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United Kingdom Employment Appeal Tribunal |
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You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Hunt v Fospur Ltd [1996] UKEAT 847_95_0205 (2 May 1996) URL: http://www.bailii.org/uk/cases/UKEAT/1996/847_95_0205.html Cite as: [1996] UKEAT 847_95_0205, [1996] UKEAT 847_95_205 |
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At the Tribunal
HIS HONOUR JUDGE PETER CLARK
MR S M SPRINGER MBE
MR T C THOMAS CBE
Transcript of Proceedings
JUDGMENT
Revised
APPEARANCES
For the Appellant IN PERSON
For the Respondents MR A CHOUDHURY
(of Counsel)
Instructed By:
Julia Edwards
Messrs Edge & Ellison
Solicitors
148 Edmund Street
Birmingham
B3 2JR
JUDGE PETER CLARK: The Appellant was employed as a general labourer by the Respondents from 2 August 1989 until his dismissal effective on 18 December 1992.
On 11 December 1992 he presented an Originating Application to an Industrial Tribunal alleging that he was unfairly selected for redundancy on the grounds of his trade union activities.
By their Notice of Appearance the Respondents admitted the dismissal, but contended that their reason for dismissal was redundancy and was not for the inadmissible reason advanced by the Appellant.
His complaint came before an Industrial Tribunal sitting at Nottingham on 7 April 1993 (Chairman: Mr D.M. Richards) ("the first tribunal"). That tribunal dismissed the Applicant's contention that his dismissal was by reason of trade union activities and found that the reason was redundancy.
However, it found that the dismissal was unfair under Section 57(3) of the Employment Protection (Consolidation) Act 1978 on the grounds that there was a failure by the Respondents to consult the Applicant before dismissing him. That tribunal went on to assess compensation and awarded the sum of £3,660 by way of a compensatory award. Mr Hunt had already received a redundancy payment, equivalent to the basic award.
Against that decision both parties appealed to this tribunal. Mr Hunt against the tribunal's assessment of compensation; the employer against both the finding of unfair dismissal and the award of compensation.
That appeal came before this appeal tribunal on 7 December 1994 (Holland J presiding). Mr Hunt's case was that the Industrial Tribunal had erred in failing to make any award of compensation in respect of his loss allegedly sustained as a result of his no longer being able to participate in the Respondents' Sharesave Scheme. We shall return to that scheme later in this judgment.
The upshot of the appeal was that both appeal and cross-appeal were allowed. The whole case was remitted to a fresh Industrial Tribunal for re-hearing. The first tribunal's decision was set aside.
That rehearing took place before an Industrial Tribunal sitting at Nottingham on 2 May 1995, chaired by Mr P.G. Pollett ("the second tribunal").
Again, the second tribunal found that the reason for dismissal was redundancy and not trade union activities. The tribunal went on to find, as did the first tribunal, that the dismissal was unfair, but for two reasons. One, that there was no proper consultation; two, that the Appellant had not been granted a right of appeal against the employer's decision to dismiss him.
However, unlike the first tribunal they then found that these two procedural failings made no difference to the result. (See Polkey v A.E. Dayton Services Ltd [1988] ICR 142). Had the employer adopted a proper procedure dismissal would, the tribunal found, have inevitably followed, but following a two-week period of consultation. (See paragraph 28 of the second tribunal's Extended Reasons, dated 21 June 1995). Accordingly, they held, the Appellant's entitlement to compensation was limited to two weeks' net pay, representing the lost two week consultation period, together with a sum of £150 in respect of his loss of statutory rights.
Finally, in their Reasons, the second tribunal dealt with the Appellant's claim in respect of the Sharesave Scheme in this way at paragraphs 30 to 33:
"30. The final matter to which the applicant has drawn our attention are the benefits that he has under the share option scheme which is set out in detail in the respondents bundle (c) at page 40 onwards. The rules in respect of that scheme are also set out in bundle (c) and from page 2 onwards.
31. It is perfectly clear to the tribunal having regard to page 40 under the heading `your questions answered' the question being `suppose I leave through redundancy, etc' and also to the relevant clause of the full scheme which is set out on page 15 at paragraph 4(a), that if the applicant is made redundant his rights are limited and to be exercised within a period of 6 months. That is the conclusion of the answer to the question on page 41 and rule 4(a) on page 15. In fact the applicant exercised his option on the 18th June 1993. What the applicant says is that once the tribunal have found that there was an unfair dismissal the way is open to him to claim his rights for the remainder of the full period of the 5 years under the scheme.
32. The tribunal cannot accept that contention because it is perfectly clear that the rules of the scheme in the event of a redundancy is limited to a period of 6 months. The sole reason for the applicant's dismissal was redundancy.
33. The only loss that the applicant could possibly have suffered (which is a loss recoverable from the respondents) is as Mr Choudhury has pointed out if the share price varied against the applicants interests between the time when he did exercise the option and 2 weeks later. We have no evidence of any such variation and therefore make no order for compensation in that respect. If the applicant can produce evidence of any such variation against his interests he will be entitled to apply to the tribunal for a review of that aspect of compensation only."
They therefore made no award under this head of claim. Mr Hunt has made no application for a review.
Against the second tribunal's award of compensation Mr Hunt now appeals.
The appeal was considered at a Preliminary Hearing before this tribunal held on 1 December 1995 (Judge H.J. Byrt QC presiding). On that occasion it was directed that a full hearing of the appeal should be limited to consideration of whether any compensation is properly recoverable in respect of the Sharesave Scheme. Consequential directions were given, First, that any document setting out the terms of the Sharesave Scheme be produced to this tribunal. Secondly, the Chairman of the second tribunal, Mr Pollett, was asked to produce his Notes of Evidence relating to the scheme.
The Chairman has produced Notes of Evidence; they relate solely to the circumstances surrounding the dismissal. There is no mention of the Sharesave Scheme in those notes.
However we have been provided with the Rules of the Sharesave Scheme and the explanatory pamphlet distributed to employees, both being documents which were before the second tribunal and are referred to expressly in paragraphs 30 and 31 of their Reasons. Those documents, coupled with the agreed information supplied by Mr Hunt and Mr Choudhury, who again appears for the Respondents, during the hearing before us, allow us to fully appreciate how it worked.
The scheme allowed employees to save up to £250 per month in an interest-bearing Yorkshire Building Society account. The amount to be saved was deducted from the individual employee's pay. Mr Hunt joined the scheme from its inception, and saved the full £250 each month, starting in February 1992. The scheme was expressed to run for a maximum period of five years.
Clause 6 of the Rules is headed "Exercise of Options".
Clause 6(4)(a) provides:
"If any Participant ceases to hold the office or employment by virtue of which he is eligible to participate in the Scheme (otherwise than by reason of his death), the following provisions shall apply in relation to any option granted to him under the Scheme:-
(a) if he so ceases by reason of injury, disability, redundancy within the meaning of the Employment Protection (Consolidation) Act 1978, or retirement on reaching pensionable age within the meaning of Schedule 20 to the Social Security Act 1975 or any other age at which he is bound to retire in accordance with the terms of his contract of employment, the option, subject to sub-clause (3) above, may only be exercised within 6 months of his so ceasing;"
In layman's terms, the pamphlet explains Clause 6(4) in the form of the following question and answer.
"Q. Suppose I leave through redundancy, injury, disability, retirement at state or contractual retirement age?
A. If this happens before you complete your contract, you may apply to the Yorkshire Building Society for the return of your savings plus any interest due. You may then use this money within six months of leaving, to take up your Option and purchase some shares. Since you can only use the savings and interest due up to that date you will not be able to buy all the shares your Option entitled you to buy."
It is Mr Hunt's case that following his dismissal in December 1992 he continued to pay £250 per month into his savings account for the next six months, as permitted under the Rules. At the end of that period, in June 1993, he converted the monies saved into shares at the discounted price fixed for the whole of the five year period of the scheme of £2.86 per share. That bought 1,442 shares. However, he calculates that had he remained in the scheme for the full five years of its life he would, at the end, have been able to purchase a further 5,114 shares at £2.86 per share, giving him a total holding of 6,556 shares.
The scheme had this favourable feature for savers. If on leaving the scheme, the share price was less than £2.86, the saver could withdraw his savings in cash. Alternatively, if the quoted price was greater than £2.86, he could convert his accumulated savings into shares, and then hold the shares, or dispose of them at a profit.
These shares have done well. The peak price thus far, so Mr Hunt tells us, has been £7.04 per share.
Thus his case was before the second Industrial Tribunal and is before us, that had he not been unfairly dismissed he would have remained in the scheme for the full five years, contributing £250 per month. At the end of that period he would have acquired a further 5,114 shares at £2.86 per share. If the price was then £7.04 he would make a tax free profit of £5,114 times the difference between the fixed buying price of £2.86 and the quoted price of £7.04, a difference he calculates of £21,141.96. At all events, that loss of a chance comfortably exceeds the maximum compensatory award permitted under the Act of £11,000.
The short question, therefore, in this appeal is whether the second tribunal erred in law in its approach to the question of loss under the scheme in paragraphs 30 and following of their reasons which we have set out earlier in this judgment. In our view, it did not.
There is no doubt that by leaving the scheme early as a result of his dismissal, Mr Hunt lost a potentially valuable right to acquire further shares at a favourable price. But the question is whether that loss properly flows from the unfair dismissal.
Here, the second tribunal found as a fact, not simply that the employer could have fairly dismissed Mr Hunt two weeks later, but that they would have then dismissed him. Accordingly his loss is limited to that short period of time and no longer. (See Mining Supplies v Baker [1988] ICR 676.
Our powers to interfere with Industrial Tribunal decisions are limited to questions of law. It follows that we cannot interfere with the tribunal's finding of fact; based on that finding we cannot discern any error of law in the conclusion which the tribunal then reached.
Mr Hunt takes the point that the law should be concerned with fact, not hypothesis. However, in assessing compensation for unfair dismissal the tribunal is required to make hypothetical findings, based on the probabilities of what would, in their judgment, have happened had the position been different from that which in fact occurred.
In these circumstances we must dismiss this appeal. Accordingly it is unnecessary for us to rule on the enforceability of the waiver clause to be found in Clause 10(1) of the Rules, on which the Respondents relied in the alternative, and which Mr Hunt contended fell foul of the Unfair Contract Terms Act 1977.
