Appeal No.	 EAT/996/99

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 3 October 2000

Before
HIS HONOUR JUDGE PETER CLARK
MRS T A MARSLAND
MRS D M PALMER

MR T RICHARDSON	APPELLANT

H MULLINS (EARLBY) LTD	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR JOHN FALKENSTEIN
(of Counsel)
Instructed by
Messrs Shirtcliffe & Co
Solicitors
53 Market Place
Thirsk
North Yorkshire
YO7 1HA	
For the Respondent	MR JOHN O’ROURKE
Managing Director	

JUDGE PETER CLARK

1.	Three questions arise for determination in this appeal, brought by the Applicant before the Newcastle upon-Tyne Employment Tribunal, Thomas Richardson, against that Tribunal’s decision promulgated with extended reasons on 8 July 1999.

(1)	was the Applicant employed under a fixed-term contract of apprenticeship, not terminable by the Respondent employer on notice, such that he has a claim for damages for breach of contract arising out of the termination of that contract by the Respondent on 18 January 1999 (the apprenticeship question)?

(2)	if not, and the contract was terminable on notice, was the Tribunal wrong in law in finding that although the dismissal by reason of redundancy was unfair, there was a fifty per cent chance that the Applicant would have been dismissed fairly had a proper procedure been followed? ( the Polkey point).	

(3)	was the Tribunal’s decision flawed for lack of adequate reasons insofar as they found that the period of future loss of earnings was limited to 4 weeks from the date of the Tribunal hearing (future loss)?

The facts
2.	The Respondent is a small family run precision engineering business.  The managing director and principal shareholder is Mr O’Rourke.  At the relevant time it employed 37 people.

3.	The Applicant, then aged 17 years, was engaged by the Respondent on 11 September 1995.  On 22 September 1995 he signed 2 Statements of Employment Particulars which showed his job title as apprentice and provided for pay, hours of work and holidays with pay.  The documents were signed on behalf of the employer on 25 September 1995.

4.	Attached to those documents were certain Notes, including provision for length of notice by either party to terminate the contract.

5.	The Tribunal found that the Applicant was expected to go to college on day release for one day per week and at the end of 4 years he would be regarded as having served his time.  Provided he passed his examinations his wages would be increased.

6.	In December 1996 the Applicant handed in his notice and left the Respondent to join the Royal Navy.  Unfortunately he then failed his medical due to a perforated eardrum and was rejected by the Navy.  He returned to the Respondent and asked for his job back.  Mr O’Rourke agreed and he resumed work on 13 January 1997.  Apart from minor changes he carried on as before, finishing an ONC course and later commencing an HNC course.

7.	In December 1998 the Respondent experienced a downturn in work and Mr O’Rourke decided to reduce overheads by cutting the workforce.

8.	In determining who should be made redundant he did not employ an objective scoring matrix, as he put it in evidence ‘We are not ICI remember,’ but consulted with his foreman Mr Pearson.  As a result the Applicant was identified for redundancy.  The principal criteria appear to have been the desire to retain people with appropriate skills but also taking into account other factors, including length of service and disciplinary records. In the Applicant’s case that included written warnings dated 7 November and 25 November 1998 for lack of attention to his work and an incident immediately prior to Christmas 1998 when he was seen drinking from a can of lager whilst operating a machine.

9.	On 4 January 1999 the Applicant was given a letter of dismissal to take effect on 18 January.  He was permitted to absent himself during his notice period to look for other work.

10.	Between 18 January 1999 and the Tribunal hearing on 17 June 1999 he had worked elsewhere for some 4-5 weeks on a trial period earning £120 per week and was then at the third stage of interviews for a post with the Fire Brigade.  He continued on his HNC course at the Respondent’s expense.

11.	The Tribunal decision

The Tribunal made the following principal findings:

(1)	The contract was terminable on notice.

(2)	The Applicant was dismissed by reason of redundancy.

(3)	That dismissal was unfair.  There was no consultation with the Applicant over his redundancy and no objective criteria for redundancy were identified by the Respondent.

(4)	There was a fifty per cent chance that had the Respondent carried out proper consultation and adopted better defined criteria for selection the Applicant would have been fairly dismissed.

(5)	He was entitled to a compensatory award based on his net loss to the date of hearing and a further 4 weeks future loss, less the fifty percent Polkey deduction, which together with a sum for loss of statutory rights totalled £2,362.50.  The basic award was reflected in the redundancy payment which he had received based on 2 years continuous service.

12.	The Appeal
	
We return to the 3 questions posed earlier.

(1)	The Apprenticeship question

Mr Falkenstein has helpfully referred us to 2 recent statements of the modern law of apprenticeship, first by Sedley J in the first instance case of Wallace v CA Roofing Services Ltd  [1996] IRLR 435 and secondly the judgment of the Court of Appeal delivered by Bingham LCJ in Edmunds v Lawson QC [2000] IRLR 391, the case of the pupil barrister who claimed entitlement to the National Minimum Wage.

Historically, a contract of apprenticeship bound the apprentice to serve and work for the master and comply with all reasonable directions for the term of the apprenticeship and the master undertook to educate and train the apprentice in the practical and other skills needed to practice a skilled trade.  Those mutual covenants are the cardinal features of such a relationship (Edmunds. paragraph 30).  Being bound to each other, the contract was not terminable by either party during the term short of a frustrating event or repudiatory act (Wallace. paragraph 13).

Thus the question arises in this case as to whether this was a contract of apprenticeship for a 4 year fixed term.

On the facts of Wallace Sedley J held that such a contract existed, even although there was no written contract of apprenticeship, as in the present case.  Mr Falkenstein submits that this case is on all fours with Wallace and that the Tribunal should have so held.

We disagree.  In the absence of a written contract of service (compare Gasol Conversions Ltd v Mercer [1974] ICR 420) we think that the Tribunal was entitled to apply the canons of construction to be found in Carmichael v National Power [2000] IRLR 43.  In that case the House of Lords held that an Employment Tribunal is entitled to take into account evidence of subsequent conduct, inadmissible to construe a written contract, to discern the intentions of the parties.

We think it highly significant, as Mr O’Rourke points out, that in December 1996 the Applicant gave notice of termination of the contract and left the Respondent.  Such action is wholly inconsistent with a fixed-term contract not terminable on notice.   In these circumstances we are satisfied that the Tribunal was entitled to conclude that this was not a fixed-term contract but a contract terminable on notice by either party.

(2)	The Polkey point

The Polkey deduction, reflecting the chance that a fair procedure would have resulted in the employee’s dismissal, is necessarily speculative and an imprecise science.

It was for the respondent to decide how many staff were to go and then to devise a proper selection procedure following adequate consultation.

Put shortly, we are satisfied that the Tribunal made sufficient findings, particularly as to the 3 other members of the CNC milling section in which the Applicant worked having longer service and possessing greater skills, coupled with the disciplinary record which applied to the Applicant as opposed to the other members of that section, to render their finding of a fifty per cent chance of the Applicant being selected for redundancy in any event a permissible option.

(3)	Future loss  

The complaint here is that the Tribunal failed to give adequate reasons (see Meek v City of Birmingham District Council [1987] IRLR 250) for their finding that the Applicant would gain further employment after 4 weeks following the Tribunal hearing.

Again, the period of future loss requires the Tribunal to make a judgment which is necessarily speculative.  But it must be on the basis of some evidence.  The factual basis for the finding appears to us to be that the Applicant was then at the third stage of interview for a post with the Fire Brigade.  That strikes us as a sufficient basis for their conclusion.

13.	In summary, for the reasons given, we have concluded that this appeal does not establish any error of law in the Tribunal’s decision.  Consequently it must be dismissed.