Park Cakes Ltd v Shumba and Others

JurisdictionEngland & Wales
JudgeLord Justice Underhill,Lord Justice Rimer,Lord Justice Moore-Bick
Judgment Date31 July 2013
Neutral Citation[2013] EWCA Civ 974
Docket NumberCase No: A2/2012/3358
CourtCourt of Appeal (Civil Division)
Date31 July 2013

[2013] EWCA Civ 974

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL

HHJ RICHARDSON AND MEMBERS

UKEAT/0219/11/RN

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Justice Moore-Bick

Lord Justice Rimer

and

Lord Justice Underhill

Case No: A2/2012/3358

Between:
Park Cakes Ltd
Appellant
and
Shumba & Ors
Respondents

Ingrid Simler QC (instructed by Davenport Lyons) for the Appellant

Simon Gorton QC and Charles Prior (instructed by Thompsons) for the Respondent

Lord Justice Underhill

INTRODUCTION

1

The four Claimants in these proceedings, who are the Respondents before us, worked as "section managers" in the Appellant's factory in Oldham. They were dismissed for redundancy in the spring of 2009. They brought proceedings in the Employment Tribunal claiming that they were unfairly dismissed and also — which is the only claim with which we are concerned — that they had not been paid "enhanced" redundancy payments, i.e. payments over and above their statutory entitlements, to which they said they were entitled as a matter of contract. The entitlement which they claimed consisted of double the statutory package, i.e. two weeks' pay for each year of service up to age 41 and three weeks' pay for each year over that age, but without the statutory cap on service or the amount of a week's pay, together with a lump sum payment of £600. As will appear, there is a potential question about whether any distinction falls to be made between the claim for the £600 and the claim for the enhanced payments; but where it is not necessary to distinguish between them I will refer to them simply as "the claimed benefits". Although it was initially claimed that there was an express term of the Claimants' contracts affording them the claimed benefits that claim is not maintained before us, and the entitlement is said to arise as a matter of "custom and practice".

2

Those claims were heard by an ET sitting at Manchester, chaired by Employment Judge Vinecombe, in two three-day tranches in May 2010 and January 2011. By a judgment sent to the parties on 7 February 2011 the claims of unfair dismissal were upheld but the claims in relation to the redundancy payments were dismissed.

3

The Claimants appealed to the Employment Appeal Tribunal. By a reserved judgment promulgated on 28 November 2012 a Tribunal comprising HHJ Richardson, Lady Drake and Mr Mallender allowed the appeal by a majority and remitted the case for re-hearing by a differently constituted Tribunal.

4

Before us the Appellant has been represented by Ms Ingrid Simler QC and the Claimants by Mr Simon Gorton QC, leading Mr Charles Prior. Mr Prior appeared in both the ET and the EAT, and Ms Simler appeared in the EAT. In the ET the Appellant was represented by Mr Satnam Choongh of counsel.

BACKGROUND FACTS

5

I shall have to set out some of the detailed facts more fully below. At this stage I need only set out two matters of important background about union representation at the factory and about a change of ownership which occurred in 2007.

6

The Claimants were first employed at dates between 1990 and 2001. During that period the Oldham factory was owned and operated by a company within the Northern Foods group. In respect of most of the employees at the factory the company recognised the Bakers Food and Allied Workers Union ("the Union") for collective bargaining purposes. But although the Claimants were members of the Union, as section managers they fell within a class known as "non-negotiated employees", and the Union did not have negotiating rights in respect of them.

7

In January 2007 the factory was sold to the Vision group, and the Claimants' employment transferred to the Appellant, which is a company within that group, under the Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE"). Where it is necessary to refer specifically to the Claimants' pre-transfer employer I will do so as "the old company"; where there is no need to distinguish I will refer to the pre—and post-transfer employers together simply as "the company".

THE ISSUE AND THE EVIDENCE BEFORE THE TRIBUNAL

8

The Claimants' case before the ET was that Northern Foods had operated a formal redundancy scheme under which the enhanced terms and the lump sum were paid. Such payments were made, over very many years, whenever redundancies occurred. The existence of that scheme was well-known both to the Union and to the workforce generally and was correctly understood by them to reflect a contractual entitlement.

9

The Appellant did not dispute that Northern Foods had had a group-wide policy of paying enhanced redundancy terms and that in the case of non-negotiated employees such as the Claimants the terms in question were those which are claimed in the present case — though not including the £600 lump sum. But its case, in summary, was that that was a matter of policy and not of contractual entitlement: it was not the result of any negotiation with employees or their representatives and the policy was not communicated to employees generally or "systematically" provided to them.

10

Thus the essential issue between the parties was not the existence of a policy of paying enhanced terms to redundant employees but whether that policy reflected any contractual obligation. The evidence which the Tribunal heard was significant to the extent that it cast light on that issue. I need to summarise it fairly fully in order that the grounds of appeal can be understood; but it is not my intention to perform my own evaluation of the extent to which it supports either party's case. I will summarise that evidence under three headings — (1) the explicitly contractual documents; (2) the non-contractual documents; and (3) the evidence of practice and knowledge.

(1) The Contractual Documents

11

The Claimants had written terms and conditions of employment. These made no reference to any entitlement to enhanced redundancy payments. Under the heading "Other Terms and Conditions of Employment" there was a cross reference to an Employee Handbook, which was said to contain "additional information regarding terms and conditions of employment". The Handbook is fairly full. Under the heading "What Park Cakes Offers You" it set out provisions relating to holiday entitlement, sick pay, maternity and paternity leave, bereavement leave etc. Under the heading "Benefits for Employees" it gave details of the Northern Foods pension scheme and certain other benefits. There is no reference to entitlements in the case of a dismissal for redundancy.

12

Two documents dating back to the time when the factory was owned by Northern Foods either constitute or evidence agreements between the employers and the Union about redundancy entitlements. Although, as I have said, the Union was not recognised in relation to employees of the Claimants' status it may be relevant to refer to the collective agreements between it and the old company because it was the Claimants' case that the entitlement to enhanced redundancy payments applied to all permanent employees and not only those for whom the Union was recognised. Two collective agreements are potentially material, as follows:

(1) A full and elaborate "Memorandum of Agreement" was entered into between Park Cakes Ltd (that is, the old company) and the Union with effect from December 1985. This contains many provisions of a collective character regulating the relationship of the Union and the company, but it also purports to set out certain provisions which are plainly apt for incorporation in the terms and conditions of individual employees, such as working hours and overtime entitlements. Clause 22 reads:

" Redundancy payments will be made as required by the Redundancy Payments Act 1965 (as amended by subsequent legislation)."

There is no reference to any entitlement to enhanced redundancy payments.

(2) There was an undated agreement between the old company and the Union relating to employment of temporary workers. The agreement itself does not appear to have been available to the Tribunal, but its terms were set out in an old handbook for managers. Clause 10 of the agreement, which is headed "Security of Employment", provides that in a redundancy situation the company would be entitled to dismiss all temporary employees (being those employed for less than nine months) first; but it goes on to set out the redundancy payments to which employees would be "entitled" after they became permanent. The relevant paragraphs read:

"Between 9 and 24 months service the employee would have permanent status and the entitlement of one weeks' notice of termination of employment and 2 weeks' pay in lieu of notice.

Between 24 and 36 months service the employee would have permanent status and would be entitled to a redundancy package of equal to twice the statutory package with no upper earnings limit plus an additional £600 ex gratia payment."

The "entitlement" of permanent employees with more than 24 months' service is identical to that sought by the Claimants in the present case.

The two agreements point in wholly opposite directions. The former is hard to reconcile with the existence of any contractual entitlement to enhanced redundancy terms — at least as at 1985; whereas the latter appears to provide for the claimed benefits as a matter of express entitlement.

(2) The Non-Contractual Documents

13

As I have said, the Appellant accepts that Northern Foods generally, and the old company in particular, operated a policy under which the enhanced redundancy payments claimed in these proceedings were made. Two internal documents...

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