Appeal No. UKEAT/0231/04/MAA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 24 March 2004

Before
THE HONOURABLE MRS JUSTICE COX
MR T HAYWOOD
MR D NORMAN

T B TURBOS LTD	APPELLANT

MR C E DAVIES	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR I G LOVEJOY
(Representative)
Messrs DWF Solicitors
Spencer House
89 Dewhurst Road
Birchwood
Warrington WA3 7PG	
For the Respondent	No Appearance or Representation By or on Behalf of the Respondent	

SUMMARY

Time Limits / Practice and Procedure

Effective Date of Termination – parties mistaken re continuing employment after service of notice to terminate by employer which takes effect.

THE HONOURABLE MRS JUSTICE COX

1.	This is the full hearing of the Appellant employer’s expedited appeal from a decision of the Manchester Employment Tribunal promulgated on 13 January 2004, that the Applicant’s contract of employment terminated on 23 July 2003 and therefore that his Originating Application complaining of unfair dismissal, filed with the Tribunal on 23 September 2003, was in time and the Tribunal had jurisdiction to determine it.

2.	This morning the Appellants were represented by Mr Lovejoy.  The Applicant himself was notified of the date of the hearing in the normal way, but has not appeared before us, nor has he been represented.  Efforts to contact him have proved fruitless and while we delayed the hearing of the appeal by half an hour it proved impossible to contact him and we therefore decided to proceed with the appeal in his absence.

3.	In their grounds of resistance, in addition to denying that the dismissal in this case was unfair, the Appellants had contended that the Applicant’s employment had terminated on 27 May 2003 and that his Originating Application was therefore not presented within three months beginning with the effective date of termination.  The Tribunal therefore held a preliminary hearing in December 2003 in order to determine the issue of jurisdiction.  They heard evidence relating only to that issue and both parties were legally represented before the Tribunal.

4.	The facts found by the Tribunal, in respect of which there was no real dispute between the parties, are set out at paragraph 3 of their reasons.  Given their importance in this appeal we shall set them out in full:

“3.	Having considered the oral and written evidence and heard the submissions made on behalf of the parties the Tribunal makes the following findings of fact: 
a)	The applicant commenced employment with the respondent on 4 May 1999 as a vehicle technician.
b)	On 28 January 2003 the respondent posted a notice advising of changes to the start time of employees from 8.30 am to 8 am.  The applicant objected to this and correspondence between the parties followed.
c)	By a letter of 28 April 2003 (1) the respondent gave the applicant notice of termination of his present contract of employment with effect from 27 May 2003.  A new contract would start on 28 May 2003.
d)	The applicant did not sign the new contract and wrote on 20 May 2003.  At this time he was signed off work sick by his GP and produced a sick note.  In this letter he also outlined why he would not accept the proposed changes and stated "It would be duly deemed that as from May 28 2003, I will not be resigning from the company but reporting for duty without formal contract of employment".
e)	On 21 May the respondent replied reiterating that the old contract would end on 27 May and the new contract would start on 28 May.
f)	On 27 May the applicant who was still on the sick, wrote to clarify the situation and continued to try to negotiate about the variation to his contract of employment.  In letters of 29 May and 12 June the respondent replied to the "applicant about this question.  Neither party had changed their position. 
g)	The applicant continued to receive wages throughout May including a small amount of statutory sick pay and received his pay slip (33) in the letter of 29 May (7).
h)	On 17 June 2003 the respondent wrote to the applicant inviting him to attend a disciplinary heating on 20 June to face an allegation of gross misconduct for unauthorised absence from work from 10 June 2003.
i)	The applicant then submitted a further sick note and disciplinary action was withdrawn.  In the letter of 19 June (12) dealing with this, the respondent stated that the issues raised by the applicant on 10 June would "be dealt with at the appropriate time on his return to work".
j)	The applicant replied on 20 June and tended his resignation giving one month's notice from 24 June. 
k)	On 23 June the respondent replied accepting his resignation.  His final wage slip and P45 were also sent (32 and 33).  The wage slip showed payment of SSP from 27 May 2003 to 23 June 2003.  The letter was also the date of termination shown on the P45.  Mr Appleton was unable to say how the 23 June had been arrived at.  In his final wage slip there was also included "one month's gross pay in lieu of notice".  He was also given 5½ days' holiday pay.
l)	The applicant then sent a fax on 24 June (16) stating that he was now able to return to work and would do so on 25 June and gave two contact telephone numbers.  He stated that if the respondent did not accept his return he would expect payment in lieu of his notice period. 
m)	Mr Appleton gave evidence that as he had already accepted the applicant's resignation and paid the monies due he did not reply. 
n)	The applicant never returned to work.  His Originating Application for unfair dismissal was presented to the Manchester Employment Tribunals on 23 September 2003.”

5.	It will be seen from these findings of fact that the Tribunal made a clear finding at paragraph 3 (c) that on 28 April 2003 the Appellants gave notice to terminate the Applicant’s existing contract of employment with effect from 27 May 2003 and offered him re-employment on new terms.  In those circumstances the Appellants contended before the Tribunal:

(1)	that 27 May was the effective date of termination of the Applicant’s employment for the purposes of section 97 of the Employment Rights Act 1996;
(2)	that after that date, as a matter of law, he ceased to be employed by the Appellants;
(3)	following the termination of that contract of employment the parties had not been able to reach agreement as to the Applicant’s working hours and that therefore no new contract of employment had come into existence between the parties after 27 May;
(4)	the fact that both parties misunderstood the legal position and still considered that some form of employment relationship was still existing between them was irrelevant to what was in fact the true legal position.

6.	The Applicant contended that, notwithstanding the fact that the contract had terminated on 27 May, both parties considered that the employment relationship still existed until the Applicant’s purported resignation.  They contended that the effective date of termination should therefore be considered to be that date.

7.	The Tribunal set out their conclusions at paragraphs 4 to 10 and, once again, we shall set them out in full:

“4.	The Tribunal were satisfied that the applicant continued to be employed until he resigned with one month's notice which took effect on 23 July 2003.

5.	The evidence heard and read by the Tribunal supported this finding.  In particular the applicant continued to receive wages and a wage slip after 27 May 2003.  He was treated as an employee by the respondent in correspondence and in particular he was subject to aborted disciplinary action.  The respondent also referred to his returning to work to discuss the issues in dispute (12) and by letter the respondent also stated (page 15) "we accept your resignation as tendered"
6.	The respondent also clearly treated the applicant as an employee for purposes of statutory sick pay. 
7.	The applicant was actually paid up until 24 July (although the final amount was paid gross and referred to as wages in lieu of notice). 
8.	Having concluded that the applicant did continue to be employed after the 27 May 2003 the Tribunal did give some consideration to the proposition that the applicant's contract terminated earlier on 23 June 2003.  The applicant's P45 stated this date as his final date of employment (although it was not clear how this date had been arrived at) and payment for the period after this was referred to as payment in lieu of notice and was paid gross.
9.	In cases where an employee is dismissed and wages in lieu of notice is paid rather than notice being given, the effective date of termination is the earlier date rather than the date when the notice would have expired. 
10.	This was not however the case here as it was the applicant who had given notice and was prepared (as was seen by his fax of 24 June} to work out his notice.  There was no evidence that the respondent had dismissed him or given him counter notice in the intervening period.  The applicant therefore continued to be an employee who was simply not required to work out his final month.” 

8.	It will be immediately apparent from the Tribunal’s conclusions that they did not address any of the Appellants’ contentions as to the correct legal position, nor do they refer to the statutory provisions which relate to the effective date of termination of the contract of employment.  It appears from their conclusions that they decided that this Applicant continued to be employed until 23 July, essentially on the basis that the Appellants continued to pay him and in other respects to treat him as an employee until that date.  It appears, although again it is not clear from their reasons, that the Tribunal decided that the effective date of termination was either the date up to which the Applicant was paid or the date that the parties agreed was the effective date of termination.

9.	At paragraph 5 the Tribunal stated that the evidence they had heard and read supported their finding that the Applicant continued to be employed after 27 May.  However, they do not then explain how or why they considered that the evidence before them supported that conclusion.
10.	Mr Lovejoy, who appears for the Appellants, submits first that in failing to explain their findings and to address the Appellants’ submissions below the Tribunal failed to provide adequate reasons for their decision.  It is well established in the case law that the failure to provide adequate reasons to enable the parties to know why and how the decision has been reached is itself a valid ground of appeal.  Mr Lovejoy has referred us to two recent decisions in the Court of Appeal where this principle has been confirmed.  First of all the case of Flannery & Flannery v Halifax Estate Agencies Ltd, a decision of the Court of Appeal dated Thursday 18 February 1999, reported at [2000] 1 WLR 377, where Henry LJ said this, referring to the duty to provide reasons:

(1)	“The duty is a function of due process, and therefore of justice.  Its rationale has two principal aspects.  The first is that fairness surely requires that the parties - especially the losing party - should be left in no doubt why they have won or lost.  This is especially so since without reasons the losing party will not know … whether the court has misdirected itself, and thus whether he may have an available appeal on the substance of the case.  The second is that a requirement to give reasons concentrates the mind; if it is fulfilled, the resulting decision is much more likely to be soundly based on the evidence than if it is not.
(2)	The first of those aspects implies that want of reasons may be a good self-standing ground of appeal.  Where, because no reasons are given, it is impossible to tell whether the judge has gone wrong on the law or the facts, the losing party would be altogether deprived of his chance for an appeal unless the court entertains an appeal based on the lack of reasons itself.”

11.	In the employment context a more recent decision of the Court of Appeal where this issue was addressed was the case of Tran v Greenwich Vietnam Community [2002] IRLR 735.  In the course of her judgment Arden LJ at paragraph 17 said as follows:

“17	[The giving of reasons] may be done economically, but simply to recite the background and the parties' contentions and then to announce a conclusion is not to do it at all; and an opaque reference to the evidence which has been given does not save it.  The giving of adequate reasons fulfils many functions, among them the important one of concentrating decision-makers' own minds on what they are doing and demonstrating to the parties and (if necessary) to appellate tribunals that they have given acceptable answers to the right questions.”

12.	In our judgment we accept Mr Lovejoy’s submissions as to the inadequacy of the reasons given in this case.  It seems to us that the Tribunal decision does not meet the tests referred to in both of those cases.

13.	For those reasons alone in this case we would have been prepared to allow this appeal.  However, in view of the fact that the facts in this case were not in dispute between the parties Mr Lovejoy wishes us to go on to consider his other grounds of appeal and arrive at a conclusion as to the legal position as far as the effective date of termination is concerned.  We therefore now turn to address that issue.

14.	The starting point is the legislation.  There is in law no generalised concept of an “employment relationship” not governed by a contract of employment which can exist for the purposes of the Employment Rights Act 1996.  “Employment” is defined in section 230 (5) of the Act as “employment under a contract of employment”.  “Contract of employment” is defined in the Act as “a contract of service or apprenticeship”.  By section 97 (1) (a) the Act provides:

“97	(1)	Subject to the following provisions of this section, in this Part “the effective date of termination” - 
(a)	in relation to an employee whose contract of employment is terminated by notice, whether given by his employer or by the employee, means the date on which the notice expires.”

15.	This wording is clear and unambiguous.  The provisions have very recently been considered by the Court of Appeal in the case of Fitzgerald v University of Kent at Canterbury, decided on 17 February 2004 with the reference [2004] EWCA Civ. 143.  At paragraph 7 Sedley LJ giving the judgment of the court said as follows:

“7.	The concept of the effective date of termination (EDT) is a statutory one.  It has been present in the employment legislation since its origin in 1971.  Its purpose is to give a fixed point of time by which to calculate such things as eligibility for protection against unfair dismissal, continuity of employment, loss of rights on reaching retiring age, the amount of the basic award and (as in this case) the time for lodging an originating application.”

16.	After referring to the legislative provisions and to various authorities, at paragraph 20 Sedley LJ said as follows:

“20.	… the effective date of termination is a statutory construct which depends on what has happened between the parties over time and not on what they may agree to treat as having happened.  This was in fact the approach adopted by the EAT, again with Judge Peter Clark presiding, in Caines v Hamon-Lummus Ltd (unreported, 11 January 1996).  There the EAT upheld the industrial tribunal's view that, in ascertaining the starting date of a period of continuous employment under what was then the Employment Protection (Consolidation) Act 1978, only the statutory provisions (viz those now found in s.211 of the 1996 Act) were admissible.  In my judgment the same is true of the other elements of the statutory computation of time.
21.	This is not for a moment to say that for purposes outside the statute the parties are not free to make binding agreements of this kind.  As Mr Davison has rightly accepted from the start, all kinds of contractual arrangement may legitimately be made for pension and other purposes which fix suitable dates that do not correspond with events.  Even then, no doubt, the fiscal effect of fictitious arrangements may be open to challenge by the Inland Revenue; and so forth.  We are not concerned, it should be noted, with a compromise of a genuine factual dispute about dates.  We are concerned here with the impact of voluntary arrangements on the provisions of a statute which, it is worth recalling, bears the short title of the Employment Rights Act.”

17.	Mr Lovejoy submits that if the parties cannot, by deliberate agreement, change the effective date of termination for the purposes of the Act, it is difficult to see how they can do so accidentally, or in circumstances where the parties are both mistaken as to the true legal position.  We agree.  Payment of wages and accumulation of other benefits up to the mistaken date cannot change the legally effective date of termination which is determined pursuant to the legislation.

18.	It seems to us that the crucial issue which this Tribunal had to determine, but failed to, was the effect of the notice to terminate served by the Appellants on 28 April 2003.  Further, there was no evidence before the Tribunal and no finding to the effect that a new contract of employment between the parties was created after 27 May.

19.	In our judgment, having regard to the undisputed facts, the only conclusion which this Tribunal could properly come to was that no contract of employment existed after 27 May 2003 and that that date was therefore the effective date of termination for the purposes of the 1996 Act and the Applicant’s complaint of unfair dismissal.

20.	The only matter which remains to be determined – the obvious effect of our conclusions being that the Originating Application was lodged out of time by the Applicant – is the extent to which it was or was not reasonably practicable for this Applicant to present his Originating Application within the three month time limit.  We understand from submissions made by Mr Lovejoy that in fact those representing Mr Davies before the Employment Tribunal conceded that there was no argument about reasonable practicability.  However, there is nothing in the Tribunal decision which refers to that concession, nor is there any other document before us to confirm that such a concession was made.  Given that the Respondent to this appeal is not before the Appeal Tribunal we take the view that it would be inappropriate for us to make any finding or say anything about the position so far as reasonable practicability is concerned.

21.	In the circumstances, we shall remit that issue to the Tribunal for determination and no doubt the parties will liaise with the Tribunal for a convenient date for that matter to be resolved.  We understand that the hearing date for this application is imminent and no doubt notification of the outcome of this appeal will be relayed to the Employment Tribunal as soon as practicable.