Chapman v Goonvean and Rostowrack China Clay Company Ltd
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE BUCKLEY |
| Judgment Date | 16 April 1973 |
| Neutral Citation | [1973] EWCA Civ J0416-3 |
| Judgment citation (vLex) | [1973] EWCA Civ J0416-1 |
| Date | 16 April 1973 |
| Court | Court of Appeal (Civil Division) |
In the Matter of the Redundancy Payments Act 1965 and
In the Matter of the Industrial Relations Act 1971
[1973] EWCA Civ J0416-1
The Master of the Rolls (Lord Denning)
Lord Justice Buckley and
Lord Justice Orr.
In The Supreme Court of Judicature
Court of Appeal
Appeal from Judgment of the National Industrial Relations Court on 9th November 1972.
Mr. PETER PAIN, Q.C., and Mr. JAMES MITCHELL (instructed by Messrs. Pattinson & Brewer) appeared on behalf of the Appellants.
Mr. ALEXANDER IRVINE and Mr. ELDRED TABACHNIK (instructed by Messrs. Stephens and Scown of St. Austell, Cornwall) appeared on behalf of the Respondents.
The china clay industry has been very active in Cornwall in recent years. So much so that a firm at St. Stephen in the South has drawn men from Port Isaac in the North. That is thirty miles away along the narrow winding roads of those parts. There is no public transport. So the firm provided a bus to take the men to and from she works. This was imported as a term in their contract of employment. So they were entitled by contract to free transport to work. The Tribunal so found.
In March 1972, there were ten men regularly travelling by the bus from Port Isaac to St. Stephen and back. Then there was a trade recession in the china clay industry. The firm decided to dismiss twelve out of their 220 men. Mine were selected because they were over age and due for retirement. That left three to be made redundant. The firm selected the three with the shortest service. All three happened to be men from Port Isaac. Those three got redundancy payments. But the dismissal of those three had an unfortunate result on the bus service. It cost the firm £20 a week. That expense was justified when the bus carried ten men to and fro, but it was not economic for seven men. So the firm decided to cut off the bus service and leave the seven men to find their own way to work. The firm told these seven that work was still available for them if they were prepared to make their own arrangements to get to work. But none of them could make such arrangements. Only two had cars, and those were old and unsuitable and the insurers refused to give passenger cover. So those seven told the firm that they could not get to work and would have to give up. The firm were reluctant to lose them as they were good men, but they could not see their way to pay the expense of the bus. So the seven men left and the firm replaced them by seven other men who lived ator near St, Stephen.
The seven Port Isaac men then claimed that they had been dismissed for redundancy. 'They claimed redundancy payments. The Industrial Tribunal rejected the claim. Their decision was affirmed by the Industrial Court. The men appeal to this Court.
There is no doubt that the seven men were "dismissed" by the employer. The employer's conduct (in withdrawing the bus in breach of the contract) amounted to a repudiation which entitled the men to terminate their contract - see section 3(1)(c) of the 1965 Act.
Although the seven men were "dismissed", the question is whether they were dismissed "by reason of redundancy". This depends on section 1(2) of the Act which, so far as material, says that:
"…..an employer who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is attributable wholly or mainly to…..
(b) the fact that the requirements of that business for employees to carry out work of a particular kind, or for employees to carry out work of a particular kind in the place where he was so employed, have ceased or diminished or are expected to cease or diminish".
Taking those words as they stand, this case is not one of dismissal for redundancy. The requirements of the business - for the work of these seven men - continued just the same as before. After they stopped work, the firm had to take on seven other men to replace them and to do the work that they had been doing. The requirements for work of that kind in that place had not ceased or diminished, nor were they expected to do so. So it would seem that the case does not come within the statute.
But the men say that the words of the section cannot be taken asthey stand. They point out that the employers sought to alter the terms of the contract of employment to the disadvantage of the men. They took away the free transport and left the men to pay their own travelling expenses. This free transport cost the firm £2 a week for each man (£20 for 10 men, £2 for each man). It would cost the men much about the same. So it would mean that the men would take home £2 a week less. If the employers sought to reduce wages by that sum - and the men refused to accept the reduction - would not it be a dismissal for redundancy? do say the men.
There are two cases in the Divisional Court which support the men's case. The first is Dutton v. Bailey (1968) I.T.R. 355. Dutton had been employed for nearly twenty years as a boiler maker. In 1967 the employers considered that there were too many restrictive practices and tried to get the Employees' Society to agree to do away with them. The Employees' Society refused. Thereupon the employers told the men that, if they wished to continue to work, they would have to agree to new working rules and conditions. Dutton refused to agree. So did all the other boiler makers. In consequence, the employers told him that his labour was not required. The Industrial Tribunal held that he was not dismissed by reason of redundancy. They said: "We find that the reason for the employers' termination of the old contract is that they wished - wisely or unwisely - to impose or attempt to impose new terms upon their work force. It was not because of any existing or expected reduction in the need for boiler makers".
The Divisional Court reversed the Tribunal. Lord Parker, Chief Justice, said that: "the proper approach is to say what in all the circumstances would have" happened if these men had been retained on the old terms".
In Line v. White (1969) I.T.R. 336 two men were employed in a joinery shop at time rates. The employers were dissatisfied with the work being turned out on that basis and offered the men piece rates instead. The men refused to accept it and were dismissed. The Industrial Tribunal found that the men were dismissed because they would not accept the new terms. It was not because there was any falling off in work. So the Tribunal rejected the claim for redundancy payment. The Divisional Court reversed the Tribunal. They held that the case was governed by Dutton v. Bailey.
If those two cases wore correctly decided, they do show that if an employer seeks to alter the terms and conditions of employment to the disadvantage of the men: and the men do not accept it: they can treat themselves as dismissed for redundancy.
The Industrial Court held, however, that those two cases were wrongly decided. They declined to follow them. The question for us is whether those two cases were right or wrong.
Mr. Peter Pain, Q.C. sought to uphold the decisions in those two cases. Me submitted that section 1(2) (b) of the 4ct is to be read with section 2, sub-paragraphs (3) and (4), and other sections of the Act. So read, he says that section 1(2)(b) is to be read as if it included the words: "on the existing terms and conditions of employment" at an appropriate place.
During the argument I was much attracted by this submission, but, on further consideration, I do not think it is right. I will take section 2 sub-paragraphs (3) and (4) on which Mr. Pain principally relied. Those sub-paragraphs are intended to cover cases where a man has been given notice by reason of redundancy but afterwards, before he actually leaves, the employer makes a new offer to him. Thus section 2(3) is apt to cover a case where,owing to lack of orders, an employer gives notice to a number of his men. But afterwards, before they leave his employ, more orders come in and the employer changes his mind. He offers the men, or some of them, to renew their contract or to re-employ them on the same work at the same place on the same terms. If the employee unreasonably refuses the offer, it is a bar to redundancy payment.
Section 2(4) is apt to cover similar cases, but the employer does not offer the employee the same, but different. He offers him other work which may differ in kind and place and on different terms. If the work is suitable for him and he unreasonably refuses it, it is a bar to redundancy payment to construed, Section 2(3) and 2(4) do not affect section 1(2)(b). They only apply after a man has been dismissed for redundancy: whereas section 1(2) applies at the time when he is dismissed. It defines the cases in which a man is to be taken to be dismissed for redundancy.
I come back, therefore, to section 1(2)(b): and I am afraid that I cannot read into it the words "on the existing terms and conditions of employment". I think the two cases were wrongly decided. I have loss hesitation in overruling them because I notice that Lord Parker himself decided as he did with reluctance: and I can see why. It is very desirable, in the interests of efficiency, that employers should be able to propose changes in the terms of a man's employment for such reasons as these: so as to get rid of restrictive practices: or to induce higher output by piece work: or to cease to provide free transport at an excessive cost. Taken an instance very like the present case. The employers are able to obtain all the labour they need from places near their works without paying travelling expenses. So, as vacancies occur, they replace them locally and...
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