De La Haye v Air Mauritius Ltd
| Jurisdiction | UK Non-devolved |
| Judge | Lord Hughes |
| Judgment Date | 21 May 2018 |
| Neutral Citation | [2018] UKPC 14 |
| Court | Privy Council |
| Docket Number | Privy Council Appeal No 0088 of 2016 |
| Date | 21 May 2018 |
[2018] UKPC 14
Privy Council
Easter Term
From the Supreme Court of Mauritius
Lord Wilson
Lord Reed
Lord Hughes
Lady Black
Lord Lloyd-Jones
Privy Council Appeal No 0088 of 2016
Appellant
Jean Claude Bibi
Juliya Arbisman
Abdullah Yusuf Ali Bauluck
Sheren Govinden
(Instructed by Jean-Marie Leclézio)
Respondent
Gilbert Ithier SC
(Instructed by Axiom Stone)
Heard on 26 April 2018
In these proceedings Mr De La Haye (“the plaintiff”) claims severance pay under the Employment Rights Act 2008 (as amended) following the ending of his employment as a pilot by Air Mauritius Ltd (“the defendant”).
The plaintiff was employed under a series of separate four-year contracts. The first ran from 8 December 1997 to 7 December 2001. The second commenced the day after the expiry of the first and ran from 8 December 2001 to 7 December 2005. Likewise, the third commenced immediately on the expiry of the second and was due to run from 8 December 2005 to 7 December 2009. However, this third contract was, in Summer 2006, displaced by mutual consent by a fourth contract dated 16 June 2006; this fourth and last contract of employment was to run from 13 July 2006 to 12 July 2010. Nothing turns on the reasons for this substitution of the fourth contract for the third, which seem to have been connected with a change of model of aeroplane which he was employed to fly.
One of the reasons why the plaintiff was employed under successive fixed term contracts appears to have been that as an expatriate his work permit ran only for four years at a time. The defendant's evidence was that another reason was that demand for air services fluctuated a good deal with global and local conditions.
Each of these fixed term contracts contained similar terms. One of them was for termination by either side on notice to the other. The critical clause for present purposes is clause 10(A) of the last (fourth) contract. So far as material it read:
“Subject to … [provisions not relevant to the present litigation], this Agreement shall be subject to termination:
either (i) on the day which is four years from the beginning of the period as defined in clause 2; [that would have been 12 July 2010]
or (ii) by six months' notice in writing given by either party at any time during the duration of the Agreement;
or (iii) … [provision for four weeks' notice by either side in the event of unremedied breach by the other.]”
On 27 February 2009, when the fourth contract had about 17 months to run, the defendant served written notice of termination on the plaintiff. The relevant parts of its letter to him read:
“Dear Mr De La Haye,
In the face of the economic crisis that is growing in intensity, losses incurred and expected with the fuel hedging and the financial situation of the Company which is exacerbated by a substantial drop in traffic, the Company's operations for year 2009–2010 has been significantly reduced.
As a consequence, the Company has no other choice than to review its manpower requirements.
In this respect, we regret to inform you of Management's decision to terminate your contract effective 31 August 2009. Pursuant to clause 10A(ii) of your contract dated 16 June 2006 and bearing reference C16F06YP03, this letter serves as a six months' notice for the termination of your contract.
…”
The plaintiff's claim was principally for severance pay under section 46 of the Employment Rights Act 2008 (“the Act”). If he was entitled to such severance pay, it fell to be calculated by reference to his remuneration according to the formula contained in that section. In addition to his salary he enjoyed several potentially valuable allowances, benefits and privileges. There was some dispute between the parties as to which of these would count towards his remuneration for the purpose of the formula, and what if any credit needed to be given for gratuities paid under the successive contracts, but the Board is concerned only with the question whether he qualified for severance pay at all.
Entitlement to severance pay is dealt with in section 46 of the Act. The terms here set out by the Board are those which prevailed at the time that the plaintiff's contract came to an end (ie on 31 August 2009). So far as material section 46 then provided as follows:
“46. Payment of severance allowance
(1) Where a worker has been in continuous employment for a period of not less than 12 months with an employer and the employer terminates his agreement, the employer shall pay severance allowance to the worker as specified in subsection (5).
…
(5) Where a worker has been in continuous employment for a period of not less than 12 months with an employer, the court may, where it finds that —
(a) the termination of agreement of the worker was due to the reasons specified under section 36(3) and (4);
(b) the termination of agreement of the worker was in contravention of section 38(1), (2), (3) and (4);
(c) the reasons related to the worker's alleged misconduct or poor performance under section (38)(2) and (3) do not constitute valid reasons for the termination of employment of the worker;
(d) the grounds for the termination of agreement of a worker for economic, technological, structural or similar nature affecting the enterprise, do not constitute valid reasons;
(e) notwithstanding paragraphs (a), (b), (c) and (d), the termination of agreement of the worker was unjustified,
order that the worker be paid severance allowance as follows —
(i) for every period of 12 months continuous employment a sum equivalent to three months remuneration; and
(ii) for every period of less than 12 months, a sum equal to one twelfth of the sum calculated under subparagraph (i) multiplied by the number of months during which the worker has been in continuous employment of the employer.”
Subparagraph (e) had been added to section 46(5) by amendment made by the Finance (Miscellaneous Provisions) Act No 14 of 2009, with effect from 1 July 2009, thus before the end of the plaintiff's employment. It should be recorded that since then there have been further amendments, not to subsection 46(5) but to the initial qualifications under subsection 46(1), and to provide for exceptions to the entitlement to severance allowance.
The references in subsection 46(5)(a) to section 36(3) and (4) are to circumstances in which a worker may treat the employer's actions as amounting to termination. The references in section 46(5)(b) to section 38(1) to (4) are to prohibitions on termination for various reasons such as race or other protected characteristics, or protected activity, and to the circumstances in which termination for misconduct or poor performance is permitted.
It will be noted that the concept of continuous employment is relevant both under section 46(1), which requires a minimum of 12 months such service before severance allowance arises at all, and also under section 46(5), where the length of such service determines the amount of the allowance. “Continuous employment” is given a specific definition for the purposes of the Act in section 2, which provided then, as it still does:
“‘continuous employment’ means the employment of a worker under an agreement or under more than one agreement where the interval between an agreement and the next does not exceed 28 days.”
It follows that in the present case, on the law as it stood in August 2009, there were three conditions, all of which had to be satisfied, for entitlement to severance allowance:
(i) there had to be a termination by the employer;
(ii) there had to be the necessary period of continuous employment; and
(iii) the termination had to fall within one or more of subparagraphs 46(5)(a) to (e).
In the Industrial Court the magistrate heard evidence on each side as to the economic reasons which the defendant contended justified it in giving notice to the plaintiff, and which had been foreshadowed in the letter of notice. There was a good deal of evidence concerning the impact on the defendant airline of the global financial crash in 2008–09, not only via reduced demand for its services but also because of the effect on hedging fuel contracts which it had made, which had run into considerable losses. The evidence was that overall the losses were of the order of €84.3m or almost 4 billion rupees by 31 March 2009. There was evidence that a series of cost-saving measures had been adopted before there was any question of terminating the contracts of any pilot. They had included asking employees to take unpaid leave of up to two years, or to switch to part-time work, and the granting of unpaid leave to pilots. Recruitment had been put on hold. The evidence also showed that the cost to the defendant of an expatriate pilot, such as the plaintiff, was a good deal greater than that of a...
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