England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM AN EMPLOYMENT APPEAL TRIBUNAL
(Mr Justice Wall)

		Royal Courts of Justice Strand London, WC2
		17th July 2003

Thursday, 17th July 2003
1. LORD JUSTICE PETER GIBSON: Section 94 of the Employment Rights Act 1996 gives an employee the right not to be unfairly dismissed. But by section 109(1):

"Section 94 does not apply to the dismissal of an employee if on or before the effective date of termination he has attained-

(a) in a case where-

(i) in the undertaking in which the employee was employed there was a normal retiring age when employees holding the position held by the employee, and

(ii) the age was the same whether the employee holding that position was a man or a woman

that normal retiring age, and

(b) in any other case the age of sixty-five."

By "position" is meant the following matters taken as a whole: (a) the employee's status as an employee; (b) the nature of his work; and (c) his terms and conditions of employment (section 235(1) of the 1996 Act).

2. In Waite v Government Communication Headquarters [1983] 2 AC 714 at 721 Lord Fraser commented on the remarkable extent to which the expression "normal retiring age" in its legislative context, dating only from 1971, had been the subject of judicial discussion. The 20 years subsequent to Waite have shown little diminution in the amount of litigation which the subject has produced.
3. This is an appeal by the appellant, Mr Jayawardane, from the order made on 2nd December 2002 by the Employment Appeal Tribunal ("the EAT"), Wall J presiding. The EAT thereby allowed the appeal of the respondents, the Commissioners of Customs and Excise ("the Commissioners"), against the decision of an Employment Tribunal ("the Tribunal") sitting at London South. By their decision sent to the parties on 10th August 2001, the Tribunal held that the normal retiring age for employees holding the position held by Mr Jayawardane, a Band 6 employee within the Commissioners, is the age of 62 and that Mr Jayawardane, who was 60 when dismissed, therefore had the right not to be unfairly dismissed.
4. The background facts can be stated very shortly. Mr Jayawardane was born on 25th May 1940. He was employed from 7th April 1975 until 30th November 2000, latterly as an executive officer in Job Band 6. The documents provided for the Tribunal included a statement for new recruits. The document in the bundle related not to Mr Jayawardane but to a Mr Skinner, appointed as from 1st November 1975 as an established executive officer in the Customs and Excise department, that is to say more than six months after Mr Jayawardane was appointed. It appears to have been accepted that a document like this would have been provided for Mr Jayawardane, although before us we have had another document, a letter dated 21st February 1975, shown to us by Mr Jayawardane. It is in different form and does not set out nearly as much information for a new recruit as the statement for new recruits. Mr Skinner's document contained statements to the following effect. He was told that he was employed by the Crown and that the Crown had the right to change its employees' conditions of service at any time. He was told that he held his appointment at the pleasure of the Crown, but that in practice, provided an officer gave satisfactory service, an established appointment in the Civil Service is not normally terminated before the holder reaches retiring age.
5. Under the heading "Superannuation Benefits" there is this:

"Superannuation benefits are provided under the Principal Civil Service Pension Scheme ... . For those who retire with at least five years' service having reached the retiring age (normally 60), an annual pension is paid ...."

I need not read the details given of the benefits provided.

6. Another document before the Tribunal was a witness statement by Elizabeth Carmichael on behalf of the Commissioners. This stated in paragraph 2:

"I refer to the normal retirement age in the section Mr Jayawardane was working in. There is a common retirement policy throughout Customs and Excise. The normal minimum retirement age for all staff at any job band is age 60. All staff can retire at this point and receive any accrued pension entitlement. The maximum retirement age depends on three factors, job band, health and efficiency. The maximum retirement age for those staff in job band 7 and above is age 60, for those in job bands 5 and 6 it is age 62 and for those in job bands 1 to 4 it is 65. It has been the Department's custom and practice for many years to allow staff in job bands 1-6 to continue to work beyond the age of 60 if they wished to do so and provided that their health and efficiency were acceptable."

7. Also before the Tribunal were excerpts from a staff handbook, which contain a number of provisions of relevance. Chapter 2 is headed "General Principles", and section 1 sets out over four pages of provisions relating to retirement. They include:

"1.1 When can I retire?

You can retire when:

• you have reached the minimum retiring age of 60 (or less in certain circumstances, as explained in this book); or

• you have reached the maximum retiring age (see below).

The maximum retiring ages at present are. ..."

Then the maximum retiring ages for a number of bands are set out, including 62 for staff in job bands 5 and 6.

"1.2 Retention beyond the minimum retiring age (Job Bands 1 - 6)

Whether you can be retained will depend on factors such as:

• your fitness;

• your efficiency; and

• the overriding needs of the Department.

In the [sic] view of the Department's custom and practice over many years of allowing staff in Job Bands 1-6 (and formerly at EO grade and below) to stay on beyond age 60 if they wished (subject to health and efficiency), you cannot be required to leave before 62 (Bands 5 and 6) or 65 (Bands 1-4) unless you are made compulsory [sic] redundant."

8. By paragraph 1.3 the Personnel Management Unit ("the PMU") is responsible for carrying out a review before age 59½ to determine if a person is suitable for retention.
9. In paragraph 1.7 it is provided:

"You will normally receive 6 months' notice of your retirement at age 60. ... If you wish to retire before reaching the maximum retiring age (for those in Job Bands 1-6) you should give your PMU at least 3 months' notice to ensure the Contractor has sufficient time in which to prepare your pension award."

10. In section 8 provisions are contained under the heading: "Health & efficiency of officers approaching the minimum retirement age". By paragraph 8.1:

"General

The minimum retirement age for civil servants is 60. No-one can be guaranteed that they will be retained beyond this point. The decision as to whether or not an officer should be retained beyond age 60 is laid to the appropriate senior manager who will consider, amongst other factors, the officer's levels of health and efficiency."

11. On 3rd August 1999 the Commissioners wrote informing Mr Jayawardane that his retirement was under consideration and that there was a possibility of his retention to age 62, subject to satisfactory health and efficiency and the availability of a suitable post for him. He was provided with a Retirement Option Form appropriate to his band. The form stated: "OPTIONS AVAILABLE". Then three options were specified, and he was required to tick his preference. The options were:

"I wish to

A) retire finally on 24/5/00

B) retire formally on 24/5/00 and immediately be re-employed

C) be retained in my current job band from my 60th birthday."

Mr Jayawardane ticked option B. He had to subscribe to two sentences, which said this:

"I understand that from age 60 the maximum pensionable service which may be accrued is 5 years. I accept that any agreement to re-employ or retain me beyond age 60 is subject to my health and efficiency continuing to be satisfactory and a suitable job remaining available."

The notes to the form prescribe that:

"The current maximum age is" [so far as relevant] "62 for Job Bands 5 and 6."

Mr Jayawardane signed that document, which he dated 28th September 1999. Mr Jayawardane, however, as I have indicated, had his employment terminated, the effective date of termination being 30th November 2000.

12. Mr Jayawardane then exercised his right of internal appeal. That failed. He tried to appeal to the Civil Service Appeals Board, but was told that he was ineligible. On 27th February he applied to the Tribunal, complaining of unfair dismissal. The Commissioners resisted that on the ground that he was not entitled to make that complaint because he had attained the age of 60 at the effective date of termination. That was, they said, the normal retiring age for employees holding the position he held, and in any event they said that the dismissal was not unfair.
13. The Tribunal dealt with the question of the "normal retiring" age as a preliminary point, on which they heard no evidence. They considered the bundle of documents to which I have referred. One document in the bundle contained some statistical information provided by the Commissioners shortly before the Tribunal hearing at the request of Mr Jayawardane's solicitors. That information was that 19 Band 6 officers ceased to work for the Commissioners on their sixtieth birthday during the year ended 30th November 2000. Three officers who had been Band 6 on their sixtieth birthday ceased to work for the Commissioners during that year, but, after their sixtieth birthday, two (including Mr Jayawardane) retired during the year and one when aged 62. None of those three was regraded to a band lower than 6 on the sixtieth birthday or was so regraded at a later date. The Tribunal noted that some statistics had been provided which seemed to indicate that a few people stayed on after 60. They recorded that counsel for Mr Jayawardane suggested to the Tribunal that statistics were totally irrelevant; and that suggestion appears to have been accepted by the Tribunal, because they make no further reference to this point.
14. The Tribunal in their Extended Reasons set out the basic facts and the arguments of counsel on both sides and said:

"15. The Tribunal finds that the contractual retiring age and therefore the normal retiring age for individuals holding the position of the Applicant, i.e. a band 6 officer in Customs and Excise is 62 years of age and the Applicant therefore does have the right under section 94 of the Employment Rights Act 1996 not to be unfairly dismissed.

16. We reached our decision by asking ourselves what would be the reasonable expectation or understanding of the Applicant as to his normal retiring age. The Respondents own literature and in particular the bold print at paragraph 1.2 of the handbook which we again repeat

'In the view of the departments custom and practice over many years of allowing staff in job bands 1-6 to stay on beyond age 60 if they wished (subject to health and efficiency) you cannot be required to leave before 62 unless you are made compulsorily redundant.'

We believe the contractual retiring age is 62, that thus affords any individual who is dismissed under age 62 and the opportunity to test whether or not the Respondents failure to allow him to stay on to 62 is fair. That we submit must satisfy the social aspect of ensuring fair treatment as regards compulsory retirement."

The Tribunal said that the applicant would fall within the exclusion set out in section 109 and therefore had the right not to be unfairly dismissed. Accordingly the Tribunal set a date for the full merits hearing.

15. The Commissioners appealed. At the preliminary hearing of their appeal the EAT, His Honour Judge Wilkie QC presiding, allowed the appeal to go to a full hearing. The Commissioners appealed on two grounds:

(1) the finding that the contractual retirement age was 62 was reached using a flawed methodology; and

(2) the Tribunal's finding that the normal retiring age was the same as the contractual retiring age was wrong in law and contrary to the evidence.

16. At the full hearing of the appeal the EAT found an error of law in the reasoning of the Tribunal, as expressed in paragraph 15, where they found the contractual retiring age and therefore the normal retiring age for individuals holding the position of Mr Jayawardane to be 62. The EAT contrasted that with what Lord Fraser said in Waite v Government Communication Headquarters at page 723:

"I therefore reject the view that the contractual retiring age conclusively fixes the normal retiring age. I accept that where there is a contractual retiring age, applicable to all, or nearly all, the employees holding the position which the appellant employee held, there is a presumption that the contractual retiring age is the normal retiring age for the group. But it is a presumption which, in my opinion, can be rebutted by evidence that there is in practice some higher age at which employees holding the position are regularly retired, and which they have reasonably come to regard as their normal retiring age. Having regard to the social policy which seems to underlie the Act - namely the policy of securing fair treatment, as regards compulsory retirement, as between different employees holding the same position - the expression 'normal retiring age' conveys the idea of an age at which employees in the group can reasonably expect to be compelled to retire, unless there is some special reason in a particular case for a different age to apply. 'Normal' in this context is not a mere synonym for 'usual'. The word 'usual' suggests a purely statistical approach by ascertaining the age at which the majority of employees actually retire, without regard to whether some of them may have been retained in office until a higher age for special reasons - such as a temporary shortage of employees with a particular skill, or a temporary glut of work, or personal consideration for an employee who has not sufficient reckonable service to qualify for a full pension. The proper test is in my view not merely statistical. It is to ascertain what would be the reasonable expectation or understanding of the employees holding that position at the relevant time. The contractual retiring age will prima facie be the normal, but it may be displaced by evidence that it is regularly departed from in practice. The evidence may show that the contractual retirement age has been superseded by some definite higher age, and, if so, that will have become the normal retiring age. Or the evidence may show merely that the contractual retiring age has been abandoned and that employees retire at a variety of higher ages. In that case there will be no normal retiring age and the statutory alternatives of 65 for a man and 60 for a woman will apply."

17. The EAT said that the Tribunal were plainly wrong in accepting the submissions of counsel for Mr Jayawardane that the statistics were totally irrelevant, though they accepted that it was for the Tribunal to decide on the quality of the statistics and how informative they were.
18. The EAT then considered whether the decision of the House of Lords in Hughes v Department of Health and Social Security [1985] 1 AC 776 assisted the appellant. In that case the contractual retiring age, which Lord Diplock said at page 787 was the age at which the employees could be compelled to retire, was 60. But, pursuant to a particular provision in what was called the primary code, individual government departments were given discretionary powers to supplement the primary code in its application to the particular department. Lord Diplock said at page 787:

"Where as a matter of administrative policy a department decides that for the time being it is in the interests of the departmental efficiency that a particular category of employees should, subject to continuing health and efficiency, be permitted if they so wish to remain in the employment of the department until they attain some specified age higher than 60, and such decision is communicated to employees in that category in a departmental circular issued pursuant to ... the primary code, employees in that category have a reasonable expectation that the higher age so specified has replaced the age of 60 as 'the normal retiring age', and the presumption of which Lord Fraser speaks in the Waite case ... in favour of the contractual retiring age of 60 as constituting the normal retiring age of employees in that category (whatever the position each may hold) is rebutted."

19. The EAT said that nothing in Hughes derogated or was intended to derogate from Lord Fraser's exposition in the Waite case. The EAT further said that the question for the Tribunal was whether Mr Jayawardane had a reasonable expectation of having a normal retiring age of 62 based on the documentation and any other admissible evidence. The EAT said at paragraph 42:

"However, as we have already made clear, the Tribunal can only properly approach the question by deciding first what Mr Jayawardane's contractual retiring age was. If it was 60, the question of reasonable expectation of a normal retiring age of 62 would then arise. If 62 was the contractual retiring age, the question of reasonable expectation was irrelevant. In our judgment it was not permissible, as the Tribunal appears to have done, to use the concept of 'reasonable expectation' as a means of ascertaining the contractual retiring age."

The EAT decided that they could not decide the question themselves and that the matter would have to go to a tribunal. They allowed the appeal and remitted the case to a fresh tribunal.

20. Mr Jayawardane applied to this court for permission to appeal. Permission was given by Clarke LJ, who said in paragraph 15 of his judgment of 26th February 2003:

"I have reached the conclusion that it is at least arguable that that conclusion is wrong. It would be correct if the ET had held that the contractual retiring age was 60 and therefore the normal retiring age was 60, because such a conclusion would deprive the employee of the opportunity of rebutting the presumption that the contractual retiring age and the normal retiring age are the same. However, it seems to me to be at least arguable that the same is not true in a case like this if the contractual retiring age is 62. No-one suggests that there is, in the words of Lord Fraser, 'some higher age at which employees holding the position are regularly retired'."

21. Mr Jayawardane appears in person before us assisted by his McKenzie friend Mr Perera. His submissions were in essence these:

(1) the Tribunal having decided that the contractual retirement age was 62, there was no error in the Tribunal holding that therefore the normal retirement age was 62 in circumstances in which no-one had suggested that there was some higher age at which employees holding the position held by Mr Jayawardane were regularly retired;

(2) the contractual retirement age was an issue of fact for the Tribunal which the EAT did not find was wrong.

(3) there was sufficient evidence to hold that the contractual retirement age was 62.

22. Mr Griffith-Jones QC for the Commissioners, who did not appear before the Tribunal or the EAT, submitted to us that the EAT were right to find an error of law by the Tribunal. He said that the Tribunal must first determine (a) whether there is a contractual retirement age and (if so) what it is; (b) if able to identify the contractual retirement age, it must determine whether the presumption that that age is also the normal retirement age has been rebutted by evidence that in practice there is some higher age at which employees holding the relevant position are regularly retired and which they have reasonably come to regard as their normal retirement age; that is determined at the effective date of termination of employment and with the exclusion of particular attributes or circumstances of the employee which extended beyond the three matters identified in section 235(1) as to the employee's position. He submitted that the Tribunal not only did not follow the procedure laid down in Waite but also confused the concepts of "contractual retiring age" and "normal retiring age" and, further, that they reached the decision not only as to "normal retiring age" but also as to "contractual retiring age" by having regard to the question: what would be the reasonable expectation or understanding of Mr Jayawardane?
23. I accept that the Tribunal can be criticised for appearing to pose a test for the normal retiring age by reference to the reasonable expectation or understanding of Mr Jayawardane, when the right test is not dependent on an applicant's personal expectation or understanding. But it is to be noted that the Tribunal correctly say that the relevant expectation or understanding must be reasonable, and that in itself imports an objective test. Further, I observe too that the submissions of counsel for Mr Jayawardane, which the Tribunal record, refer to what a band 6 employee holding Mr Jayawardane's position could reasonably expect: see paragraphs 10 and 12 of the Extended Reasons.
24. The primary thrust of the submission made by Mr Griffith-Jones was that the Tribunal wrongly found the contractual retiring age to be dependent on reasonable expectation or understanding. If the Tribunal had decided that, then I would entirely agree with that submission. But I do not think that that was the decision fairly read.
25. The Tribunal in the course of their Extended Reasons referred to the documents before them. They noted that the staff handbook extracts set out the position relating to retirement and that that document was issued to all employees. They set out other extracts from that document. They refer to the arguments of counsel in which reference is made to the extracts from the staff handbook. I emphasise that it was not merely counsel for Mr Jayawardane who relied on those extracts: counsel then appearing for the Commissioners also did that. It would appear therefore that the Tribunal were regarding as relevant contractual provisions that which was contained in the staff handbook.
26. No mention is made by the Tribunal to the statement for new recruits. We do not know whether that was because on its face it did not apply to Mr Jayawardane, or whether, being dated as long ago as 1975 and itself providing for the Crown having the right to change the terms and conditions of employment, the staff handbook was regarded as containing the relevant provisions dealing with retirement. Certainly there is nothing in the Tribunal's Extended Reasons to show that points such as are now taken by the Commissioners were put to the Tribunal. In particular, Mr Griffith-Jones now submits that the staff handbook should not be treated as containing any statements as to contractual provisions. He submits that it was for Mr Jayawardane to show that the retiring age specified in the statement for new recruits to which I have referred -- that is to say "normally 60" -- had been altered by subsequent amendment.
27. I have to say that I am surprised at the way the case has been presented by the Commissioners. They are a major government department. Normally employers in a dispute relating to normal retiring age will be cooperative in producing all the relevant contractual documents. It is to my mind very surprising indeed to find the Crown submitting that a clear statement such as one finds in paragraph 1.2, Chapter 2 of the staff handbook as to the age before which the employee cannot be required to leave cannot be relied on by the employee as a statement of his entitlement in law as a matter of contract.
28. Unhappily the preparation for the hearing before the Tribunal appears to leave a great deal to be desired. There is a letter dated 31st July 2001 from the solicitors for Mr Jayawardane, who note that they were somewhat surprised to learn from the Commissioners that they did not propose to use any evidence or documents at the hearing to take place then only seven days away. They asked for copies of all relevant sections of all contracts, regulations, handbooks or similar documents which concerned the date of retirement of any band 6 officer working for the Commissioners on 30th November 2000, I would expect that what was put into the bundle was derived from the Commissioners' response.
29. Mr Griffith-Jones has laid some emphasis on an index, with which we have not been provided, to the bundle of documents put before the Tribunal. That apparently distinguished between contractual documents (and contained the statement for new recruits bearing the name of Mr Skinner) and documents dealing with policy, where, apparently, were to be found the extracts from the staff handbook. To my mind, it would not be surprising if the Tribunal did not place great weight on the description in an index. Before the EAT it appears to have been accepted that there was some common ground that Mr Jayawardane would have received a document such as that apparently given to Mr Skinner, and I am prepared to proceed on that footing. But, for my part, I am wholly unable to accept that the statements in the staff handbook cannot be treated as statements as to the entitlement of Mr Jayawardane in relation to when he would have to retire.
30. What is significant in the circumstances of the present case is that there is no evidence at all, nor was it ever suggested, that persons in band 6 remained in employment until retirement after the age of 62. In those circumstances, if the contractual retiring age was 62, then matters such as statistics are of no relevance, as Mr Griffith-Jones very properly accepted.
31. In my judgment the EAT were wrong to say that there was a plain failure on the part of the Tribunal to follow the guidance given by Lord Fraser in Waite. If the Tribunal could properly find 62 as the contractual retirement age, then it was proper for them to say that therefore the normal retirement age was 62. I do not accept Mr Griffith-Jones' submission that the Tribunal applied a test based on expectation or understanding as to the contractual retiring age. If that had been their approach, then I would have expected them to have said so in paragraph 16. Instead, they say that they reached their decision by asking what would be the reasonable expectation or understanding of the applicant as to his normal retiring age. No mention is there made of the contractual retiring age. The decision to which they were directing themselves was, of course, the decision as to the normal retiring age, which is the age to which they had to pay attention having regard to section 109. No mention is made in the statute of the contractual retiring age. I therefore can find no error by the Tribunal in reaching that conclusion, and I respectfully disagree with the view of the EAT that the Tribunal reached a decision erroneous in law on that point.
32. On the question whether the contractual retiring age of 62 was a finding which was open to the Tribunal on the facts before them, in my judgment it plainly was, having regard to the way the matter appears to have been argued before them. It was open to them to consider the various provisions of the staff handbook and to reach the conclusion that it provided for the contractual retiring age to be the age before which employees in the relevant band could not be required to leave. True it is that that was made subject to various exceptions, but they are only exceptions from the contractual retiring age.
33. I, of course, accept Mr Griffith-Jones' submission that it was for the Commissioners, and the Commissioners alone, to decide such matters as whether the employee satisfied tests such as good health and efficiency, but to my mind the clear statement in paragraph 1.2 really puts the matter beyond question. I do not overlook the other statements in the staff handbook to which our attention was drawn, but they do not seem to me to amount to statements that the contractual retiring age was the minimum retiring age. In certain circumstances the minimum retiring age can indeed be the contractual retiring age. But when one asks the question, when could Mr Jayawardane be compelled to retire -- the question which Lord Diplock in Hughes said was the test for the contractual retiring age -- the answer is given in paragraph 1.2: "You cannot be required to leave before 62".
34. For these reasons I have reached the conclusion that the decision of the Tribunal cannot be impugned. I for my part, therefore, would allow the appeal, discharge the order of the EAT and restore that of the Tribunal.
35. LORD JUSTICE MANCE: I agree with Peter Gibson LJ's reasoning and conclusions; and there is nothing useful that I could further add.
36. LORD JUSTICE LONGMORE: I agree also.

Order: Appeal allowed as above with costs.