Appeal No. UKEAT/0377/09/SM

EMPLOYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 28 January 2010

Before

HIS HONOUR JUDGE REID QC (SITTING ALONE)

MR A J DEAN (APPELLANT)

LATONA LUXURY LTD (RESPONDENT)

Transcript of Proceedings

JUDGMENT

REVISED

For the Appellant
MR A KAMARA (Representative)

Free Representation Unit

For the Respondent
No appearance or representation by or on behalf of the Respondent

CONTRACT OF EMPLOYMENT: Implied term/variation/construction of term

A was employed by B. When B became insolvent C took over B's business and employed A in circumstances where there was no TUPE transfer. A later left C's employment and claimed sums allegedly underpaid. C asserted A had been employed on C's standard terms of employment (less generous than B's) and was not entitled to the sums claimed. The ET in upholding C's submission overlooked a letter sent by C to A under which he was told he would in effect be employed on the same terms as before. Appeal allowed.

1. This is an appeal against a decision of an Employment Tribunal held at Exeter on 16 January 2009, the judgment and reasons being sent to the parties on 27 February. By its judgment, the Tribunal reviewed and revoked a judgment it had given earlier on 12 September 2008. That was a judgment in default of the appearance of the Respondent employer and the reason it was reviewed and revoked was that, owing to administrative errors on the part of the employer, the employer had been under the impression that the hearing was on the same date but in a different month and therefore failed to attend. The Tribunal then went on to reconsider the claim and awarded holiday pay, an uplift of 50 per cent on it under section 31 of the Employment Act 2002 and two weeks pay pursuant to section 38 of the Employment Act 2002. It rejected the Claimant's claim for other unpaid wages.

1. The background to the case is this. The Claimant was employed on 6 August 2000 as a Night Porter at the Bishops Court Hotel by a company called Wrenwell Hotels Limited. On 23 June 2006, whilst he was still in Wrenwell Hotels' employment, a winding up petition was issued against Wrenwell Hotels. On 12 July, the assets of Wrenwell Hotels were transferred to the Respondent Latona Luxury Limited. The effect of that was not however to transfer the employment of the Claimant to Latona Luxury by virtue of the TUPE regulations because of the terms of regulation 8. That was a matter which was the subject of argument at a preliminary hearing before the Employment Judge and he so held by a decision dated 27 June 2008 following a hearing on 2 May 2008, that decision being sent to the parties on 1 July 2008.

1. The immediate precursor to the transfer of assets was a letter headed "Staff Announcement" dated 11 July 2006 sent by Mr Nixey, the Managing Director of Latona Luxury on behalf of the company and addressed, I assume, individually to each member of staff. The copy in the bundle before me is that which was addressed to the Claimant and it is in these terms:

"Dear John,

Mr and Mrs Edwards of Wrenwell Hotels Limited have decided to terminate and withdraw from the partnership with Latona Luxury Limited, from the Garden House Hotel at the Bishops Court Resort, to enable them to devote more time to their family and other business interests."

1. Given that the company was being wound up as insolvent was perhaps a fairly euphemistic way of describing what was happening but that is neither here nor there:

"Latona Luxury Limited and I will be taking over the full running and management of Bishops Court as a whole [because Latona Luxury had previously been running other parts of the overall resort]

as from Tuesday, 11 July 2006 pm [although it appears that transfer only took place the following day]

. On that day a short staff meeting will be held followed by a heads of department meeting. [and this is the important sentence]

There is total continuity with running the going concern business and therefore your wages, accrued holiday and holiday arrangements are all fully protected and will be honoured.

I look forward to successfully working together for the benefit of the business, hotel and ourselves combined."

1. Now, that letter appears to have been put before the Employment Tribunal at the preliminary hearing when the question of TUPE was argued but, for some reason, slipped out of notice at the subsequent hearing which resulted in the order which is appealed today. What happened thereafter was that Mr Dean continued in the employment of Latona Luxury Limited for almost exactly a year. He received no contract of employment, no statement of terms of employment or anything to indicate that matters were changing from the terms of his employment with Wrenwell Hotels Limited as, I think it is fair to say, the letter suggests that his employment would continue.

1. On 6 July 2007, the Claimant left his employment and asserted that he had been constructively dismissed. He made a claim in the Employment Tribunal for unfair dismissal, unpaid wages and unpaid holiday pay. The constructive dismissal claim, i.e. the unfair dismissal claim, was dismissed as a result of the holding that there had been no TUPE transfer because he did not have a full year's service under Latona Luxury. That, however, did not dispose of the remaining claims. The holiday pay claim I can dispose of very shortly. The Employment Tribunal held that there was £27 holiday pay unpaid. There was no appeal against that by the Respondent employer and that obviously stands.

1. The claim for wages was, however, dismissed. The basis upon which the wages have been claimed (and there is no dispute as to the mathematics of the claim) is that under his employment with Wrenwell Hotels and, as Mr Dean asserts, his fresh employment with Latona Luxury, he was entitled to be paid triple time for working on bank holidays. That was contested on the basis effectively that Latona was an extremely mean employer and the standard Latona terms and conditions did not provide for any payment over and above the basic rate except I think in relation to two specific bank holidays a year.

1. The Employment Tribunal held that there was in, apparently, forgetfulness of the letter of 11 July, no evidence of any contract of employment by Latona on the terms of the old Wrenwell employment. They were therefore left with nothing more than Latona's standard terms and conditions and because it was Mr Dean who was asserting the special term as to triple time for bank holidays, he failed because he could not show that there had ever been any agreement to that effect. Now, so far as that is concerned, it seems to me that the staff announcement makes it clear that there was going to be total continuity. Mr Nixey wrote:

"There is total continuity with running the going concern business and therefore your wages, accrued holiday and holiday arrangements are all fully protected and will be honoured."

1. What it does not say is, "But of course, for the future, the terms of your employment will be entirely different". I have a nasty feeling that the problem probably was that Mr Dean, who was representing himself, was not the most articulate of advocates of his own cause and simply took it as read that the Employment Judge would recollect all the bits and pieces which had been in his mind a very considerable time before. Had the Employment Judge not been oblivious of that letter, he would, it seems to me, inevitably have held that that letter was an offer of employment on the pre-existing terms which Mr Dean accepted by continuing to work. Had he come to that conclusion, it seems to me inevitable that he would have upheld the claim for unpaid wages.

1. It seems to me, therefore, that the appropriate way of disposing of that point is by discharging that part of the Decision which makes no reference to unpaid wages and by making an award of that sum of £756. That, however, is not the end of the matter because the Employment Judge went on and dealt with two further points. The first of those was whether there should be an uplift on the unpaid wages by reason of the Respondent's failure to respond to the grievance that was raised by Mr Dean. At paragraph 8 of the Decision, he said this:

"The matter does not end there. The evidence that I have is that Mr Dean wrote to the respondent querying the issue of his outstanding pay but never received any substantive or satisfactory response. The Statutory Grievance Procedure requires that an employer should invite an employee to a meeting to discuss the matter but no such invitation was issued and I am satisfied that the respondent is in breach of its obligations in this respect. S.31 Employment Act 2002 requires me to uplift any award I may make by at least 10% up to a maximum of 50%. So be it. There must be an uplift. I have considered how much that should be. I bear in mind that the figures are small but it does seem to me that all this could have been avoided, first of all, if Mr Dean had been given a statement of terms and conditions of his employment, as he should, and secondly, if the respondent had addressed the situation and met him to discuss the position and explain their stance to him. I uplift the sum of £27.00 by 50%, that is to say, a further £13.50."

1. Now that, it seems to me, is a clear finding that he regarded this as being a case where there had been a substantial dereliction of duty by the employer in simply failing to deal with the grievance. There is no appeal by the Respondent against that 50 per cent uplift and since the 50 per cent uplift applies to any sum which is awarded in this regard, it seems to me that that 50 per cent uplift pursuant to Section 31 of the Employment Act 2002 should apply equally to the unpaid wages as is applied to the unpaid holiday pay. That leaves open the final part of the judgment relating to a payment of two weeks pay pursuant to Section 38 of the Employment Act 2002. The Employment Judge dealt with that at paragraph 9 of his decision:

"In as much as I have made an award, I am required to award a further sum as a consequence of failing to provide a statement of terms and conditions of employment. S.38 Employment Act 2002 says that I shall award a figure of 2 weeks' pay or I may, if I think it just and equitable to do so, award a higher amount equal to 4 weeks' pay. I have given consideration to whether or not the appropriate award should be 2 or 4 weeks' pay. As I have indicated, all this could have been avoided if the respondent had observed its responsibilities. Much time and effort could have been avoided and I have to say that, although the amounts involved are not great, I regard this as quite a serious failing on their part and I have come very close to awarding 4 weeks' pay. On balance, however, I have decided that it would be appropriate to award 2 weeks' pay in the sum of £540."

1. Now, the Employment Judge there was operating on the basis that there had been no written communication. The problem of course from my point of view is that we now know that there had been the communication of 11 July. That communication did not, it seems to me, comply with the requirements of Section 38 of the Employment Act 2002. I have considered, however, whether it should be said that, given that the letter in effect referred back to the pre existing contract of employment which had been given to Mr Dean by Wrenwell Hotels, it could be said that there were exceptional circumstances so that the two weeks award should not be made.

1. It seems to me that I should not go down that route, firstly, because there is no appeal by the Respondent against that part of a decision and, secondly, because it does not seem to me that, even if there were, it could properly be said that there were exceptional circumstances in this case given that far from saying that it "... might look at the letter and this is a technical default", Latona Luxury saw fit to, so to speak, seek to bury the letter and rely on its own terms and conditions which it had never made available to the employee. In those circumstances, therefore, it seems to me that I should leave undisturbed the Employment Judge's holding that it was appropriate to award two weeks' pay in the sum of £540.

1. The result of that, therefore, is that the appeal will be allowed to the extent that I will make an award of £756 in respect of unpaid wages, £27 in relation to holiday pay (which is simply affirming what the Employment Judge did) an uplift of 50 per cent on those two figures so that the total uplift will then be I think £391.50 (subject to anyone correcting my mathematics). In addition, I will leave undisturbed the award by the Employment Judge of two weeks' pay pursuant to Section 38 of the Employment Act 2002. It follows, therefore, that the total judgment is £1,714.50.