Appeal No. EAT/307/91

	EMPLOYMENT APPEAL TRIBUNAL
	58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

		At the Tribunal
		On 28 January 1993

	Before

	HIS HONOUR JUDGE J HICKS QC

	MR D A C LAMBERT

	MR J C RAMSAY

CROWN LEISURE LTD	APPELLANTS

MR P J WALDRON	RESPONDENT

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellants	MR R J CLEEVE
	(SENIOR PERSONNEL
 	CONSULTANT)
Professional Personnel
Consultants Ltd
8 Buccleuch Close
Clitheroe
Lancs BB7 2EF

For the Respondent	MR J STENHOUSE
	(OF COUNSEL)
Messrs Amery-Parkes
Solicitors
Livery House
169 Edmund Street
Birmingham B3 2TE

	JUDGE HICKS QC:  Mr Waldron was employed by a firm called "Penn Coinomatics Limited" and had been since 1980.  He was one of four service engineers who attended to fruit machines in clubs and the like in the Midlands.  On 28 May 1990 the business of Penn Coinomatics was taken over by the Appellants Crown Leisure Ltd in circumstances which it is common ground fell within the Transfer of Undertakings (Protection of Employment) Regulations 1981.

	Crown Leisure Ltd over a period of some eight or nine weeks after the takeover first, at an early stage, increased Mr Waldron's remuneration by £8.50 per week and secondly, and as part of the same overall intention but over a longer time scale, sought to apply to him new terms and conditions of employment.  I say "new terms and conditions of employment" - they were the first written terms and conditions of employment that he had been asked to work under, because Penn Coinomatics had no such written terms.  Those terms and conditions put forward by Crown Leisure in the view of Mr Waldron and his advisers - and I do not think it is seriously contested by Crown Leisure that in this respect they were correct - contained terms which were more detrimental to Mr Waldron than those under which he had previously worked.  The most material matters were that there were deductions from his pay amounting to about £2 per week for the use of an employer's car, a charge of 6p per mile for private use which had previously not been exacted, the loss of certain rights to sick pay which Mr Cleeve says were worth about £6 per week, and the imposition of what amounted to £250 excess on his car insurance if, on what criteria is not perhaps very plain, an accident was due to his fault.  He objected to those terms.

	On 23 July he signed a copy of those terms and conditions under a typed sentence which was part of the document handed to him by the employers reading:
"I accept this Statement, a copy of which has been given to me"

Then there is an acknowledgment of receipt of a copy of the Handbook of Company Procedures, and finally before his signature he himself inserted the words:

"This contract is executed on the basis of my solicitor's letter (dated 23/7/1990) to Professional Personnel Consultants.  I reserve my position to work the statutory period of four weeks."

and the letter to which that refers was to much the same effect, since it read in the relevant paragraph:
"In any event we have advised our client to execute the contract but to avail himself, if he so chooses to the statutory trial period of four weeks as comprised in Section 84 of the Employment Protection (Consolidation) Act 1978."

It is common ground that those references were to a statutory period of four weeks which applied where there was a redundancy situation.

	Within the four weeks he resigned, and he applied to the Industrial Tribunal on the basis that that resignation was, in the circumstances, a constructive dismissal by the employers, and the Industrial Tribunal upheld that application.  The employers appeal, and we shall endeavour to deal with the matter in what seems to us to be the logical order of questions which arise.

	The first question I have already disposed of.  It is whether the Transfer of Undertakings Regulations applied - by common consent they did.  The second question is: in those circumstances was this dismissal, if it was a dismissal (postponing for a moment the question of whether there was a dismissal at all) within Regulation 8(1), which reads:

"Where either before or after a relevant transfer, any employee of the transferor or transferee is dismissed, that employee shall be treated for the purposes of Part V of the 1978 Act ...as unfairly dismissed if the transfer or a reason connected with it is the reason or principal reason for his dismissal."?

Extracting the relevant question from that paragraph for present purposes, the relevant question is:  if there was a dismissal was the reason or principal reason for it one connected with the transfer?  To that question the Industrial Tribunal gave the answer "Yes", and as we understand it that particular part of their decision is not seriously challenged.  

	Mr Cleeve did raise somewhat faintly and speculatively the question whether a dismissal as much as some two months after the transfer as in this case can be said to be for a reason connected with the transfer but it seems to us that that is really, if put in the form of a challenge to the Industrial Tribunal's decision, quite hopeless.  The question whether the reason or principal reason for the dismissal is connected with the transfer is a question of fact.  It was answered by the Tribunal in the affirmative on evidence which amply justified it, and indeed it is quite plain on the history as recited by the Industrial Tribunal that the only reason for the lapse of some two months between the transfer and the signature by Mr Waldron of the new terms and conditions with the reservation that I have mentioned was that firstly the employers had to try to ascertain what had been the applicable terms and conditions under the previous employer, with the difficulty that they had not been reduced to writing, and secondly that the introduction of the organisational changes that the new employers wished to bring into effect could not be done overnight, or indeed within a week or so, but took some time, so the finding of the Industrial Tribunal that Regulation 8(1) applied, subject to the issue whether there was a dismissal at all, is in our view unappealable.

	The next question is:  was there a dismissal?  Plainly on the facts that I have recited there was no express dismissal by the employers; the employee resigned, and so the question resolves itself on the face of it to one of whether there was what is commonly called "a constructive dismissal".  That question is to some extent dealt with by the Regulations, in the sense that Regulation 5(1) says:

"A relevant transfer shall not operate so as to terminate the contract of employment..."
and Regulation 5(5) reads:

"Paragraph (1) above is without prejudice to any right of an employee arising apart from these Regulations to terminate his contract of employment without notice if a substantial change is made in his working conditions to his detriment;..."

Regulation 5(5), therefore, is really a negative or passive saving of the position which would arise under the general law and does not impose any new requirement, except that by the words "if a substantial change is made in his working conditions to his detriment" it, as it were, recognises the existing law that such a change is capable of being the sort of significant breach of contract which an employee is entitled to treat as entitling him to terminate the employment without notice.

	The Industrial Tribunal dealt with that matter in the latter part of paragraph 4 of their Reasons by saying this:

"We are satisfied that the applicant was constructively dismissed by the respondent's attempt to impose on him terms and conditions less favourable than hitherto.  His hours were to be different; his holidays were to be different; he was to receive nothing by way of sick pay and might be required to meet the first £250 of any insurance claim on his company car."

Whether those changes were significant breaches of contract by reason of being substantial changes in his working conditions to his detriment was a question of fact for the Industrial Tribunal and there is no ground on which it could be said that they erred in law in their approach.  

	The next question is the one which I think it might fairly be said Mr Cleeve on behalf of the employers relied upon most strongly:  did the employee debar himself from accepting that significant breach of contract by his signature of the terms and conditions?  I have already related the relevant terms of his written reservation and the relevant terms of the letter to which he referred.  That purported to be the reservation of a right to work what is described as the statutory period of four weeks, and as I have said there is statutory provision for such a period in the case of redundancy.  It was found by the Industrial Tribunal that the reference to redundancy was inapt, and although Mr Stenhouse on behalf of the employee did advance an argument that the redundancy provisions do apply we are satisfied that they did not, and that the Industrial Tribunal was correct in treating the reference to them in the document of 27 July and the letter of 23 July as being mistaken.  I must briefly dispose of Mr Stenhouse's argument on that point.  It starts with the observation, which is perfectly accurate, that the definition of what amounts to constructive dismissal in section 55 (2)(c) of the 1978 Act dealing with unfair dismissal and in section 83 (2)(c) dealing with redundancy are substantially identical.

	He then referred us to Section 93 (1), which provides:

"Where in accordance with any enactment or rule of law -

(a)	any act on the part of an employer, or
(b) ...

	operates so as to terminate a contract under which an employee is employed by him, that act or event shall for the purposes of this Part be treated as a termination of the contract by the employer, if apart from this subsection it would not constitute a termination of the contract by him and, in particular, the provisions of section 83, 84 and 90 shall apply accordingly."

It suffices to say that in this case no act on the part of the employer terminated the contract.  What terminated the contract was the employee's resignation.  That was precipitated by an act on the part of the employer, but it was not the employer's act which terminated the contract, and therefore in our view the attempt to equate what happened in these circumstances with redundancy or to bring those circumstances within the redundancy provisions fails at that point.
	The reference to redundancy was therefore inapt; on the other hand there was an undoubted right at common law on the part of the employee to take a reasonable time to consider his reaction to the employer's breach of contract, as indeed Mr Cleeve concedes, and it was he who drew our attention to the case of Cox Toner (International) Limited v Crook [1981] IRLR 443, in which the Employment Appeal Tribunal presided over by Mr Justice Browne-Wilkinson dealt with the application to employment law of the general principles of contract law applicable to repudiation.  Mr Cleeve submits, and we think rightly, that the matter is accurately summarised in the headnote, where it is said:

"The Employment Appeal Tribunal held:

The general principles of contract law applicable to a repudiation of contract are that if one party commits a repudiatory breach of the contract, the other party can choose either to affirm the contract and insist on its further performance or he can accept the repudiation, in which case the contract is at an end.  The innocent party must at some stage elect between these two possible courses:  if he once affirms the contract, his right to accept the repudiation is at an end...

An  obvious difference between a contract of employment and most other contracts, however, is that if an employee faced with a repudiation by his employer goes to work the next day, he will himself be doing an act which, in one sense, is only consistent with the continued existence of the contract, ie he might be said to be affirming the contract.  When he accepts his next pay packet (ie further performance of the contract by the guilty party) the risk of being held to affirm  the contract is very great.  Therefore, if the ordinary principles of contract law were to apply to a contract of employment, delay might be very serious, not in its own right but because any delay normally involves further performance of the contract by both parties.

The Court of Appeal's decision in Marriott v Oxford Co-operative Society, however, establishes that, provided the employee makes clear his objection to what is being done, he is not to be taken to have affirmed the contract by continuing to work and draw pay for a limited period of time, even if his purpose is merely to enable him to find another job."

	The question in this case on the present case is this:  were the Industrial Tribunal entitled to construe Mr Waldron's conduct in signing the terms and conditions subject to the reservation that he expressed as being, in the words of that headnote, his making clear his objection to what is being done, notwithstanding that he gave a mistaken reason and a mistaken account of what it was he was doing?  Insofar as the Industrial Tribunal expressly addressed this, their response is to be found in their use of the word "acknowledged".  They say:

"On 23 July the applicant acknowledged the new contractual terms"

That presumably is intended to be a finding that his signature was not intended itself to be contractual.  It is also of course implicit in their recital of the reservation that he made that they take into account that reservation as part of the relevant circumstances and that they did not consider himself thereby to have affirmed the contract so as to debar himself from resigning within a reasonable period and asserting that that was constructive dismissal.  

	In our view they were entitled to reach that conclusion.  We would put it in this way, that it is plain that, however mistaken the basis of the endorsement, the Applicant - the employee - was not unconditionally accepting the terms of the contract, and it seems to us that  in terms of the way it is put in the headnote to Cox Toner v Crook, which of course in any event is not to be taken as statutory words but merely a convenient way of summarising the position, he was making clear his objection to what was being done.  For those reasons we have reached the view that the Industrial Tribunal were entitled to find, as inferentially they plainly did, that his conduct in signing the terms and conditions with that reservation did not debar him from accepting the repudiatory breach.  We therefore consider that the Industrial Tribunal did not err in law in that respect.

	That leaves one final point, which arises under Regulation 8(2) of the Transfer of Undertakings Regulations, which reads as follows:-

"Where an economic, technical or organisational reason entailing changes in the workforce of either the transferor or the transferee before or after a relevant transfer is the reason or principal reason for dismissing an employee -

(a) paragraph (1) above shall not apply to his dismissal; but ..."

and then effectively the dismissal is to be treated as being for a substantial reason of a kind such as to justify the dismissal, which effectively is a way of saying that it is fair and not unfair.

	The Industrial Tribunal dealt with that point by saying:

"It seems to us further that this case is more or less on all fours factually with Berriman v Delabole Slate Ltd [1985] ICR 546."

In that case there was a transfer of undertaking, and it is not necessary to go into all the facts, but the significant fact is that the transferee, the new employer, sought to enforce changed terms and conditions of employment which among other things would have resulted in a significant reduction in remuneration for the employee in question, Mr Berriman.  The relevant paragraph in the Judgment of the Court of Appeal delivered by Lord Justice Browne-Wilkinson is paragraph 11 in the report at [1985] IRLR 305, in which he says:

"Mr Tabachnik, for the company, does not persist in the argument which he unsuccessfully advanced at the EAT that the words "changes in the workforce" were wide enough to cover changes in the terms and conditions of the workforce.  He accepts that what must be shown are changes in the number of the workforce or possibly changes in the job descriptions of the constituent elements of the workforce which, although involving no overall reduction in numbers, involves a change in the individual employees which together make up the workforce..."

	Mr Cleeve attacks the finding of the Industrial Tribunal here, that the case was more or less on all fours factually with Berriman's case, on two main grounds.  The first is that any change in the remuneration of Mr Waldron was much less detrimental, if detrimental at all, than that suffered by Mr Berriman.  That seems to us to be a misunderstanding of the relevance of Berriman's case.  The question whether the changes were sufficiently detrimental to amount to a significant breach of contract on the part of the employer is not a question which arises at the stage of asking whether Regulation 8(2) applies; it is a question which we have already covered in dealing with the question whether there was a constructive dismissal, moreover it is a question which was disposed of by the Court of Appeal in Delabole Slate Ltd  v Berriman by their acceptance of Mr Tabachnik's concession there that the words in the regulation "changes in the workforce" do not cover changes in the terms and conditions of the workforce, so it cannot have been that matter which the Industrial Tribunal had in mind when they said that "this case was more or less on all fours factually with Berriman's case".

	The second distinction which Mr Cleeve seeks to draw is this that it is implicit in Berriman's case that the employers there were making no significant organisational change other than the attempted bringing of all employees, new and old, onto the same regime.  Mr Cleeve says that in this case there was a significant organisational change, namely that the position under the previous employers, Penn Coinomatic, was that engineers such as Mr Waldron were what one might call general purpose engineers who might turn their hand to repairs in the workshop, servicing on site or installation, whereas the new employers, Crown Leisure Ltd, wished to operate a system under which there were three specialised corps of engineers: the service engineers, the installation engineers and the workshop repair engineers.  

	Assuming, without deciding, that such a change would be capable of being within Regulation 8(2) as an organisational reason entailing changes in the workforce, the fact is that there simply is not any finding by the Industrial Tribunal that any such situation obtained.  They state in paragraph 2 that Mr Waldron was under Penn Coinomatic as a service engineer, and it is quite clear on Mr Cleeve's own submissions, and indeed on the evidence, that a service engineer is what Crown Leisure Ltd wanted him to be, so it simply cannot be said that there is any finding of fact which distinguishes this case in that respect from Berriman's case.  Nor can it be said that the Industrial Tribunal were perverse in failing to find any such organisational change, because we were referred to the relevant evidence, and it is quite plain that not only were they not required to make such a finding by the evidence, but that indeed it would be difficult to find any evidence on which they could have made such a finding.  Mr Waldron in his evidence described himself as a service engineer with Penn Coinomatics - "I repaired one armed bandits in clubs", he said.  That is the only evidence - and it was not challenged - about what his job description was with Penn Coinomatics.

	Mr Walsh for the employers said that he was the service manager and looked after the maintenance of equipment let to public houses and that he discussed the matter with Mr Waldron and his colleagues and he says:
"I knew we needed 3 engineers and 2 installers".

By inference he means by "engineers" service engineers, and there is no suggestion in his evidence that Mr Waldron was required to accept any change in his job description.  The terms and conditions submitted to him for signature were headed "Service Engineers" and that was exactly the same description that he had, on his evidence, under Penn Coinomatics.  So there is no ground in our view for criticising the Industrial Tribunal in finding that in that respect, which is the relevant respect, this case was similar to Berriman's case.  The similarity, and the relevant similarity, is a very simple one.  In both cases the employers were, on the findings of the relevant Industrial Tribunal, engaged in a perfectly understandable operation of trying to harmonise the terms and conditions of employment of the whole of their workforce, both that which they had previously had and that which they had acquired on the Transfer of Undertaking.  That may be perfectly understandable for commercial reasons, may be perfectly defensible in many ways, but it simply is not what Regulation 8(2) is talking about, because although the requirement that there shall be organisational reasons, or even economic reasons, may well be satisfied, there is no relevant change in the workforce entailed by those reasons.

	In our view, therefore, the Industrial Tribunal were entitled to hold that Regulation 8(2) did not apply and that disposes of the last of the matters raised in support of this appeal, which must therefore fail.