Appeal No. EATS/0017/04

EMPLOYMENT APPEAL TRIBUNAL
52 MELVILLE STREET, EDINBURGH EH3 7HF

	At the Tribunal
	On 2 July 2004

 
Before
THE HONOURABLE LORD JOHNSTON
MISS S B AYRE
DR W M SPEIRS

 

WILLIAM PENTLAND STENHOUSE & 4 ORS	APPELLANTS

 

 
FIRST EDINBURGH LTD	RESPONDENTS

 
 
Transcript of Proceedings
 
JUDGMENT

 

 

 
 
APPEARANCES

 

 
 
For the Appellants	Mr G F Bathgate, Solicitor
Of-
Messrs Allan McDougall
Solicitors
3 Coates Crescent
EDINBURGH   EH3 7AL

 

 

 
For the Respondents

 

 

 

 

Mr S Saluja, Solicitor
Messrs Paull & Williamsons
Solicitors
Investment House
6 Union Row
ABERDEEN  AB10 1DQ

 

 

 

 

 

 

 

 

SUMMARY

REDUNDANCY
 
Enhanced redundancy scheme

 

 

 

 

 

 

 

 

 

LORD JOHNSTON:
 
1.	This is an appeal at the instance of the employees in respect of a decision of the Employment Tribunal sitting in Edinburgh, to the effect that their contracts of employment did not include a redundancy agreement, which, if relevant, would have entitled them to enhanced redundancy payments, the employees having been made redundant by the respondents on the closure of the paint shop at the respondents’ premises in Dalkeith.
 
2.	The conclusion of the Tribunal was as follows:-
 
“It remains a possibility that the terms of the Agreement were incorporated into the parties Contracts by implication.  Some evidence was given to the effect that enhanced redundancy payments had been made in the past.  However this evidence was singularly lacking in detail, and was not sufficiently specific so as to allow an inference to be drawn that the Agreement had been incorporated into any contract of employment by custom and practice   A further complication arose from the terms of the Voluntary Redundancy Scheme of 2000 (A2) and 2001 (Al) It was not clear from the evidence that any enhanced payments said to have been made had not been made under those schemes. The Tribunal would find it difficult to envisage how these schemes could interact with the provisions of the Agreement if indeed the Agreement was part of the contracts between the parties.
 
The applicant's representatives made submissions as to the notes of a meeting in Production A5, but the Tribunal does not find that this assists the applicants' argument. Nor does the terms of document A2.
 
The decision in Albion Automotive Ltd v Walker and Ors. 2002 (Unreported) does not as argued by the applicants, appear to assist. This made it clear that where there is sufficient detailed evidence of custom and practice, this may give rise to an implication that the practice has impliedly acquired contractual status.
 
The applicants' representative makes, in his submissions, a number of points relating to what he says is bad employment practice by the respondents. The Tribunal cannot take these matters into consideration, these being applications solely based upon breach of contract.
 
The applicants' representative cites the case of Polkey, which the Tribunal agrees is not relevant to these applications. He also refers to Section 59(1)(b) of the Employment Protection Consolidation Act. As pointed out by the respondents' representative this was repealed in 1995, and has no relevance to these applications.
 
The Tribunal unanimously finds that the terms of the Agreement (R25) were not incorporated into the applicants' contracts of employment, that the respondents are not in breach of their contacts with the applicants, and therefore dismisses the applications.”

3.	We were referred by the parties to the following authorities:-
 
Alexander v Standard Telephones & Cables Ltd (No.2) [1991] IRLR 286.
 
Quinn & Others v Calder Industrial Materials Ltd [1996] IRLR 126
 
Henry v London & General Transport Services [2002] IRLR 472.
 
Lee & Others V GEC Plessey Telecommunications [1993] 1RLR 383.
 
Secretary of State of Employment v Bearman & Others [1998] IRLR 43I.
 
Alexander Machinery v Crabtree [1974] ICR 120.
 
United Distillers v Conlon [1992] IRLR 453.
 
Duke v Reliance Systems Ltd [1982] IRLR 347
 
Quinn v Calder Industrial Materials Ltd [1996] IRLR 126
 
Yeboah v Crofton [2002] IRLR 634
 
Stewart v Cleveland Guest (Engineering) Ltd [1994] IRLR 440
 
Chiu v British Aerospace Plc [1982] IRLR 56
 
Retarded Children’s Aid Society Ltd v Day [1978] IRLR 128
 
Kearney & Trecker Marwin Ltd v Varndell and Others [1983] IRLR 335
 
Adlington and Others v British Bakeries (Northern) Ltd [1989] IRLR 218
 
Albion Automotive Ltd v Walker and Others [2002] EWCA Civ 946
 
4.	Mr Bathgate, appearing for the appellants, adhered to his grounds of appeal as enumerated as follows:-
 
“(a)	The Respondents' witness McCracken gave evidence to the effect that Clause 5 of Production A3 and R25 being a redundancy procedure agreement had been applied in the past.
 
(b)	Witness McCracken also confirmed in cross-examination to the Appellants' representative that in a previously decided Tribunal (S319/94 and S026/94) the requirement for securing volunteers in terms of the said agreement was a requirement before compulsory redundancy was imposed.
 
(c)	Evidence was given by the Appellants' witness Mr S Smart that in the previous redundancy situations he had been involved in with the Respondents as a Union representative volunteers were in the first instance sought and in particular Clause 5 of the Redundancy Procedure Agreement A3 and R25 was followed.
 
(d)	Production A2 confirms the Respondents' policy that compulsory redundancy would only become necessary when there were insufficient volunteers.
 
(e)	The Respondents' letter to the Appellants' Union representative Mr Smart dated 24th January 2001 Production A10 confirms that so far as the Respondents were concerned the mechanism for redundancies was first by volunteers and then by selection criteria.
 
(f)	No evidence contradicting the inference that Clause 5 and A3 and R25 was incorporated within individual contracts of employment was admitted.”
 
5.	In substance, Mr Bathgate’s position was the Tribunal had misdirected themselves to the point of perversity in achieving the conclusion they did, which was contrary to the evidence.  He referred us to a previous decision of an Employment Tribunal in the same context and to clear statements on behalf of the employer that the voluntary redundancy scheme had been followed in the past.
 
6.	Mr Saluja, for the respondents, responded to each of the grounds of appeal in a specific way and his general position was that the applicants had failed to discharge the burden of proving the existence of a custom and practice which was incorporated in the agreement into the contracts of employment of the individual employees by implication.  He maintained that the agreement itself was of doubtful status, being undated and said to be a draft, the copy produced was also incomplete.   He further pointed to the existence of other voluntary redundancy schemes as referred to by the Tribunal which were inconsistent with the alleged agreement in question.  He further submitted, in any event, that even if a voluntary scheme for selection was to exist or applied, it was clear the employer was not obliged to accept applications.  The fact that voluntary schemes had operated in the past was nothing to the point.  This was a compulsory redundancy situation with a closure of a department.  It was doubtful, therefore, whether the relevant clause of the agreement even applied at all since it referred to reductions, which is not the same as cessation.
 
7.	The parties were not in dispute as to the general law to be applied both to the issue of perversity and also to the question of implication of a term into a contract by custom or trade.  
 
8.	The situation is unsatisfactory inasmuch that the Tribunal have dealt with the matter in a fairly perfunctory way, and, it is clear, that the procedures adopted by the employer with regard to agreements or lack of them was unsatisfactory and this may have led to a view that the employees in question were treated badly.
 
9.	Be that as it may, it is not for us to re-interpret the evidence.  We consider, with some hesitation, that the Tribunal had properly directed themselves to the right question and had reached a conclusion with which we could not interfere, to the effect, essentially, that the evidence did not establish the necessary degree of incorporation by custom or practice.  It is well settled that such must be so clear and obvious an existing practice that in effect the parties both knew that they had to adhere to it and did not consider it necessary so to state.  Upon the evidence before the Tribunal it does not appear that the appellants got anywhere near establishing that position quite apart from the inconsistencies in the various documents produced.
 
10.	In these circumstances we consider the Tribunal, as we have indicated, reached a decision upon the evidence they were entitled to make and it is not for us to interfere with it.
 
11.	This appeal is therefore refused.