Appeal No.	 EAT/979/99

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 20 October 1999

Before
HIS HONOUR JUDGE J HICKS QC
MISS A MACKIE OBE
MR N D WILLIS

API SPONSORSHIP USA LTD	APPELLANTS

MR P RICHMOND-SWIFT	RESPONDENT

Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING

Revised

	APPEARANCES

For the Appellants	MR M BURD
(Solicitor)
Instructed by
Lewis Silkin
Windsor House
50 Victoria Street
London  SW1H 0NW	

	JUDGE HICKS:	The Respondent, Mr Richmond-Smith, was employed by the Appellant company API Sponsorship USA Ltd from 1 October 1989 until 23 November 1998 when his employment came to an end.  He made claims for breach of contract, sex discrimination and equal pay, or lack of equal pay, but the equal pay claim was dismissed on 22 March 1999 before the substantive hearing in the Employment Tribunal was reached.  The discrimination claim was withdrawn by Mr Richmond-Smith during the hearing so the only matter dealt with by the Employment Tribunal, and the only matter before us was the breach of contract claim and that turned entirely on the question whether valid notice terminating the employment had been given by a letter of 28 May 1998.  

1	It is important in our judgment to construe the effect of that letter by reference to its full terms, or virtually its full terms - one or two paragraphs may not be necessary - but it reads as follows:

“Dear Peter
Further to our recent consultation meetings, I am writing formally to notify you of the decision that later this year this company will be moving the Accounts Department work from Portsmouth to London.
I confirm that we have considered whether there is any possibility of offering you alternative employment once our Portsmouth operations cease.  To this end, I wrote to you on 26th May 1998 setting out the terms on which you would be offered employment in London when the move takes effect.  You have since indicated that you do no wish to take up the London post on the terms offered.
Accordingly, the Company will have no other option but to make you redundant.  The terms which will apply to you will be as follows:-
1.	Your employment with the Company will terminate by reason of redundancy.  The latest date for such termination will be 31 December 1998, but this may take place earlier if arrangements for the move to London are completed before the end of the year.  You will be given reasonable advance notice of any change to the date.  (Whatever your last day of work is will be the “Redundancy Date”).
2.	For the period between today’s date and the Redundancy Date, you will remain an employee of the Company and will be expected to continue to work diligently and conscientiously at your duties (subject only to having reasonable time off to look for other work and attend interviews if you choose).
3.	You will continue to be paid your salary (less PAYE and NIC contributions) and other benefits as normal to the Redundancy Date.
4.	You will be paid in respect of any accrued holiday entitlement not yet used at the same time as you receive your final salary payment.  This payment is subject to deduction of income tax.  
5.	You will be provided with your Form P45 on or as soon as possible after the Redundancy Date.
6.	On the issue of your Form P45 you will receive your statutory redundancy entitlement of £1,980.00.  In addition, provided you have in our judgment continued to carry out your duties diligently and conscientiously until the Redundancy Date, we will make you an enhanced redundancy payment as follows.  If the Redundancy Date is:
6.1	31 December 1998, you will receive an enhanced redundancy payment of at least £1,000 and potentially up to the equivalent of 2 months gross salary, the precise amount to be determined at our discretion depending upon your performance between now and that date;
6.2	any date in the period before 30 December 1998 you will receive an enhanced redundancy payment equal to the gross salary you would have earned in the period from the Redundancy Date until 31 December 1998 plus a sum determined on the same basis as in 6.1 above.
7.	The Company will maintain your existing health insurance and life assurance cover until 31 December 1998.
8.	The Company will continue to fund your pension at the present level until 31 December 1998.”

2	9 deals with leaving voluntarily before the Redundancy Date which did not happen.  10 deals with claims for business expenses which have to be submitted within seven days of the Redundancy Date and 11 deals with the return of equipment, document or any other property belonging to or relating to the business of the Company etc. which must be again by the Redundancy Date or resignation date if earlier.  The final short paragraphs are not of any materiality on the issue of construction.

3	The Employment Tribunal in dealing with the matter noted that the employer’s case was that that letter was good notice and in the event the closure date, which became for the purposes of the letter the ‘Redundancy Date’, was 23 November 1998.  That was communicated orally to Mr Richmond-Swift on 19 or 20 November, but his first written notification was on the Redundancy Date itself, 23 November.  The Tribunal find that he did not work after 23 November but was made a payment which the Tribunal describe as pay to 31 December.  

4	How it has been treated for purposes of tax was not dealt with by the Tribunal and may not have been resolved by that date or may not have been resolved now, we know not.  But whatever the description of the payment at that time, it is quite clear that both the Company and Mr Richmond-Swift will contend to the Inland Revenue that its status is governed by the letter of 28 May 1998, that it arose under paragraph 6.2 of that letter, and that it is not pay and it is not taxable.  As Mr Burd for the employer’s very fairly and frankly accepts, that indeed was the whole purpose of the letter and it was carefully framed with that object in view.  

5	The Employment Tribunal reminded itself of some authorities on the question of what constitutes a valid notice and, in particular, cited a passage from the judgment of Lord Widgery CJ in the case of Morton Sundour Fabrics Ltd v Shaw [1996] 2 ITR 84 as follows:

“As a matter of law an employer cannot dismiss his employee by saying ‘I intend to dispense with your services at some time in the coming months’.  In order to terminate the contract of employment the notice must either specify the date or contain material from which that date is positively ascertainable.”

And they also quoted from the judgment of this Appeal Tribunal in the case of The Burton Group Ltd v Smith [1977] IRLR 351 as follows (and this was by reference to the same passage from the Morton Sundour case):

“… The requirement that the date should be positively ascertainable is not met by a statement that the date of termination of the employment is to be some specific date or such earlier date as the employer may select, or such earlier date as the employer may, consistent with his obligation to give the requisite period of notice, select, because that available alternative was not positively ascertainable at the relevant date of ascertainability, which is the date of the receipt of the notice.”

6	We accept that those are for the purposes of the facts of this case accurate statements of what is required of a valid notice to terminate employment.  Mr Burd postulated hypothetical circumstances in which he argued that those statements of principle would not, or should not, apply, but we are not concerned with hypothetical cases, we are concerned with this particular case and in this particular case, not only was the date uncertain in the sort of sense that was postulated, in particular in the Burton case, but the whole tenor of the letter repeatedly is directed to making sure that after what is called the ‘Redundancy Date’ the employment shall plainly have ceased.  Item 2 says in terms that Mr Richard-Swift will remain an employee of the Company until the Redundancy Date, the plain implication being that thereafter he will not be so.  Item 3 says that he will not be paid his salary less PAYE and NIC as normal to the redundancy payments.  The plain implication is that after that he will not be paid a salary.  Item 4 dealing with accrued holiday entitlement is plainly intended to deal with the period of his entitlement up to the redundancy date because it is to paid at the same time as the final salary payment.  Form P45 is then to be provided on or as soon as possible on or after the redundancy payment and then the extra payment from that date, if it is earlier than 31 December until 31 December, is quite plainly described as an enhanced redundancy payment.  It is to be equal to the gross salary, so plainly it is envisaged that it is not taxable as salary would be, and it is discretionary.  It is perfectly true that there are as it were two levels of discretion; there is a completely open level of discretion as to whether the extra payment under paragraph 6.1 is to be paid, but even the payment under paragraph 6.2 is discretionary in the sense that it depends on the judgment of the employer as to whether Mr Richmond-Swift has carried out his duties diligently and conscientiously until the Redundancy Date.

7	In our view, therefore, it is quite impossible to construe this as a notice expiring on 31 December with liberty for both parties to be released from their obligations to provide on the one hand and to execute on the other hand Mr Richmond-Swift’s work.  That of course would be perfectly possible form of notice but the features to which we have drawn attention make it, in our view, clear beyond peradventure that that was not either the intention or the nature or the effect of this notice.  For those reasons we consider it unarguably right that the Employment Tribunal reached the conclusion that this was not a valid notice expiring on 31 December 1998, which was the employer’s contention.  Of course the employers could not possibly contend that it was a valid notice expiring on 23 November 1998 because not only was that date not mentioned in it, it was in fact less than the 6 months notice to which Mr Richmond-Swift was entitled.  

8	It is true that the reasons which I have given are not precisely in the same terms as those given by the Employment Tribunal to the extent that the Employment Tribunal relies (and we are not saying they were wrong in this) on the fact that the letter of 28 May is framed as a notice of intention at a future date to make Mr Richmond-Swift redundant, so that even on its face it does not purport to be a notice of a termination of employment.  Whether or not that is right however, it seems to us, that in any event the result was inevitably correct because even if, contrary to that assumption, one takes the letter as having been intended to have immediate effect and not to be notice of future intentions, it simply does not specify or make ascertainable a date for the termination of the employment.  The appeal is therefore dismissed.