Appeal No. EAT/1389/97 	& EAT/1390/97

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 9 June 1998
Judgment delivered on 4 August 1998

Before
THE HONOURABLE MR JUSTICE MORISON (PRESIDENT)
MR L D COWAN
MS D WARWICK

MR A BOOTH, MR D GOULD & MR N ELLIS	APPELLANTS

THE UNITED STATES OF AMERICA	RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellants	MR DECLAN O’DEMPSEY
(of Counsel)
Instructed by:
Mr N Johnson
Messrs Rowley Ashworth
Solicitors
247 The Broadway
Wimbledon
London
SW19 1SE
	
For the Respondents	MR LYNDON JAMES
(Solicitor)
3AF/JA1 RAF Mildenhall
Suffolk
IP28 8NF	

	MR JUSTICE MORISON (PRESIDENT):  	There are two appeals against decisions of two Industrial Tribunals held at Southampton which held that the three appellants/applicants did not have the requisite period of continuous employment to entitle them to bring complaints against their former employers, the United States of America.   The appeals were heard together.   

	In Mr Booth’s case, the decision of the Industrial Tribunal was promulgated on 11 September 1997.   He was employed by the United States Army at its maintenance depot near Southampton as a maintenance electrician.   He commenced his employment on 8 July 1991; the effective date of termination of his employment was 27 September 1996.   He claimed redundancy pay in a complaint lodged with the Industrial Tribunal in December 1996.   The employers denied liability and that the applicant had the requisite period of continuous service.  They contended that he had been employed for three specific periods: from July 1991 to 18 June 1993 and from 6 July 1993 to 16 June 1995 and, finally from 3 July 1995 to 27 September 1996.   They stated, in their Respondent’s Notice that:

“The breaks between the fixed term contracts were not caused by temporary cessations of work”.

This was a reference to the provisions of what is now section 212(3)(b) of the Employment Rights Act 1996.

	The Tribunal’s Decision in the cases of Mr Gould and Mr Ellis was sent to the parties on 12 September 1997.   Their case was heard by a Chairman sitting alone; unlike Mr Booth’s case which was considered by a full panel [the industrial jury].   The employers contended that Mr Gould was employed as a pipe-fitter on a series of fixed term contracts, namely: from 5 May 1992 to 28 January 1994; from 14 February 1994 to 24 November 1995 and, finally from 11 December 1995 to 6 December 1996.   In Mr Ellis’ case, (he was an electrician) the dates of his employment were from 22 August 1990 to 30 January 1991, and again from 28 September 1992 to 2 September 1994; from 19 September 1994 to 23 August 1996 and finally from 9 September 1996 to 12 December 1996.   Mr Ellis claimed unfair dismissal and a redundancy payment; Mr Gould confined his claim to a redundancy payment.

	At the relevant date it was necessary for the three applicants to show that they had been continuously employed for a period of two years prior to the effective date of termination of their employment.   Apart from a significant break of over a year and a half between Mr Ellis’ first and second periods of employment, all the ‘breaks’ were for relatively short periods of around two weeks.   Each applicant was issued with an offer letter referring to the employment as being temporary and a contract of employment in which the termination date was expressed “not to exceed” a date of less than two years after the date of commencement. At the end of each contract the employees were informed in writing of the termination and paid any outstanding holiday pay due or other benefits. The employees were engaged on a new contract after a break of two weeks and always need to complete new application forms and other documentation for employment. The Industrial Tribunals found that the employees understood they were being given temporary contact and that the employer insisted that there was a two week gap between the end of one temporary contract and the commencement of a new one. During the breaks between contracts, Messrs Ellis and Gould registered as unemployed for the purpose of claiming State benefits. There is no mention of this in the decision concerning Mr Booth.

	Section 210 of the Act provides that a week which does not count in computing the length of the period of continuous employment breaks the continuity of employment.   Section 212(3) postulates that a week may count even where there is no such contract if one of the circumstances there specified applies to it.

	Although it was not formally conceded, Mr O’Dempsey on behalf of the appellants felt unable to argue that paragraph (b) applied.   Under that provision, the cessation of work referred to is a cessation due the unavailability of work for the employee, and not due to the employers’ unwillingness to make any such work available.   Here, there was no shortage of work during the break periods.   None of the applicants ceased to be employed immediately before the breaks by reason of such a shortage.   Thus, unless paragraph (c) of section 212(3) applies to the facts of their cases, the applicants do not have the requisite period of continuous employment and the two Tribunal Decisions must stand.   More precisely, the appellants must establish that the Industrial Tribunals have misdirected themselves in law, either overtly or implicitly [perversity].

	In argument, Mr O’Dempsey stressed the following points in particular.   First, the underlying purpose of these contracts and the break periods was to defeat the application of the legislation.   The successive contracts were, in essence, just a device to achieve that objective. When the contracts were terminated, the parties well understood that the employee would be re-employed after a short break.   A formal offer of re-employment was, in one instance, made before the existing contract came to an end.    When the employees returned to work, they were given the same employee number, they used the same tools and clothing provided to them by their employers and the same lockers.   The housing of their equipment pending their return to work showed that at least for that purpose the employment was regarded as continuing and it was sufficient if the employment was so regarded for any purpose.

	For the USA, it was argued with force that the question at issue was simply whether the arrangements made achieved the purpose they were designed to achieve.   For all that we knew, there might be good and sound reasons why the USA was not willing to employ local staff to work on their bases if the staff acquired statutory rights which might make their employment unattractive, for a variety of reasons, or just simply uneconomic.   “By arrangement” implied a meeting of minds.   Here, one could say that the USA never intended the employment to be continuing during the break: indeed, the whole purpose of the break would otherwise have been defeated.   It does not follow that because the USA made certain administrative arrangements of the kind referred to that there was some kind of understanding that, by reason thereof, the employment relationship continued during the break period.   It was submitted that for there to be a custom it must be a custom of the trade, some kind of implied contract that employment would continue and there was no evidence to support such a finding.   The issue before the Industrial Tribunal required them to look at all the facts and decide whether a custom or arrangement had been established.   On the facts they concluded that there was none; we could not and should not interfere with their decision.

	It seems to us that the expression “by arrangement” at least requires that something was said or done by the employers such as to justify the conclusion that the parties regarded the employment relationship as continuing despite the termination of the contract of employment.   The Industrial Tribunal will, ex hypothesi, be considering the question at issue after there has been a termination of a contract, and a break followed by re-employment.   Thus, it will have the advantage of the benefit of hindsight when deciding whether this was by arrangement.   We respectfully agree with what was said by the EAT in Letherby & Christopher v Bond [1988] ICR 480, at 486, where they said:

“What the tribunal have to look at is whether when the absence from work takes place, the parties regard the employment as still continuing.”

	A custom does not, we think, have to be a custom of the trade, but rather a custom in the sense of ‘custom and practice’ as commonly understood by those dealing with industrial relations.   Thus, the statute will allow a break in employment not to break continuity if either some kind of arrangement was made that the employment should be treated as continuing for any purpose, or if, without anything being said or done to the contrary, by established custom and practice such breaks were treated as though the employment continued.   An arrangement requires there to have been some discussion or agreement in advance of the break.   It would be reading more into the statute than was justified to say that a contract between the parties was required.   The words of the statute give effect to the reality on the ground, namely that arrangements falling short of binding commitments often govern particular aspects of the relationship between employer and employee.   In short, the word ‘arrangement’ is well known and its meaning does not become clearer from any attempt to re-define it or to find a synonym.

	Were the Industrial Tribunals entitled to conclude that there was no such arrangement on the facts before them?   It seems to us that they were.   At the highest it can be said that there was a settled expectation that the employees would return to their old job after a short break; that on their return they would use the same tools and take up where they had left off.   But what the statute requires is that the arrangement should be one pursuant to which the employee is regarded as still being in the employment of the USA.   In fact, there is no evidence that any of the applicants had any right to enter the base during the break; the documents suggest that passes had to be handed back when the old contract was terminated, although it is fair to say that there is no finding by the Industrial Tribunal on this point.   None of the matters referred to by Mr O’Dempsey, either when taken alone or together, are pertinent to that issue.   It is clear that at least the employer did not want the employment relationship to continue and did not regard it as continuing.   It seems to us that the Industrial Tribunals were well entitled to reach the decision which they did on this issue and we agree that we cannot and should not interfere with their decisions.

	We would have regarded a submission that there was evidence of a custom as unsustainable.

	Accordingly, the appeal must be dismissed.   

	We would respectfully add two comments.   

	In the first place, whilst it is generally desirable that employees should enjoy statutory protection during their employment, Parliament has laid down the conditions under which that protection is afforded.   If, by so arranging their affairs, an employer is lawfully able to employ people in such a manner that the employees cannot complain of unfair dismissal or seek a redundancy payment, that is a matter for him.   The courts simply try and apply the law as it stands.   It is for the legislators to close any loopholes that might be perceived to exist. Accordingly, we have resisted Mr O’Dempsey’s attractively presented invitation to condemn the USA’s practices or to stigmatise them as devices or shams.   

	The second, and unrelated, comment refers back to a matter which has been of concern to the EAT in other cases, namely where a Chairman decides contentious issues without the benefit of the good advice of his lay colleagues.   The issue in this case was, we think, just the sort of matter in which the learned Chairman might well have found the input of lay colleagues of assistance.   That said, we are not suggesting that his decision would have been different or that it was other than satisfactory and, as we think, correct.