Appeal No. EAT/827/99

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	                   At the Tribunal
	                On 12 June 2001
Judgment delivered on 23 July 2001

Before
MR COMMISSIONER HOWELL QC
MRS T A MARSLAND
MISS S M WILSON

MR B L BHATIA	APPELLANT

WINCANTON LOGISTICS	RESPONDENTS

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	ANTHONY HUDSON
(of Counsel)
(Bar Pro Bono Unit)

For the Respondents	PETER OLDHAM
(of Counsel)
instructed by
Eversheds
11-12 Queen Square
Bristol
BS1 4NT	

MR COMMISSIONER HOWELL QC
1	This employee’s appeal must be dismissed, as in our judgment there was no material error of law in the decision of the Tribunal Chairman sitting alone on 6 May 1999, rehearing and dismissing a complaint by Mr Banwari Lal Bhatia of unlawful deductions from his wages by the Respondents, Wincanton Logistics.   Wincanton had become his employers from April 1996 onwards, by a transfer which all parties at that time wrongly appear to have assumed was protected by the Transfer of Undertakings (Protection of Employment) Regulations 1981.

2	Like the Tribunal Chairman, we have great sympathy for Mr Bhatia for what has happened to him.  He has been the victim of a practice of “outsourcing” employees to different employing companies without any real change in the nature of his work or the entity for whose benefit it was being done, in a way that enabled substantial adverse changes to be imposed on him in respect of his employment rights and has cost him a substantial amount of money.  We think this reflects little credit on current employment practices or those for whom the services are really being performed, whose cost-cutting requirements are presumably the root cause of the need to resort to such things.  

3	Mr Bhatia had been employed for many years as a senior store assistant working in a duty-free warehouse at Heathrow Airport, filling trolleys with duty-free items for British Airways.  The trolleys were the standard ones used on British Airways flights, and all the duty-free goods put in them in the warehouse under Mr Bhatia’s supervision belonged at all material times to British Airways.  However, his employer from April 1982 onwards was not British Airways itself, but a company called European Air Catering Services Ltd (EACS) to which British Airways had contracted out the provision of the work of filling the trolleys.  At the end of March 1996, that contract was transferred to the Respondents. The work itself of course remained the same: it continued to have to be done in a warehouse at Heathrow Airport, using British Airways stock and the same trolleys, and by employees doing what was in reality the same job, although the Respondents introduced a more automated system.  Accordingly, Mr Bhatia and a number of other EACS employees who had been doing the work on the British Airways contract were offered continuity of employment with Wincanton Logistics.  

4	It is beyond dispute that both employing companies co-operated and concurred in the arrangements being made for the changeover.  As the Tribunal Chairman recorded in paragraph 7 of his Statement of Extended Reasons sent to the parties on 11 May 1999:
“7………..EACS represented to its workers that this was a transfer of undertaking and therefore their terms and conditions would be protected if they took up employment with Wincanton Logistics.  If they did not wish to transfer they could compete for a few other vacancies all of them less well paid or face redundancy.  They explained this position to their staff at a meeting and in letters.”

The involvement of the Respondents, and the common assumption of all involved that employees choosing to transfer to continued employment with Wincanton Logistics had their existing employment rights protected by the Transfer of Undertakings Regulations unless they could be persuaded to relinquish them, appear from the succeeding paragraphs of the Chairman’s Extended Reasons, summarising the material facts as found by him as follows:-

“8.   Mr Bhatia was born on 23 August 1934 and had worked for EACS  from April 1982 at a salary of £11,632 per annum including shift work allowance for a 37½ hour week plus overtime at £8.65 per hour.  Having examined the options he opted to transfer to Wincanton, and on the 26 March he completed an application form for transfer together with a health questionnaire.   He did not receive a reply.
9.  On the 2 April, he reported to EACS and they sent him to Wincanton’s premises.  He was met by a manager, Alan Koppen, who asked him if he was prepared to work for Wincanton he agreed and started work immediately.
10.  On the 7 April, he was handed a copy of an offer of employment setting out the principal terms and conditions to take effect from Monday 1 April 1996 at 7am.  This provided for different terms and conditions than he had worked at EACS.  In particular, the annual salary was to be £13,300 per annum for a 48 hour week and with a normal retirement age of 62.  This represented a serious reduction of wages to Mr Bhatia who worked long hours.  If he worked 48 hours per week he would be £80 per week gross worse off.  Furthermore, he was only four months off his 62nd birthday and therefore found himself with only four months employment left, whereas at EACS he could have continued working until he was 65.  He pointed out one or two factual errors such as his date of commencement of employment with EACS.  These were corrected and the letter returned to him for signature.  It is worth quoting two important paragraphs in that letter:-
(a) “This offer is made following your request to join Wincanton under Transfer of Undertaking (Protection of Employment) legislation.  This offer constitutes an agreed change to your Terms and Conditions of Employment.  However, your continuity of service, which commenced on April the 26th 1982 remains unaffected by these amendments”.
(b) “Acceptance Paragraph”
        I accept employment with Wincanton on the terms detailed above and will commence on Monday 1st April 1996 at 7.00 am.”
Mr Bhatia did not like his new terms but nevertheless he signed the acceptance paragraph on the 9 April 1996.
11.  It was clear that Wincanton knew his previous terms and conditions because they had telephoned EACS to ask details of Mr Bhatia’s terms and conditions and these had been provided in a letter dated 3 April.
12.  Thereafter, Mr Bhatia worked on the new terms and conditions although I have no doubt that he grumbled about them to his line managers on many occasions.”

5	By his Originating Application dated 30 June 1997, Mr Bhatia brought a claim against Wincanton Logistics for the difference between the remuneration he had received under the reduced terms set out in the letter of April 1996 summarised in paragraph 10 of the Chairman’s Extended Reasons, and what he would have received had he gone on being paid at the more favourable rates he had been entitled to under his previous contract with EACS: those, his Originating Application asserted, remained due to him by the operation of the Transfer of Undertakings Regulations.  In their Notice of Appearance and answer to the proceedings, Wincanton then denied that there had ever been a relevant transfer to which the Transfer of Undertakings Regulations applied; and contended that they were not, and never had been, liable to pay Mr Bhatia anything more than the reduced amounts provided for in the April 1996 letter.  A full Employment Tribunal sitting at London South in September and October 1997 held in a reserved decision sent to the parties on 20 October 1997 that although it was correct that Mr Bhatia’s employment rights had not been protected by the Transfer of Undertakings Regulations because the conditions for a “relevant transfer” were not met on the facts, nevertheless there had been an initial contract between Mr Bhatia and the Respondents for his employment to be continued with them from 1 April 1996 on the same terms and conditions as previously applied between him and EACS, which initial agreement had never been effectively varied by substitution of the terms set out in the letter of 7 April 1996, since on the facts he had never accepted the substitution  That decision was however appealed by Wincanton Logistics; and by an Order of the Appeal Tribunal made by consent on 9 October 1998 (page 18 of the appeal file before us) the appeal was allowed, and the case remitted to a freshly constituted Tribunal:
 “for consideration of [Mr Bhatia’s] claim for unlawful deduction of wages on the footing that there was no relevant transfer from EACS …….within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 1981”

6	In directing as they did that the case should be remitted for rehearing by “a freshly constituted Tribunal” of the crucial issues of fact as to what had or had not been agreed between Mr Bhatia and his new employers about his continuing terms of employment, we do not imagine for a moment that our colleagues who formed the Appeal Tribunal on that date had in mind that these difficult issues of fact would be redetermined by anything other than a fully constituted Tribunal consisting of three members.  It has been said before, and we re-emphasise, that when difficult issues of fact in relation to employment terms and what happens in the workplace need to be resolved in order to dispose of a case, it is undesirable, if not downright unwise, for one person, even though legally qualified, to attempt to discharge the task alone.  Those comments certainly apply to the issues remitted by the Appeal Tribunal to be reheard in the present case, and we record our surprise that this Chairman thought it appropriate to proceed with the rehearing of the factual issues on 6 May 1999 sitting alone, without the support of experienced lay members.  Although, as we have indicated, we have not been satisfied that there was in the result any material error of law making it necessary for the Tribunal’s decision on the case to be set aside yet again, we think it likely at the least that the apparent lack of clarity in the Chairman’s stated reasons to which we refer below could well have been avoided if the reasoning had had to be discussed and worked over with two other minds as well; and the factual issues canvassed in the course of the earlier full hearing in September 1997 might also have been gone into again in more depth than they were, if a full tribunal had been sitting.

7	On the rehearing, the Applicant was represented by a different trade union official from the one who had represented him at the earlier hearing in September 1997.  The main factual issue raised on his behalf appears to have been that he had been induced to sign the acceptance letter by duress, though there appears to have been little evidence to substantiate a defence of duress in the legal sense.  The arguments put forward at the earlier hearing to the effect that the Applicant had never effectively become bound by the varied terms put forward in that letter as he had never unconditionally accepted them do not appear to have been developed in the same way, but appear only to have been understood as subsidiary to the issue of duress: see paragraph 17 of the Chairman’s Extended Reasons on the rehearing.  His reasons for rejecting both that argument, and the contention that the Applicant was entitled to anything other than what the letter of 7 April 1996 provided, were expressed in the following paragraphs of his Extended Reasons under the heading “Decision”:
“DECISION
21.  I find that the letter addressed to Mr Bhatia offering him work with Wincanton to be the vital letter in this case.  The phrase “this offer constitutes an agreed change to your terms and conditions of employment” persuades me that Wincanton accepted an obligation to pay Mr Bhatia at his EACS rate, but with the intention of seeking his agreement to a substantial reduction in those rates with immediate effect.  
22.  However, I find that Mr Bhatia cannot rely on that to substantiate his claim because:-
(a) that offer was made under a mistake of law.  They were not under an obligation to seek his consent to the new terms because at common law this was a new contract which they could lawfully have offered at the outset; and
(b) he signed his acceptance of that contract.  There is no evidence before me that his signature is of no effect because it was obtained under duress.  He may not have liked the new terms, but that does not amount to duress.  Although he may have grumbled about them to his supervisors he made no specific written complaint about him . I find this particularly significant because of the two complaints he made about sick pay and retirement both met with positive responses from his managers and he had no reason to believe that any formal protest in writing would necessarily have been swept aside.
23.  I therefore find that he had accepted the change in terms and conditions and cannot now sue for his former terms.”

8	Against that decision Mr Bhatia brings a further appeal, now before us for full hearing pursuant to the directions given by the Appeal Tribunal at the second preliminary hearing on 29 November 2000 and explained in the judgment of Mr Justice Bell given on that day.  

9	Two principal grounds of appeal remain before us.  The first is that the Chairman has given an inadequate explanation of his reasons in paragraphs 21 and 22(a) of the decision under appeal, in view of the apparent contradiction between what is there said about there having been an agreed change in Mr Bhatia’s terms and conditions of employment, and an acceptance by Wincanton of an obligation to continue to pay him at his EACS rate.  

10	The second ground relates to the Chairman’s apparent reliance on what is said about Wincanton’s offer of having been “made under a mistake of law” when this was not an issue that had been raised at all by the Respondents in answer to the claim, or dealt with as an issue at the hearing at all.  As Mr Justice Bell pointed out, this was a point which the President had specifically raised in the judgment given on 22 October 1999 on the first preliminary hearing of this appeal when directing that the Chairman’s observations should be obtained, in the following terms:
“Whether it was fair to proceed, in Wincanton’s favour on the basis that there was an unpleaded mistake of law is a matter on which we would require some assistance.  A lot would depend on precisely what was done and said at the hearing on 6 May, and again, we would be grateful for the Chairman’s assistance.”

Nevertheless, as Mr Justice Bell pointed out, the comments from the Chairman which were obtained in a letter dated 10 December 1999 at pages 55 - 56 fail to deal with that matter at all. They are confined to providing supplemental comments on the reasons which led him to the conclusion that Mr Bhatia was bound by the contract signed on 9 April 1996.  

11	A third ground of appeal referred to in Mr Justice Bell’s judgment based on a contention of estoppel was, very properly in our view, not pursued on the full hearing of the appeal before us when Mr Hudson appeared on behalf of Mr Bhatia.  

12	On each of the main issues on the appeal, we consider that the Chairman’s stated reasons are open to criticism.  We agree with Mr Hudson’s submissions that it is far from easy to understand what he was deciding about the original contractual basis on which Mr Bhatia first went to work for Wincanton on 2 April 1996, and we also agree with him that the Chairman was further at fault in introducing what appears to us to have been an inexplicable (but for the reasons given below irrelevant) piece of reasoning saying, at the beginning of paragraph 22 in reference apparently to the offer contained in the letter of 7 April 1996:
“However, I find that Mr Bhatia cannot rely on that to substantiate his claim because [sic]:-
(a) that offer was made under a mistake of law.”

13	We also endorse what was said by the President and Mr Justice Bell in the two judgments given on the preliminary hearings of this appeal about the apparent inadequacy of the way the fresh issue of a mistake of law appears to have been introduced into the Statement of Reasons without Mr Bhatia, or for that matter either party, having had an opportunity of addressing it and making submissions at the hearing if it was to be taken into account as material to the decision.  Had either or both of those defects had any material effect on the actual outcome of the case or the issues properly before the Tribunal, we would have been constrained to set the decision aside and remit the case for yet another rehearing.  However, despite all that, we have been satisfied by the argument of Mr Oldham on behalf of the Respondents that on a proper analysis of what fell to be decided by the Tribunal on 6 May 1999, and on the express findings of fact made by the Chairman (that Mr Bhatia had indeed signed his acceptance of the new contract, and that there was no evidence that could establish his signature to have been no effect because obtained under duress: neither of which findings is challenged or open to challenge in the appeal now before us) the actual conclusion reached by the Chairman in this case was the only possible conclusion a reasonable tribunal, having made such findings of fact, could have arrived at.  

14	Consequently, in our judgment, the actual decision reached by the Chairman was plainly and unarguably right, for the reasons set out in paragraphs 22 (b) and 23 of his decision: namely that having actually agreed the revised terms of employment proposed to him by Wincanton in the letter of 7 April 1996, Mr Bhatia was not thereafter entitled to go back and attempt to re-assert any entitlement he had previously had to more favourable terms, whatever the exact basis of express or implied agreement that had up to that point been applicable between him and Wincanton from the time he actually started work for them on 2 April.  This is accordingly a case in which we are satisfied that (in the terms used by Lord Donaldson in Dobie v Burns International [1984] ICR 812 at 818G) the actual decision reached by the Tribunal in this case is “plainly and unarguably right” despite the defects we have identified, and accordingly should be left to stand.  

15	That makes it unnecessary for us to base our decision on a subsidiary issue which arose in the course of argument, over the exact status of the comments in the Chairman’s letter of 10 December 1999 and to what extent it was right to take them into account either to qualify or to supplement his Statement of Extended Reasons, promulgated on 11 May 1999 in accordance with Rule 10 of the Employment Tribunals Procedure Regulations 1993 SI No 2687 Sch. 1.  In case anything turns on it however, we confirm our own understanding that it is the formal statement of reasons promulgated in accordance with that Rule that should be looked at as the record of the tribunal’s reasons in order to determine questions of whether a decision is based on a misdirection or inadequate reasoning; and that as explained in the judgment of Morison P in Reuben v London Borough of Brent [2000] IRLR 176, in particular at paragraph 17 with which we respectfully agree, there can be no halfway procedure where a Tribunal can comment on the substance of the decision or the way the reasoning is expressed, so as to make good any shortcomings ex post facto during the course of an appeal to the EAT.  That is quite a different thing from the well established practice of the Chairman being asked to comment on allegations of fact about what has or has not gone on in the course of the proceedings so as to assist the Appeal Tribunal in assessing whether any breach of natural justice may arguably have occurred, which we think must have been the basis for the President asking for assistance as he did in the judgment given on the first preliminary hearing, though unfortunately it seems instead to have been understood by the Chairman as a request for supplemental justification of his own reasoning process.

16	We accordingly unanimously dismiss this appeal.  

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