THE MASTER OF THE ROLLS: These cases raise an important question under the statutory provisions about unfair dismissal. Two men were employed by the British Broadcasting Corporation at its premises in Manchester. They were described as "house services attendants". That is a grandiloquent way of describing a commissionaire or a porter.
First, Mr. Dixon. He started with the British Broadcasting Corporation in 1974. The conditions of his employment as a house services attendant were put into writing. His employment was specifically described as a "temporary engagement for an indefinite period". It was subject to the term that it could be determined by one week's prior notice in writing on either side. After he had been there 20 months, the B.B.C. decided that they would soon have no further need for his services and would have to give him notice to terminate his employment. But instead of giving him a long notice, they got him to sign a new written contract of employment for a short term. He signed a new contract of employment covering the period from the 1st February, 1976 to the 31st March, 1976) but the agreement contained these significant words: "... unless previously determined by one week's prior notice in writing on either side". But when the period expired on the 31st March, 1976 the B.B.C. decided that they would like to retain his services for another month. So they wrote to him as follows: "We would like to extend the duration of your fixed term contract for a further period of four weeks after 31st March 1976, the date on which its present term expires. We therefore propose that the term of your engagement should now expire on 1st May 1976, Clause 3 being amended to that effect. The other provisions of your contract will continue in force for the period of the extension". So there were two short periods of extension in 1976, each in a written form, each of which the employee signed, and each including these important words, "unless previously determined by one week's prior notice in writing on either side". Similarly with Mr. Constanti. On the 1st May, 1976 those short term renewals expired. Thenceforward the two men were no longer employed by the B.B.C.
Both men claimed for unfair dismissal or for redundancy payment. Those claims depended in the first instance on whether they had been "dismissed" within the meaning of the Act. If they had been "dismissed", the burden is on the employer to prove that the dismissal was not unfair. The Trade Union and Labour Relations Act 1974, Schedule 1, Part II, paragraph 4(1) says: "In every employment ... every employee shall have the right not to be unfairly dismissed by his employer". If these men were "dismissed, the B.B.C. would no doubt say it was not unfair. The B.B.C. would say, "We only employed you temporarily. You knew that perfectly well: and when the temporary period came to an end, you had to leave, so you have no cause for complaint". That is the sort of reason which Mr. Justice Phillips considered in Terry v. East Sussex County Council (1976) ICR 536. But in this case the B.B.C. took a preliminary point. They said that these men were not "dismissed" at all within the meaning of the Act. The B.B.C. relied on the decision of this court in British Broadcasting Corporation v. Ioannou (1975) 1 Queen's Bench 781. They said that under the terms of their contract the employment of these men had come to an end. So they had not been dismissed at all. The industrial tribunal accepted that argument. It held that it had no jurisdiction to go into the case because these men had not been dismissed.
When, then, is a man "dismissed"? Paragraph 5(2) gives a definition. It says: "... an employee shall be treated for the purposes of this Act as dismissed by his employer, if, and only if, - (a) the contract under which he is employed by the employer is terminated by the employer, whether it is so terminated by notice or without notice" - in this case that did not happen - "or (b) where under that contract he is employed for a fixed term, that term expires without being renewed under the same contract". These men both said that they were employed for a "fixed term", albeit it was only four weeks, and that term expired without being renewed. So they were dismissed within the meaning of paragraph 5(2)(b).
That would seem to be a perfectly good ground for saying they were "dismissed". But the B.B.C. dispute it. They say that these men were not employed for a fixed term. Each agreement contained a term that it could be determined by one week's notice: and that means it was not for a "fixed term". It was so decided, they say, in the case of Ioannou. The case of B.B.C. v. Ioannou turned on another paragraph in the schedule. It is paragraph 12. That says that, when a man has a two-year contract, the employer can stipulate that the man shall have no right to compensation when that term comes to an end. The actual words are:
"Paragraph 4 (which gives the right to compensation) does not apply ... (b) to dismissal from employment under a contract for a fixed term of two years or more, where the dismissal consists only of the expiry of that term without its being renewed, if before the term so expires the employee has agreed in writing to exclude any claim in respect of rights under that paragraph in relation to that contract".
In British Broadcasting Corporation v. Ioannou (1975) 1 Queen's Bench 781 Mr. Ioannou was employed for three successive periods: first for three years: followed by two years: and lastly by one year. Each contained a term that it was determinable by three months' notice.
One ground for decision was that the only relevant period was the last period of one year. That was less than two years. So paragraph 12 of the Schedule did not apply. Paragraph 4 applied. So Mr. Ioannou was "dismissed" and could claim compensation for unfair dismissal.
The other ground of decision was that a "fixed term" is one that cannot be unfixed by notice. To be a "fixed term" the parties must be bound by the term stated in the agreement: and unable to determine it by notice on either side. Assuming, therefore, that Mr. Ioannou's contract was for six years, it was not a "fixed term" because it could be determined by three months' notice.
That second ground had not been taken in the courts below. It was taken by this court itself. Now after further consideration, I desire to say at once that that second ground was mistaken. It was a wrong ground. We did not in that case refer to paragraph 5(2)(b). If we had done so, we should have held ' that a "fixed term" is sufficiently satisfied if the contract is for a specific stated period, even though it is determinable by notice within that period.
Take this present case of Mr. Dixon. His last two contracts were for two months and another for four weeks, each containing a provision for a week's notice. Were those contracts for a "fixed term"? Looking at the general purpose and intention of the statute, each contract must have been employment for a "fixed term" within the meaning of the statute. Otherwise you get an absurd position. If a man was employed for four weeks (and there was no clause in his contract making it determinable by a week's notice) he can claim for dismissal when the four weeks come to an end. But by inserting in the contract a clause for a week's notice, the employer can get rid of any employee under the statute when the period of four weeks comes to an end. On the other hand, if the employer, within the four weeks, determines it by one week's notice, then he will be liable to answer a complaint of unfair dismissal. It would mean that an employer could always evade the Act by inserting a simple clause "determinable by one week's notice". That can never have been the intention of the legislature at all. The words "a fixed term" must include a specified stated term even though the contract is determinable by notice within its term.
Seeing that the second ground of decision in Ioannou's case was erroneous, I think we can depart from it. As I have often said, we are not absolutely bound by a previous decision of this court. At any rate, we are not bound when two grounds are given for a decision of this court: and afterwards, on investigation, it is found that one of them is right and the other is wrong. The case is then of authority for the correct ground and not for the ground which is shown to be incorrect.
I can understand entirely the attitude taken by the Employment Appeal Tribunal. They felt they could not overcome the second ground in Ioannou's case. By a very ingenious line of reasoning, they evaded it. I admire the ingenuity by which they achieved the sensible result: but I do not think it is necessary for us to use like ingenuity. We can and should give a consistent meaning to the whole of these provisions by holding that the words "fixed term" mean a specified term even though it is determinable by notice within that term.
In the result both these men, having been employed under contracts for a fixed term, can claim that they were dismissed. They can put in a claim before a tribunal. Then it will be for the employer to prove that the dismissal was not unfair and that there were good reasons for it. They may be able to do it. The industrial tribunal have jurisdiction to hear these cases. They should be remitted for reconsideration accordingly.
I would therefore dismiss the appeal on both grounds.
LORD JUSTICE SHAW: I agree. The short but critical question raised by this appeal is what is the meaning to be attributed to the phrase "fixed term" where it appears in paragraph 5) Part II of the First Schedule of the Trade Union and Labour Relations Act 1974. If the phrase is looked at in isolation, the natural construction is that it means an immovable term for whatever period may be stated; but it is requisite to look at the heading of Part II of the Schedule. It refers to "unfair dismissal" and it is followed by the rubric "right of employee not to be unfairly dismissed". Beginning with that emphasis, it seems to me that the language which follows must be understood in the light of the protection of the employee against unfair dismissal. In turn that involves the question of what constitute a dismissal.
If the matter arose now for the first time, one would be inclined to the view that what appears at first sight to be the natural meaning of the expression cannot be the right one because it would not be consonant with the objectives of the Act. It would be easy, as my Lord has already said, for an employer to introduce into a contract for a stated term a provision as to notice; and the result would be that the purpose of the Act, as expressed in the heading of Part II of the Third Schedule, would be stultified.
The difficulty arises from the judgments in British Broadcasting Corporation v. Ioannou (1975) 1 Queen's Bench 7S1. There the question was as to the meaning of the same expression used in the Act of 1971 in a passage which corresponds to what is now paragraph 12 of the First Schedule to the Act of 1974. The court had then to consider two matters: first, whether the contract in question was a contract for two years or more; and, secondly, whether it was in any case a contract for a fixed term. The court held that the contract was not for two years or more, and on that basis dismissed the appeal. It went on to decide that it was not a contract for a fixed term because the period of the contract could be shortened by notice. Notwithstanding that, the court remitted the case for further consideration by the tribunal, which appears to have been an outcome inconsistent with the view they took as to the meaning of "fixed term".
However, in that case, the court was not invited to consider the phrase "fixed term" in relation to the context of the whole then current legislation; and it was not drawn to the attention of the court that the meaning they ascribed to that phrase would bring it into head on collision with other legislative provisions designed to protect an employee from a premature or unfair determination of his employment. It is quite clear from the argument which has been addressed to this court in these two appeals that the result of adopting the view taken by the court in that case as to what was meant by a fixed term would be to erase in a substantial degree what was the manifest intention of the Act of 1974, for it would be possible to get round the provisions designed to protect an employee against unfair dismissal simply by inserting in a contract for a stated term a provision for determination by notice. That would give rise to an intolerable absurdity. It is a consequence to which the attention of the court in Ioannou's case was not drawn because it was considering in isolation what was then paragraph 12 of the Schedule to the Act of 1974. It seems to me, accordingly, that it may properly be said that the decision so far as that matter was concerned was per incuriam. It was moreover unnecessary for the ultimate determination of the appeal. Once the court had decided that the contract in that case was not a contract for two years, it was immaterial whether or not it was a contract for a fixed term. It seems to me, therefore, with all respect to the view then taken that the decision ought not to be followed in regard to the meaning of "fixed term".
I too would dismiss the appeal.
LORD JUSTICE BRANDON: Part II of the First Schedule to the Trade Union and Labour Relations Act 1974 has the heading "Unfair Dismissal". It contains 12 paragraphs, numbered 4 to 15. Those paragraphs consitute an entire code which, it seems to me, has to be read and understood as a whole.
The present appeals raise the question as to what is meant by the expression "fixed term" as used in paragraph 5(2)(b) of that First Schedule. The same expression is also used in paragraph 12 (a) and (b). Paragraph 12(b) was originally in section 30 of the Industrial Relations Act 1971; and at the time when it was in that Act its meaning was considered by this court in the case of British Broadcasting Corporation v. Ioannou, to which both my Lords have referred. The Court of Appeal on that occasion held that the expression did not include a term which, although of fixed length in principle, could be terminated earlier by notice on either side.
Prima facie one would expect the expression "fixed term" to have the same meaning in paragraph 5(2)(b) as in paragraph 12 (a) and (b). I can see nothing in the code as a whole to displace that prima facie view. The only problem with which this court is faced is that a different view was taken about the meaning of the expression in the case to which I have referred from that which would make any sense in paragraph 5. If the meaning ascribed to the expression in the case referred to is applied to paragraph 5; the result to my mind is to defeat to a large extent the purpose of the code. It would create an enormous breach in the wall of protection which the code has built round employees. I would not be prepared to give to that expression in paragraph 5(2)(b) a meaning which had that effect.
Since I am of that opinion, I am faced with a dilemma. Either I have to hold that the expression means something different in the two paragraphs or I have to conclude that the decision in Ioannou's case was erroneous. I would not for my part be prepared not to follow the decision in Ioannou's case simply because the meaning put on this expression was only one of the reasons for the judgment given, but I would agree with both my Lords that this court is entitled not to apply the decision in Ioannou's case on the ground that it was reached per incuriam. I began my judgment by saying that I thought that this was a complete code which had to be viewed as a whole. It seems to me that in that case, for reasons which it is not necessary to go into, and which are in any event impossible to ascertain, the code was not viewed as a whole. The expression was looked at in one paragraph only without reference to its presence in another paragraph and, as a result, an erroneous conclusion was reached.
For these reasons I agree that this appeal should be dismissed and that these two employees should be entitled to have their claims considered, although the reasons for such decision are different from those given by the Employment Appeal Tribunal.
(Order: Appeal dismissed with costs)
