The claimant was dismissed with 1 month’s notice, although there was no contractual notice period set down in her contract of employment, but was unable to work during the notice period. Her statutory notice period was 2 weeks. She was found to have been unfairly and wrongfully dismissed and was awarded sums to cover both claims. The unfair dismissal remedy was not appealed but the wrongful dismissal award, which was calculated at 4 weeks pay, was. The ET looked at s86 – 91 of the ERA 1996 and concluded that s88, which states that an employee who is incapable of work through ill health during her notice period is entitled to receive her normal pay, applied and that she was entitled to receive her normal pay during those 4 weeks. The respondent appealed.

The EAT allowed the appeal and reduced the number of weeks for which the respondent was liable to 2 weeks. They rejected the argument that s87(4) applied so as to disapply s88 because there was no express contractual notice period. However, they agreed with the second argument, that the liability under section 88 extended only to the period of notice required by section 86(1), and that was a period of two weeks only.  s88 applies “as respects the liability of the employer for the period of notice required by section 86(1)”.

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Appeal No. UKEAT/0391/12/RN

EMPLOYMENT APPEAL TRIBUNAL

FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX

At the Tribunal

On 7 March 2013

Before

HIS HONOUR JEFFREY BURKE QC, MS P TATLOW, MR S YEBOAH

MILSON (APPELLANT)

HOPE (DEBARRED) (RESPONDENT)

Transcript of Proceedings

JUDGMENT

For the Appellant
MR RICHARD REES (Representative)

Peninsula Business Services Ltd
The Peninsula
2 Cheetham Hill Road
Manchester
M4 4FB

For the Respondent
Debarred

CONTRACT OF EMPLOYMENT – Damages for breach of contract

The Tribunal awarded to the unfairly dismissed Claimant compensation for failure to pay any money to her during a 4 week notice period. The award was made under sections 86 to 88 of the ERA 1996. However the statutory minimum period of notice under section 86 was only 2 weeks. The appeal was allowed to the extent that 2 weeks pay was substituted for 4 weeks pay. **

HIS HONOUR JEFFREY BURKE QC

1. This is an appeal by the Respondent before the Employment Tribunal, Miss Milson, against an award of £1,010 for breach of contract made to the Claimant, Miss Hope, by the Employment Tribunal sitting at Leeds, presided over by Employment Judge Forrest and set out in the Employment Tribunal's judgment sent to the parties on 1 May 2012. Miss Milson has been represented before us today by Mr Rees of Peninsula Business Services Limited; Miss Hope did not respond to the Notice of Appeal or file an answer and was debarred from taking part in the appeal by order of the Employment Appeal Tribunal dated 13 September 2012.

1. The facts can, for present purposes, be very briefly set out. Miss Milson suffers from ill health as a result of which she needed a companion and domestic help for the purpose of independent living. From October 2007 Miss Hope was employed by Miss Milson to provide that help at the house which Miss Milson shared with her partner. It seems from the Tribunal's findings of fact that, in practice, Miss Milson did not require a great deal of physical help; but no doubt she valued the companionship that Miss Hope provided, and she and Miss Hope became friends.

1. Unhappily, over a couple of days in August 2010, their relationship fell apart. Miss Milson believed that she had been neglected by Miss Hope during that period, decided to dismiss her, and did dismiss her, giving her one month's notice. She told the Tribunal that she had been advised that she could dismiss Miss Hope summarily but that, because of Miss Hope's long service and their friendship, she had decided to give her one month's notice, and she confirmed that in a letter a few days later.

1. The Tribunal concluded that Miss Hope had been unfairly dismissed. It is not necessary to consider their reasons for that conclusion beyond recording that they found that there were no reasonable grounds for the allegation of neglect. The Tribunal awarded Miss Hope a basic award of £700 and a compensatory award of £3,210. There is no appeal against any of those awards or of the finding of unfair dismissal, and we are told by Mr Rees that those sums have been paid.

1. The appeal is brought solely against the award to the Claimant of the sum of £1,010, described by the Tribunal as damages for breach of contract, that breach consisting of failure to pay to the Claimant any monies during the notice period. The figure of £1,010 was arrived at by taking £1,680 as the gross sum payable for the four weeks of that notice period and deducting appropriate sums from it in respect of statutory sick pay that Miss Hope had received during that period and for tax and National Insurance. The Employment Tribunal described this award in unsurprisingly brief terms in paragraph 35, in which they said this:

"Lastly, we considered the claim for breach of contract. Under Section 88 of the Employment Rights Act an employee who is incapable of work through ill health during her notice period is entitled to receive her normal pay."

1. The Tribunal then went on to make the calculations which we have just set out.

1. Mr Rees, on behalf of Miss Milson, in his Notice of Appeal and skeleton argument put forward two grounds in support of his appeal against that award. Taking them in the order in which they appear in the Notice of Appeal, the first is that the Employment Tribunal should have taken as their starting point, if they had properly applied the provisions of sections 86 88 of the Employment Rights Act 1996, only a two week period, not a four week period, and should have come, by the same process of calculation, to an award of £484. The second point taken in the Notice of Appeal is that sections 86 88 did not apply at all, because there was an implied contractual notice term of one month and the effect of section 87(4) of the 1996 Act was that the minimum notice provision in those sections did not apply.

1. We need to set out the relevant provisions of Part IX of the 1996 Act:

"86(1) The notice required to be given by an employer to terminate the contract of employment of a person who has been continuously employed for one month or more—

(a) is not less than one week's notice if his period of continuous employment is less than two years,

(b) is not less than one week's notice for each year of continuous employment if his period of continuous employment is two years or more but less than twelve years, and

(c) is not less than twelve weeks' notice if his period of continuous employment is twelve years or more. […]

87(1) If an employer gives notice to terminate the contract of employment of a person who has been continuously employed for one month or more, the provisions of sections 88 to 91 have effect as respects the liability of the employer for the period of notice required by section 86(1). […]

(3) In sections 88 to 91 "period of notice" means—

(a) where notice is given by an employer, the period of notice required by section 86(1), and

(b) where notice is given by an employee, the period of notice required by section 86(2).

(4) This section does not apply in relation to a notice given by the employer or the employee if the notice to be given by the employer to terminate the contract must be at least one week more than the notice required by section 86(1).

88(1) If an employee has normal working hours under the contract of employment in force during the period of notice and during any part of those normal working hours—

(a) the employee is ready and willing to work but no work is provided for him by his employer,

(b) the employee is incapable of work because of sickness or injury,**

(c)the employee is absent from work wholly or partly because of pregnancy or childbirth [F1 or on [F2adoption leave, [F3ordinary or additional paternity leave] or paternity leave]], or

(d) the employee is absent from work in accordance with the terms of his employment relating to holidays,

the employer is liable to pay the employee for the part of normal working hours covered by any of paragraphs (a), (b), (c) and (d) a sum not less than the amount of remuneration for that part of normal working hours calculated at the average hourly rate of remuneration produced by dividing a week's pay by the number of normal working hours.

(2) Any payments made to the employee by his employer in respect of the relevant part of the period of notice (whether by way of sick pay, statutory sick pay, maternity pay, statutory maternity pay, [F4paternity pay, [F5ordinary statutory paternity pay, additional statutory paternity pay], adoption pay, statutory adoption pay,]F4 holiday pay or otherwise) go towards meeting the employer's liability under this section."

1. In his skeleton argument Mr Rees, for sound, logical reasons, took what we can describe as his four week argument first and his two week argument second; and we will deal with them in that order. His starting point is that, in a contract of employment which is not subject to a fixed term or to an express term as to what notice the employer is bound to provide, there is implied by law a provision that the contract is terminable by reasonable notice. He supported that proposition by reference to authority, but the proposition is elementary and uncontroversial; and we do not need to refer to authority in order to provide support for it. From that start, Mr Rees argues that in this case there was an implied term that the period of a month or four weeks (which amount to the same thing), agreed by the parties represented the appropriate period of reasonable notice to be implied into the contract, therefore the contractual notice period was one of four weeks; but the minimum period of notice required by section 86, having regard to the length of the employment, was, pursuant to section 86(1)(b), two weeks and not four weeks. Therefore, the argument goes, section 87(4) applies, and section 88 does not apply and could not be used by the Tribunal in order to award compensation during the notice period when during that period, it seems from the evidence before the Tribunal, Miss Hope was actually ill and unable to work.

1. A similar situation arose in Scotts Co (UK) Ltd v Budd [2003] IRLR 145, a decision of the Employment Appeal Tribunal over which I presided ten years ago. Mr Budd was dismissed after he had been off work through ill-health for over two years. His contractual rights to sick pay were exhausted. He was given 13 weeks' notice, pursuant to an express rather than an implied contractual provision, but was not paid during that period. The Employment Tribunal awarded him pay in respect of that period under sections 86 88, but that award was set aside by the Employment Appeal Tribunal, whose judgment expressed unresolved puzzlement as to the potentially curious effects of sections 86 88 and in particular section 87(4); but there was no doubt that, in a case to which sections 86 88 applied, section 87(4) had the effect that, if the contractual notice period exceeded the statutory minimum period by one week or more, section 87(1) and all that flows from it does not apply and there can be no award under section 88. Mr Budd was contractually entitled to 13 weeks' notice, but under section 86 his statutory minimum notice period was only 12 weeks. He was not therefore entitled to pay in respect of his notice period under statute; and he was not entitled to any pay in respect of that period at common law because he was unable to work as a result of sickness and his right to sick pay had been exhausted. Thus his claim for notice pay should have been rejected.

1. There is, however, a difficulty that confronts Mr Rees when seeking to apply the approach of the Employment Appeal Tribunal in Budd to the present case. It is that, in the present case, there is no finding by the Employment Tribunal as to the contractual period of notice applicable to the contract of employment between Miss Milson and Miss Hope, either expressly or by implication. There is no suggestion in the Tribunal's judgement that there was a written contract of employment or even a statement of its terms and conditions – and we suspect that there was no such document; nor is there any suggestion of any oral agreement between Miss Milson and Miss Hope as to the notice period. It is therefore highly unlikely that there was any express term. The Employment Tribunal did not make and did not seek to make any finding as to that or as to any implied term. They did not need to, because it was not in dispute that Miss Milson had in fact given Miss Hope one month's notice, whatever was the contractual period, either express or implied. There was no claim that Miss Hope was contractually entitled to longer. There are therefore no findings as to what the contractual notice period was, either expressly, if there was any express provision as to that, or by implication; and Mr Rees accepts and agrees that we cannot, as an appellate Tribunal make our own finding as to what either the express or the implied term as to notice was in the contract between Miss Hope and Miss Milson. Mr Rees floated the possibility that we might need to remit this case to the Tribunal for that to be ascertained but very quickly withdrew that suggestion because the amounts involved in this case, as he appreciates, would hardly justify it. Therefore accepting, sensibly and helpfully, the analysis that we have just put forward, he did not seek to press further that first ground of appeal.

1. However, Mr Rees' second ground of appeal is more firmly based. There is no doubt that the dismissal of Miss Hope fell within section 87(1). Miss Hope was dismissed after she had been continuously employed for more than one month; therefore the provisions of sections 88 91 applied and, for the reasons we have explained, were not disapplied by section 87(4). The provisions of sections 88 applied "as respects the liability of the employer for the period of notice required by section 86(1)". That period was, however, one of only two weeks and not four weeks; thus section 88(1) required Miss Milson to pay notice pay during the statutory minimum period of two weeks even if Miss Hope was incapable of working during that period because of sickness subject only, pursuant to section 88(3), to a deduction for sick pay or statutory sick pay. In our judgment, the Tribunal erred in concluding that Miss Milson was liable under section 88 to pay the full period of four weeks' notice during which Miss Hope was unable to work through sickness. The liability under section 88 extended only to the period of notice required by section 86(1), and that was a period of two weeks only. Thus the appeal needs to be allowed in so far as the Tribunal calculated the notice pay due to Miss Hope under section 88 as consisting of four weeks' pay subject to the deduction of statutory sick pay as opposed to two weeks pay.

1. If we allow the appeal in part, for the reasons we have explained, what about the remaining two weeks of the notice period, during which the Claimant was still employed but in respect of which she has received no pay? The Tribunal did not approach that question, because, on their erroneous application of section 88, it did not arise. In these circumstances, we have considered whether we should remit the case to the Tribunal for them to determine what, if anything, is due to Miss Hope in respect of that two week period; but we have decided that we should not do so. The Tribunal found that Miss Hope was absent from work through ill health for most of the four week period and received statutory sick pay for all four weeks. There was plainly no contractual provision for sick pay; if there had been, the Tribunal would have referred to it. So, Miss Hope would not have been entitled to payment during the four week period, or at least most of it. She has not sought to resist this appeal or to contend that, in relation to the two week period to which we have just referred, there should be a remission; the amounts involved are very small; and the prospects of Miss Hope showing that she was entitled to any money at all in respect of those two remaining weeks are so small that we do not regard it as proportionate in any reasonable sense to remit the question to which we have just been referring to the Tribunal.

1. Accordingly, our order is that the appeal is allowed; the sum of £1,010 awarded as compensation for breach of contract cannot stand; for that sum will be substituted the correct sum which has been calculated – correctly, in so far as we can see – by Mr Rees as £484. That sum has not been paid, and Mr Rees accepts that interest will be payable on it and has assured us that that sum, together with appropriate interest, will now be paid to Miss Hope.