Melon v Hector Powe Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Diplock,Lord Elwyn-Jones,Lord Edmund-Davies,Lord Fraser of Tullybelton,Lord Keith of Kinkel |
| Judgment Date | 06 November 1980 |
| Judgment citation (vLex) | [1980] UKHL J1106-2 |
| Court | House of Lords |
| Docket Number | No. 1. |
| Date | 06 November 1980 |
[1980] UKHL J1106-2
Lord Diplock
Lord Elwyn-Jones
Lord Edmund-Davies
Lord Fraser of Tullybelton
Lord Keith of Kinkel
House of Lords
My Lords,
I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Fraser of Tullybelton, with which I agree.
I therefore would dismiss the appeal.
My Lords,
I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Fraser of Tullybelton, with which I agree.
I therefore would dismiss the appeal.
My Lords,
I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Fraser of Tullybelton, and I cannot usefully add to it.
For the reasons he gives, I would concur in dismissing this appeal.
My Lords,
The appellants are a well-known company of multiple tailors. Until 17.1.77 they had two factories, one at Dagenham and the other Blantyre, in which they manufactured men's suits, mainly made to measure. From about 1974 onwards, the demand for made to measure suits fell, and eventually the appellants contracted with another company, called Executex Manufacturing Ltd., that they (Executex) would take over the Blantyre factory on 17th January 1977. One term of the contract was that Executex would offer the entire work-force, except the general manager, contracts of employment on terms not less favourable than they had enjoyed with the appellants. The transfer was conditional upon that offer being accepted by at least 90% of the employees. It was duly accepted, and on 17.1.77 Executex took over the factory and practically all the appellants' employees who worked there including the three respondents. Their cases are typical of about 120 former employees of the appellants, whose claims will follow the decision in this appeal. Their contracts of employment with the appellants were terminated on 17.1.77, but they carried on working in the same factory, on the same machines, and in many cases doing the same sort of work, on no less favourable terms under new contracts with Executex.
The respondents claimed redundancy payments from the appellants on the ground that they had been dismissed on 17.1.77 by reason of redundancy. The appellants resisted the claims, and contended that by virtue of the Redundancy Payments Act 1965 section 13, read with section 3(2), the respondents should not be taken to have been dismissed. The scheme of the Redundancy Payments Act 1965 is that where an employee, who has been continuously employed for the requisite qualifying period of two years, is dismissed by his employer by reason of redundancy, he is entitled to receive a redundancy payment calculated by reference to the length of his period of employment. Dismissal is defined by section 3(1) of the Act, and by section 3(2) certain circumstances are specified in which an employee shall not be taken to have been dismissed for the purpose of claiming a redundancy payment. One such circumstance is a case where the employee's contract of employment is renewed, or he is re-engaged by the same employer under a new contract of employment, on terms that are not in essence different from the terms of his previous contract. Section 13 of the 1965 Act provides that section 3(2) shall apply in a similar way, mutatis mutandis, where a change occurs in the ownership of a business or of a part of a business, and the new owner renews the employee's contract of employment on terms not less favourable than he had before. The employee is then not to be taken to be dismissed, and he is accordingly not entitled to a redundancy payment from his previous employer, but his period of employment with the previous employer is so to speak carried forward and counts as a period of employment with the new employer, and the change of employment does not break the continuity of his period of employment. The effect is that, when section 13 applies, the employee gets one redundancy payment in respect of his entire service, if he is made redundant by his new employer, and, when section 13 does not apply, he gets two redundancy payments, one from his new employer, if employed by him for long enough, and one from his former employer in respect of the separate period of service with him.
The particular provisions upon which this appeal turns are those of section 13( 1) and (2) of the 1965 Act which are as follows:
"13(1) The provisions of this section shall have effect where—
( a) a change occurs (whether by virtue of a sale or other disposition or by operation of law) in the ownership of a business for the purposes of which a person is employed, or of a part of sucha business, and
( b) in connection with that change the person by whom the employee is employed immediately before the change occurs (in this section referred to as 'the previous owner') terminates the employee's contract of employment, whether by notice or without notice."
(Emphasis added)
(2) If, by agreement with the employee, the person who immediately after the change occurs is the owner of the business or of the part of the business in question, as the case may be (in this section referred to as 'the new owner') renews the employee's contract of employment (with the substitution of the new owner for the previous owner) or re-engages him under a new contract of employment, section 3(2) of this Act shall have effect as if the renewal or re-engagement had been a renewal or re-engagement by the previous owner (without any substitution of the new owner or the previous owner)."
I need not quote section 3(2), the effect of which I have already described. Section 3(2) had been replaced at the relevant date by a new section 3(3) as set out in Schedule 16 paragraph 3 of the Employment Protection Act 1975, but there is no relevant difference between the original subsection and the new one and as all references in the courts below have been to the original subsection I shall continue to refer to it. I should only add that sections 3 and 13 of the 1965 Act have now been superseded by sections 84 and 94 respectively of the Employment Protection (Consolidation) Act 1978.
The question in the appeal turns upon the application of the...
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