Lassman and Others v Secretary of State for Trade and Industry
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BELDAM,Lord Justice Chadwick,Lord Justice Robert Walker |
| Judgment Date | 19 April 2000 |
| Judgment citation (vLex) | [2000] EWCA Civ J0419-26 |
| Court | Court of Appeal (Civil Division) |
| Date | 19 April 2000 |
| Docket Number | Case No: EATRF 99/0285/A1 |
[2000] EWCA Civ J0419-26
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Justice Beldam
Lord Justice Chadwick and
Lord Justice Robert Walker
Case No: EATRF 99/0285/A1
Mr Bruce Carr (instructed by the Treasury Solicitor) for the Appellant
Miss Dinah Rose as Amicus Curiae
The Secretary of State appeals from the decision of the Employment Appeal Tribunal on 27th November 1998 allowing appeals by Mr Lassman and ten other former employees of the respondent company, Pan Graphics Industries Ltd. (in receivership) ("Pan Graphics"), who had sought redundancy payments from the Secretary of State on the insolvency of their employer.
The appeal calls in question the validity of a decision made in 1988 by the Secretary of State to make redundancy payments to Mr Lassman and the other respondents who became redundant when their then employer, Rotaprint plc ("Rotaprint"), went into receivership.
In 1988 the respondents had been employed by Rotaprint plc for periods varying between five and twenty-five years when the company experienced financial difficulties. By March 1988 a receiver had been appointed and on 4th March 150 of the workforce of 400 employees were dismissed on grounds of redundancy. The receiver was anxious to realise the value left in the business and on 29th March Rotaprint entered into an agreement with Pan Graphics Industries Ltd. ("Pan Graphics") under its then name of Tiltcode Ltd., giving it an option to buy the business of Rotaprint as a going concern when the remainder of the workforce, including Mr Lassman and his fellow employees, had been dismissed on grounds of redundancy.
On Maundy Thursday, 31st March 1988, notice of redundancy was given to the remaining employees who were asked to report for work after the Easter weekend. On 5th April they did so and were then employed by Pan Graphics on the same terms and conditions as they had been employed by Rotaprint doing the same work.
Rotaprint was insolvent and unable to meet its liabilities or to make the statutory redundancy payments under section 81 of the Employment Protection (Consolidation) Act 1978, (now section 135 of the Employment Rights Act 1996). Accordingly the respondents applied to the Secretary of State for payment under Section 106 of the 1978 Act (now section 166 of the 1996 Act).
In June 1988 the Secretary of State paid the respondents a sum calculated in accordance with Schedule 7 of the 1978 Act representing redundancy payments for the periods of their employment up to 31st March 1988. The respondents continued to be employed by Pan Graphics until 1995 when that company also went into receivership and became insolvent. The respondents applied once more to the Secretary of State for redundancy payments and, acting under section 106, the Secretary of State made payments to the respondents of sums calculated in accordance with Schedule 7 but on the basis that in each case the period of service began on 5th April 1988, the date on which they became employed by Pan Graphics.
The respondents appealed to the Industrial Tribunal. They submitted that the Secretary of State should have calculated the payments from the dates on which they first entered the service of Rotaprint on the ground that the transfer of the business of Rotaprint to Pan Graphics did not break the continuity of their service. They relied on the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE) as having preserved their employment and, instead of the seven years service with Pan Graphics, the Secretary of State should have made payments calculated on the basis of continuous service for periods between eleven and twenty years.
Treating the respondents' service with Rotaprint and Pan Graphics as being interrupted by the transfer of Rotaprint's business to Pan Graphics can have an adverse effect on the total redundancy award. This can be illustrated by taking the case of Mr Lassman, the first respondent. He is now 67 years of age. He was 62 in 1995. He joined Rotaprint on 16th August 1979 and on his redundancy on 31st March 1988 received a payment of £1,968. On the insolvency of Pan Graphics in 1995 he received a further payment of £2,152.50. The two payments together total £4,120.50. If his service with Rotaprint was deemed to have continued with Pan Graphics, he would in 1995 have been paid £5,040, a figure based on sixteen years service. Thus the separation of the two periods of employment in his case resulted in his receiving £919.50 less than he would have been paid had his service been regarded as continuous. However this is not the effect in every case.
Before the Industrial Tribunal the Secretary of State conceded that there was a relevant transfer from Rotaprint to Pan Graphics within the meaning of the Transfer of Undertakings Regulations (TUPE). However the Secretary of State argued that there had been an interruption between the termination of their employment with Rotaprint on grounds of redundancy and their re-employment by Pan Graphics.
The Secretary of State further argued that the continuity of the period of employment was broken by reason of the terms of paragraph 12 of Schedule 13 of the 1978 Act (now section 214 of the 1996 Act). As it is accepted that the relevant provisions of section 214 of the 1996 Act are in all relevant respects identical in effect to the provisions of paragraph 12 of Schedule 13 of the 1978 Act, the Industrial Tribunal considered the position under the later Act which was effective at the date of its decision on 13th March 1997. The Tribunal concluded that as the Secretary of State had paid a sum to the employees in respect of a redundancy payment under section 167, it operated to break the continuity of employment and accordingly the respondents were not entitled to any payment beyond the payments made by the Secretary of State.
The respondents appealed to the Employment Appeal Tribunal which on 27th November 1998 allowed their appeals. The Employment Appeal Tribunal said it was an absolute prerequisite of entitlement to a statutory redundancy payment that the employee had been dismissed by reason of redundancy. Section 214(2) plainly envisaged that a redundancy payment had to be made in respect of a dismissal and the payment made by the Secretary of State in 1988 was not made in respect of dismissal because the respondents' employments continued by reason of the transfer of Rotaprint's undertaking to Pan Graphics. Accordingly there had been no renewal or re-engagement under a new contract of employment. Thus section 214(2) did not operate on the facts of the case to break the continuity of the employment which was to be taken as commencing with the respondents' employment with Rotaprint.
Mr Bruce Carr presented the Secretary of State's case on appeal. The case for the respondents was put by Miss Dinah Rose acting as Amicus. We are grateful to both counsel for the clarity of their arguments.
At the end of argument the question for the court seemed to me to depend on whether the payment made by the Secretary of State to the respondents in 1988 was a valid payment in the sense that it was a payment which under the relevant legislation the Secretary of State was empowered to make.
Again it is convenient to cite the statutory provisions as they now appear in the Act of 1996.
The Argument for the Appellant.
Mr Carr submitted that the EAT were wrong to hold that there had been no dismissal when Pan Graphics acquired the business of Rotaprint. He pointed to an inconsistent passage in the Tribunal's extended reasons in which it said:
"On Maundy Thursday, 31st March 1988, all remaining employees of Rotaprint, including these appellants, were dismissed."
I do not think these passages are necessarily irreconcilable. In holding that there had been no dismissal the EAT were referring to the fact that there had been a relevant transfer within the meaning of Regulation 5 of TUPE when the business of Rotaprint was acquired by Pan Graphics in 1988. In its earlier reference the EAT was in my view referring to the notices of dismissal which had been given to all the remaining employees of Rotaprint. Mr Carr next submitted that on the basis of the law as it had been interpreted in 1988 the claimants had indeed been dismissed. The law at that time was correctly stated by this court in The Secretary of State for Employment v Spence [1987] QB 179.
Although the EAT did not refer to this case by name, it noted that as the law was then understood the Secretary of State could be assumed to have taken the view that the appellants (the present respondents) had been dismissed by the receivers of Rotaprint by reason of redundancy on 31st March 1988. In those circumstances transfer of the undertaking to Pan Graphics did not preserve their continuity of employment and that accordingly the Secretary of State was, as the law then stood, obliged to make the employers' payment under what is now section 167 of the 1996 Act. That understanding of the law was not to be altered until the House of Lords pronounced judgment in Litster v Forth Dry Dock & Engineering Co. Ltd. [1990] 1AC 546. Mr Carr submitted that the Secretary of State in deciding whether he should make a payment on behalf of the insolvent employers under section 167 of the 1996 Act was entitled to have regard to the law as it was understood at the time. The requirements of...
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