terms.  They or some of them were advised to take legal action but did not do so. 

7.	The redundancy exercise involving the employers commenced in January 1999.  The employers there represented stated to Albion that he expected what he called the contractual redundancy entitlement to be applied.  For Albion, it was indicated that only a statutory redundancy entitlement applied.  None of the employees had a written contract of employment nor a statement of terms and conditions of employment. 

8.	The collective agreements negotiated each year with the trade unions were recorded in writing but the redundancy terms had never formed part of the add-on negotiations and so the collective agreements say nothing on the issue.  All the employees commenced their employment prior to 1990.  It was agreed before the Employment Tribunal by the legal representations of both sides that their main authorities on whether a contractual entitlement arose by reason of custom were two EAT decisions.  The first was Duke v Reliant [1982] ICR 449 where the question for the EAT was whether a normal retiring age had been established for the particular employment and the question arose whether any policy with regard to retiring age had been communicated to employees or whether there was any evidence of any universal practice to that effect.  Brown Wilkinson J, giving the judgment of the Employment Appeal Tribunal, said this:

“A policy adopted by management unilaterally cannot become a term of the employee’s contract on the grounds it is an established custom and practice unless it is shown the policy being drawn to the attention of the employees which has been followed without exception for a substantial period”.  

9.	A similar dictum comes from Lord Caulsfield in the Scottish EAT in Quinn v Calder Industrial Materials Ltd [1996] IRLR 126 where Lord Caulsfield dealt with the matter in this way:

“Thus for example in our view the question is not whether the period to which a policy has been followed is substantial in some abstract sense, but whether in relation to the other circumstances it is sufficient to support the inference that the policy has achieved the status of a contractual term.”

10.	Again, with regard to communication the question seems to us to be not so much whether the policy has been made or become known directly to the employees or through intermediates but whether the circumstances in which it was made or become known support the inference the employers intend to become contractually bound by it. 

11.	At page 49 of the document, we have a matrix which we are told in the appellant’s letter he was shown which says, as we have already indicated, they were going to adopt the C&W policy.  Now, there are arguments for saying this was a benefit which could not be sound in contractual terms, but with great respect, we do not think this Tribunal has made any findings which are sufficient to deal with that matter.  This Tribunal’s mind was clearly focused on whether there was or was not an unfair dismissal. What the Tribunal says is:

“Having regard to the evidence before the Tribunal, we do not conclude the Respondent was required to apply the Cable & Wireless redundancy policy pursuant to the terms of the Claimant’s contract of employment.  The Claimant failed to produce any written contract of employment and the July 2003 policy expressly stated it did not form part of the employer’s contract of employment.  In any event policies are subject to change and the Respondent organisation was a small company and was very much smaller in organisation than Cable & Wireless.  We also consider it was unlikely that Cable & Wireless would adopt a policy which required them to use the service of Penna Saunders in respect of outplacement service pursuant to its employees’ contract of service.  One reason for the Claimant’s rejection of the outplacement service offered by the Respondent was the Respondent had failed to use the service of Penna Saunders Sydney.”

12.	We cannot accept the argument put very persuasively by Mr Craig that the phrase to which we have averted is an overweening prohibition.  It is a matter, together with other matters, to be taken into consideration but to say this document is for information purposes only and does not form part of your contract of employment and may be subject to change does not, in our view, and this is where the fundamental issue is, preclude a policy emerging based on custom and practice that hardens into a contractual entitlement.  That we regard as the fundamental view.

13.	However, we must say this.  The whole range of issues which are set out in Lord Peter Gibson’s judgment have not been explored.  It may very well be that whilst academically it is open to a Tribunal to find that it had emerged that there was a policy it may well be for the reasons that Mr Craig has put so ably before us that it would not reach this conclusion. 

14.	This policy document relied upon was a very recent vintage.  We do not know if it enacted a previous handbook, whether there had been redundancy exercises, what had arisen, what the expectations were, or what was known about the position.  There was a memo, an email from a former member of staff.  We do not say this in any mean-spirited criticism of the Tribunal chairman but when HHJ David Richardson actually asked for the details of the matrix and stayed the appeal when we got the answer back it was quite clear that the Tribunal did not ask this question “did the Tribunal consider terms and conditions of the matrix dated 29 October and email dated 15, and if so, what findings did it make, and what conclusion did it draw from those documents? 

15.	It was quite clear from the answer that rang no bell at all with the Chairman because he thought it was a matrix of skills and was making the point that the Claimant’s job stood on its own; it had been abolished.  We just cannot think that in the context of this case the chairman really did have on board the issue as to matrix.  We are not being critical.  A Chairman on his own, one party unrepresented, the other represented by no doubt a very capable businessman, but not professionally as far as we know, qualified to deal with this matter.

16.	We therefore come forth to the view that a Tribunal should reconsider whether or not this benefit had changed its status into a contractual entitlement.  We want to make it absolutely clear to the Appellant, as well as to the Respondent, that we are not saying it has.  There is just no way of telling.  From the decision that this issue was fully considered.

17.	What Mr Craig has said is he really cannot expect the Employment Tribunal to take on that burden of going, as it were, below the surface of the issues raised.  It is not ever possible, nor would we wish to do so, to lay down definitive guidelines as to what a Tribunal Chairman should or should not do.  If a Tribunal Chairman seeks to tease out every possible matter, he can well be accused of showing bias.  But we do think, with great respect to this obviously able Chairman that having regard to the statement made by the Claimant, we feel very strongly that it was necessary for the Chairman to go beneath the surface of the documentation and explore these issues.

18.	One thing we are all adamant about, we think this is a case where the parties should have a cup of coffee, preferably today, and to see if they can tease out some sort of settlement because if, as we direct, this matter goes to be reheard on this issue, the costs are totally disproportionate to the amount involved.  

19.	We allow the appeal and remit the case to a differently constituted Tribunal.