Lloyd v Brassey

JurisdictionEngland & Wales
CourtCourt of Appeal
JudgeLORD JUSTICE SALMON,LORD JUSTICE RUSSELL
Judgment Date26 Nov 1968
Judgment citation (vLex)[1968] EWCA Civ J1126-1

[1968] EWCA Civ J1126-1

In The Supreme Court of Judicature

Court of Appeal

Before

The Master of Rolls (Lord Denning)

Lord Justice Russell and

Lord Justice Salmon

In the Matter of the Tribunals and Inquiries Act, 1958

and

In the Matter of the Redundancy payments Act, 1965

and

In the Matter of an Appeal against a decision dated 23rd January 1968 of the Industrial Tribunal concerning the entitlement of Eric Lloyd to a redundancy payment upon the termination of his employment by R.A.B. Brassey Esq.

Between
Eric Lloyd
Appellant
and
R.A. B. Brassey
Respondent

Mr. J.T. PLUME (instructed by Messrs. Ellis & Fairbairn) appeared on behalf of Mr. Brassey.

Mr. D.J. TURNER-SAMUELS (instructed by Mr. O.H. Parsons) Appeared on behalf of Mr. Lloyd.

1

THE MASTER OF THE ROLLS: This case raises an important question as to redundancy payments to farm workers. The facts are very simple; Mr. Brassey was the owner of a 150-acre farm at Bulkeley Grange Farm, Halpas, in Cheshire. He farmed it himself. It was a mixed farm. He had milking cows. He had twenty acres of arable. The rest was grazing and harvesting. He employed two men upon the farm. One of them was Mr. Lloyd. Mr. Brassey had employed Mr, Lloyd for ten years. He paid him £16 a week and let him a cottage at 6/- a week. In October 1966 Mr. Brassey determined to sell his farm. He put the land and buildings up for public auction. They were bought by a Mr. Barlow for £49,500. Mr, Barlow did not go into oocupation at once. He waited until Parch 1967. Then on the 11th March, 1967, there was a public auction of the live and dead stock. Mr. Barlow, the incoming farmer; bought 20 out of the 46 cows, and also a tractor, a lorry, and other equipment. He paid £2,244 for them. Furthermore, Mr. Barlow took on Mr. Lloyd to work for him. The other man left of his own accord, and, of course, was not entitled to any redundancy payments. But Mr. Lloyd stayed on with Mr, Barlow at increased pay. Mr. Barlow paid him £17 a week instead of £16, and he let him have the cottage free. So Mr. Lloyd stayed on. He worked on the farm as he had done for the previous ten years. There was no break at all in his employment. But, nevertheless, he claimed that he was entitled to redundancy payment. The Tribunal rejected his claim. But the Divisional Court allowed it, They followed their previous decision in ( Bandey v. Penn 1968 1 W.L.R. 670). Now there is an appeal to this Court.

2

As this is one of our first cases on the Redundancy Payments Act, 1965, it is as well to remind ourselves of the policy of this legislation. As I read the Act, a worker of long standing is now recognised as having an accrued right in his Job; and his right gains in value with the years. So much so that, if the Job is shutdown, he is entitled to compensation for loss of the Job - Just as a director gets compensation for lossof office. The director gets a golden handshake. The worker gets a redundancy payment. It is not unemployment pay. I repeat "not". Even if he gets another job straightaway, he nevertheless is entitled to full redundancy payment. It is, in a real senset compensation for long service. No man gets it unless he has been employed for at least two years by the employer; and then the amount of it depends solely upon his age and length of service. It is calculated in this way: half a week's pay for each year between the ages of 18 and 21, inclusive! One week's pay for each year of employment between the ages of 22 and 40, inclusive; and one-and-a-half week's pay for each year of employment from the age of 41. The maximum is 20 years continuous employment. No man gets it after the age of 65. The employer makes the redundancy payment but gets a rebate from the Redundancy Fund, whicn may be as much as two-thirds of the payment.

3

If the farm-worker in this case is entitled to redundancy payment, it would come, we are told, to some two or three hundred pounds. But is he entitled to it? The Act starts off by saying in section l(l)(a) that a man is entitled to redundancy payment". he "is dismissed by his employer by reason of redundancy". Taking those words in their ordinary meaning, it would seem clear that the farm-worker here was not dismissed by reason of bedundaney. He was not dismissed at all - let alone dismissed by reason of redundancy. He remained in the same job doing the same work as before, but at an increased wage. It would seem absurd to suggest that he is entitled to redundancy payment. But the Divisional Court have held that he is entitled to it. It is all because of some "deeming" provisions in the Act whereby a thing is "deemed" to be that which it is not.

4

The first stage in the argument for the farm-worker is to say that he is "deemed" to be dismissed. Section 3 (1) (a) says an employee shall be taken to be dismissed by his employer if the contract under which he is employed by the employer is terminated by the employer. The farm-worker's contract was terminated by Mr. Brassey by consent when he went out of thefarm and Mr. Barlow went in.

5

The second stage for the farm-worker is to say that he is "deemed" to be dismissed for redundancy. Section 1 (2) (a) says that: "an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is attributable wholly or mainly to the fact that his employer has ceased to carry on the business for the purposes of which the employee was employed by him". Mr. Brassey ceased to carry on the business at the farm. So the farm-worker is "deemed" to be dismissed for redundancy.

6

Thus far, the farm-worker made out a prima facie case. But then the employer answers by referring to section 13, which deals with cases where a business remains the same but changes hands from one employer to another. It applies whenever "a change occurs in the ownership of a business". If the new owner renews the employee's contract of employment and the employee accepts it, he does not get redundancy payment, see section 13 (2) bringing in, section 3 (2): or if the new owner asks the man to stay and he unreasonably refuses, again he does not get redundancy payment, see section 13 (3) bringing in section 2 (3). In cases where the contract of employment is renewed with the new owner, there is deemed to be no break in the continuity of his employment: so that his service with the previous owner counts as if it were service with the new owner. If the new owner should afterwards dismiss him for redundancy, the payment will be calculated on his total period of service with both employers. That is clear from the Contracts of Employment Act, 1963, Schedule 1, paragraph 10, where the words "a trade or business or an undertaking is transferred frorm one person to another" clearly have the same meaning as a "change in the ownership of the business" in section 13 of the Redundancy Payments Act, 1965. The meaning of those words was considered by the Divisional Court in Kenmlr Ltd. v. Frlzzel (1968 1 W.L.R. 329), where Mr. Justice Widgery said at page 335: "In deciding whether a transaction amounted to the transfer of a business, regard must be had to itssubstance rather than to its form………. The vital consideration is whether the effect of the transaction was to put the transferee in possession of a going concern, the activities of which he could carry on without interruption". I think that is the right test. If the new owner takes over the business as a going concern - so that the business remains the same business but in different hands - and the employee keeps the same job with the new owner, then he is not entitled to redundancy payment. His period of employment is deemed to continue without a break in the same job: so that, if he is afterwards dismissed by the new owner for redundancy, his payment is calculated on the whole period in that Job.

7

The question is how is that principle to be applied when a farm changes hands. The Divisional Court had to consider it in Bandey v. Penn (1968 1 W.L.B. 670). Mr. Perm was a tenant farmer. His lease was coding to an end. He decided to retire and not farm anywhere else. The farm was taken over by another tenant farmer. The incoming farmer asked Mr. Bandey to work for him: but Mr. Bandey refused. He went off to other employment. His refusal was unreasonable. The Tribunal held that he was not entitled to redundancy payment. But the Divisional Court reversed the Tribunal. They held that there had been no change in ownership of the business within section 13. That decision has, we were told, been applied by some Tribunals when a farm has been sold by auction. It is said that, when a farmer sells the freehold, and the new farmer comes in, then the new farmer is not carrying on the same business. He has only bought the assets and has started up a new business of his own. So there has been no There ransfer of the old business, nor a change in the ownership of that business, but only a transfer of the assets.

8

I am afraid I cannot agree with the decision in Bandey v. Penn, and I have the less hesitation in doing so because it was only argued on one side. The Court did not have the benefit, as we...

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