Appeal No.	 EAT/478/98

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On  1 December 1998

Before
HIS HONOUR JUDGE J ALTMAN
MR P A L PARKER CBE
MS D WARWICK

MRS M M HOWDEN	APPELLANT

ALAN SEARLE & WILLIAM TWIGG t/a SEARLE CATERING	RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR T LINDEN
(of Counsel)
Messrs Pattinson & Brewer
Solicitors
30 Great James Street
London WC1N 3HA	
For the Respondents	MR A HOWARD
(of Counsel)
Ms S Dronsfield
Manager Employee Issues
KPMG Tax Advisers
1 The Embankment
Neville Street
Leeds LS1 4DW	

	HIS HONOUR JUDGE ALTMAN:	This is an appeal from the decision of the Employment Tribunal sitting in Liverpool on 27 January 1998.  I refer to the parties in their capacity before the Tribunal.  The application before the Tribunal was one of unfair dismissal also described as unfair selection for redundancy in the Originating Application.  The Tribunal were concerned with the preliminary question of jurisdiction because they found against the Applicant that she had not two years’ continuous service prior to her dismissal, so as to entitle her under the present law to bring a claim for unfair dismissal before an Industrial Tribunal.

	The Tribunal heard evidence to which we have been referred and part of which I will refer to in due course, but in their decision at paragraph 5 they set out the facts which they found to be relevant to the preliminary issue.  

	It appears that from January 1978 the Applicant began work for a company called Compass Plc but on 26 July 1996 she was made redundant from her position as catering manager at premises called Quest International where, presumably, Compass Plc had a contract for catering.  She received a redundancy payment.  The Tribunal found that a week later the Applicant was, in their words, re-employed by Compass Plc under a new contract of employment as “customer services assistant” at Cabot Carbon Limited.  That employment was in due course transferred to the Respondents as part of a transfer of undertaking within the Transfer of Undertakings (Protection of Employment) Regulations 1981.  That took place on 8 September 1997 and just over a month after that transfer the Applicant was summarily dismissed on the purported ground of redundancy;  In the words of the Employment Tribunal “after selection but without any meaningful consultation”.  If that selectin was based upon length of service, the computation of the period of employment is maybe doubly relevant not only to that consideration and the question of fairness, but also to the question of jurisdiction to which the Tribunal directed its attention.

	Having set out the law in relation to the qualifying period to which I have already referred, the essence of the Tribunal’s decision was set out in paragraph 6 of their decision which I quote in full:
“6.	Having regard to the facts and documentary evidence (and in particular the agreed facts of the redundancy and redundancy payment in July 1996, and that to be entitled to a redundancy payment an employee will normally have to have been dismissed, the one exception to this rule not applying to this case), we are satisfied that albeit that the applicant was re-employed under a new contract of employment by her previous employer, but at a different location and on different terms, there was a break in service.  The employer specifically wrote on 30 August 1996 that the applicant would “not keep any entitlement with regards to redundancy entitlement if in the future there is a possible redundancy, your entitlements to redundancy compensation will be based on your new commencement date of 5 August 1996”.  Whilst different considerations applied to holidays and sickness we have no hesitation in finding that the applicant’s relevant qualifying period of employment only commenced on 5 August 1996 and accordingly she is unable to bring a claim for unfair dismissal before the Industrial Tribunal, less than two years having elapsed between that date and 17 October 1997.”

	In addition to the evidence and findings of fact to which I have already referred, there was the following evidence before the Tribunal.  During the week of 26 July 1996 and 5 August 1996, the Applicant remained a member of the Respondents’ Occupational Pension Scheme.  Secondly, although it was initially denied, it is apparent from the notes of evidence that there was reference to the fact that during that week, she received her ordinary pay.  Thirdly, it is common ground that she remained a beneficiary during that period of the Respondents’ holiday scheme and fourthly, she remained a beneficiary during that period of the Respondents’ sickness scheme.

	On behalf of the Applicant, Mr Linden has argued first that the Tribunal were perverse on the evidence before them in coming to the conclusion that there was what the Tribunal called a break in service, and what we assume they meant, namely a break in a period during which the relations were governed by a contract of employment. It is quite clear that the Tribunal were directed in submissions to Section 212 of the Employment Rights Act 1996.  Section 212, subsection (1) provides:
“(1)	Any week during the whole or part of which an employee’s relations with the employer are governed by a contract of employment counts in computing the employee’s period of employment.”

	Mr Linden has drawn our attention to a number of pieces of evidence.  There was a letter written by the Applicant’s then employers on 23 January 1998 internally in the following words:
“I am writing to confirm that Margaret Howden took one week’s holiday ......”

referring to the relevant period and then going on:
“.... before commencing work with Cabot Carbon ......”

	That came from the Personnel section, or the Human Resources Assistant as it is so called, with Compass who were then employing her.  It is submitted that that demonstrates the continuation of a contract of employment, but it is clear that the Tribunal did not take that point and adopt it.

	Furthermore, in oral evidence, at page 3 of the Notices of Evidence at the bottom, there is evidence from the Respondents, Mr Twigg:
“The applicant was made redundant and re-employed one week later in another capacity at another site - with continuity for pension and holiday purposes only.”

	And at page 5 of the Notes of Evidence:
“The Applicant was paid for the week ......”

Those matters were confirmed so it appears in evidence by the Applicant.  The Applicant went further in that she said at page 8 of the Notes of evidence, that she was assured there would be continuity of employment and she reiterated that at page 9 of those notes.  The question of holiday arose because, although her line manager did not want her to take it, Human Resources felt that there was an obligation to pay it.  Insofar as the Tribunal made no specific findings about any assurances, and insofar as those were “self-serving” pieces of evidence without any documentary support for them, it would be quite wrong for us to attach any importance to them.  But there was other correspondence at page 15 of our bundle, a memo of 23 August 1996 which said:
“It has been agreed, even though it is a break in service that she will maintain her holiday and sickness entitlement as per her previous commencement date .......”

and page 19, she was referring to Applicant “re-employed” and later:
“I would be grateful if you can arrange for her pension entitlement to be maintained as if there has been no break in service.”

	On the basis of that evidence before them and the way in which the matter was expressed in their decision, the Tribunal came to the conclusion that there was a break in service, and they seem to base that on taking into account four matters.  First they have regard to the fact that there was a redundancy and a redundancy payment.  Secondly, they have regard to the re-employment under a new contract of employment at a different location and on different terms, but it seems to us they have a regard to it in a neutral sense in that they find it does not prove continuity of service.  All the more so therefore, they appear to have found that there is nothing in it to suggest there was a break in service.  Thirdly, they refer to a letter in which the Respondents told the Applicant that she would keep any entitlement with regards to redundancy.  Fourthly, they took account of the fact that the employer had different considerations applying to holidays and sickness.

	Although there was an internal memorandum to preserve holidays as referred to, it seems to us that those two letters, the two memos of 23 August 1996, are both consistent in that they bring to an end the contract of employment, so as to entitle the Tribunal in their findings to come to the conclusion that there was a break in service.  Whilst it has been urged upon us that there are particular provisions to which I will come in relation to redundancy payments, as a matter of fact, it is of course open to a Tribunal to take into account the facts of a redundancy dismissal and payment in deciding whether there is a break in service.  Accordingly, it seems to us that the Tribunal were entitled to conclude and did conclude that the relevant week was not a week during which the relations between the parties were governed by a contract of employment.

	However, Section 212 provides for situations which may preserve continuity for the purposes of computing the relevant periods.  The head note of that section provides “weeks counting in computing period”.  It therefore sets out to define what seems to us to be an otherwise artificial set of formulae designed specifically to provide for the task of assessing continuity of employment, and where subsection (1) provides for the existence of a contract of employment to dictate continuity, the remaining sections deal, or certainly subsection (3) deals with the period that arises otherwise, that is where there is no contract of employment.

	Before coming back to that, it is useful to look at section 214.  Section 214 provides in subsection (1) that:
“(1)	This section applies where a period of continuous employment has to be determined in relation to an employee for the purposes of the application of section 155  or 162(1).”

	In other words special provisions are provided for the calculation of entitlement for redundancy pay.  It is therefore implicit in the existence of those two separate sections and the specific provision of calculation of redundancy payments, that Parliament has envisaged the situation where the existence of redundancy payments can take place quite irrespective of the entitlement of an employee to have the benefit of continuous service for the purposes of other statutory rights existing within the Employment Rights Act.

	Pausing there for a moment, in that context therefore, it is noteworthy that in considering their judgement in this case, the Employment Tribunal appear to have leaned very heavily on the existence of the redundancy and as determinative of the question that they had to answer and which they appear to have asked themselves.  Indeed, apart from reference to redundancy there is no fact referred to in paragraph 6 of that decision, to be put in the scales in support of the proposition that there was no continuity for the purposes of the continuous employment under the statute.

Returning to subsection (3) now, that provides for the purposes of this case that any week 

“(not within subsection (1)) during the whole or part of which an employee is ..... (c) absent from work in circumstances such that, by arrangement or custom, he is regarded as continuing in the employment of his employer for any purpose, ..... counts in computing the employee’s period of employment.”  

That subsection only arises where there is no contract of employment.

	In this case, it seems to us unanswerable that there was an “arrangement” for the payment of pension, holidays, sickness and ordinary remuneration.  The wording of the subsection is critical it seems to us in one important phrase and that is this.  “He is regarded as continuing in the employment of his employer”, and I point out that that does not provide that he is regarded as being subject to a continuing contract of employment, but simply that he is regarded as still being an employee, and then with the following words, “for any purpose”.

	If there is anything, it seems to us, which is a result of an arrangement between the parties or between an employer and a trade union for instance, and which is a factor by which there is regarded as a continuation of employment, then that is determinative of continuity.  It is quite clear in this case, it seems to us, that in fact there were four “purposes”;  The payment of wages, entitlement to sickness and holiday benefit and participation in this company pension scheme, and everything we have seen and to which I have referred, it seems to us, is definitive of that.

	When the Industrial Tribunal dealt with their reasons in paragraph 6, they included the phrase, “whilst different considerations applied to holidays and sickness”.  That followed upon the sentence in which there was reference to the letter of 30 August that the Applicant would not retain entitlement with regard to redundancy, and it seems to us that the finding therefore of the Tribunal was that there was on the face of it entitlement to holidays and sickness, but it was discounted by the Tribunal.

	In order to answer that, therefore, and looking at the decision of the Tribunal, it seems to us that, without subjecting the decision to pedantic and legalistic analysis, which we would in common with the decisions of the courts always eschew, and looking broadly at paragraph 6 of the decision, it is clear to us that the only question to which the Tribunal address their attention, was the question as to whether or not during the relevant week, there was a contract of employment or whether on the other hand there was what they called “a break in service”.  But subsection (3) is designed to apply in those situations where there is such a break in service or where there is no such contract of employment. The Industrial Tribunal did not ask themselves the question whether Section 212 subsection (3) applied so as to preserve continuity of employment for the purposes of the statute.

	Accordingly, it seems to us that they erred law in failing to ask themselves that question or to answer it on the evidence before them and we are driven therefore to allow the appeal and set aside the decision of the Industrial Tribunal.

	Having referred to the ingredients which existed during that week to the benefit of the Applicant, it seems to us that as a matter of construction of mixed fact and law there is no other construction possible than that the Applicant was regarded for the purposes of those matters as continuing in employment for those purposes.  We have considered the case of Wishart v The National Coal Board [1974] ICR 460.  We are asked to distinguish it because that involved a particular pension scheme which provided that an ex-employee, who had not left the industry permanently, remained a beneficiary of it.  However, the only difference between the case we have to consider, it seems to us, and that, is that the link between the pension scheme and continuity was if anything more tenuous in the Wishart case because it provided cover for people who rather nebulously had not got to the positive stage of leaving the industry permanently, whereas the case we have to deal with is of someone who was going to be returning to work for her employers within a week.

	Furthermore, of course, the Wishart case turned only on pension and there were a number of other “purposes” for which employment was kept alive during the relevant period in the case before us.

	Accordingly we have come to the conclusion that there would be no further fact finding or assessment to be done if this matter were to be remitted to an Industrial Tribunal.  The facts have all been found, they are not essentially in dispute, it is a matter of construction and we are driven to the conclusion that there can be no other decision than that the week counted and continues to count in computing the period of continuous employment.  

	In those circumstances, we find that the Industrial Tribunal has jurisdiction to entertain the Applicant’s complaint and we remit it to be heard before a differently constituted Tribunal for that purpose.