Industrial Tribunals Northern Ireland Decisions

THE INDUSTRIAL TRIBUNALS

 

CASE REFS:   1375/15

1379/15

 

 

 

CLAIMANTS:                       1.         William John Glendinning

                                                2.         Patrick Beggs        

 

 

RESPONDENTS:               1.         Mid Ulster District Council

                                                2.         Dungannon & South Tyrone Borough Council

 

 

 

DECISION

The unanimous decisions of the tribunal are as follows:

 

In the Glendinning case:

 

(A)       Mr Glendinning’s breach of contract claim in respect of notice (his “notice claim”) is well-founded.

 

(B)       Any claim for compensation due to him in respect of that breach of contract will be considered during the course of a remedies hearing, if the amount of any such compensation is not agreed between the parties beforehand.

 

(C)      Mr Glendinning has withdrawn all of his other claims against the New Council.  Accordingly, all of those other claims are dismissed.

 

 

In the Beggs case:

 

(A)       Mr Beggs’ notice claim against the New Council is well-founded.

 

(B)       Any claim for compensation due to him in respect of that breach of contract will be considered during the course of a remedies hearing, if the amount of any such compensation is not agreed between the parties beforehand.

 

(C)      The claim of Mr Beggs against the New Council in respect of an alleged underpayment is not well-founded.  Accordingly, that claim is dismissed.

 

(D)      Mr Beggs has withdrawn all of his other claims against the New Council.  Accordingly, all of those other claims are dismissed. 

 

(E)       As noted above, Mr Beggs made notice and underpayment claims against the New Council.  In the alternative, he made the same claims, against Dungannon & South Tyrone Borough Council (“Dungannon”).  None of the claims against Dungannon is well-founded.  Accordingly, all of those claims, against Dungannon, are dismissed.

 

 

Constitution of Tribunal:

Employment Judge:                      Employment Judge Buggy

Members:                                         Ms E Torrans

                                                            Mr B Hanna

 

Appearances:

 

Mr Glendinning was represented by Ms R Best, Barrister-at-Law, instructed by O’Reilly Stewart Solicitors. 

 

Mr Beggs was also represented by Ms Best.  In the Beggs case, Ms Best was instructed by McKeowns Solicitors.

 

In each of these two cases, the respondent/s was/were represented by Mr C Hamill, Barrister-at-Law, instructed by Worthingtons Solicitors.

 

 

REASONS

 

1.         Until 1 April 2015, there were 26 local district councils in Northern Ireland.  With effect from that date, under a programme of reform, 11 new councils took over the functions of the previous 26.  The new councils provide the same services as those which the previous councils had provided, but also have a number of additional powers and responsibilities. 

 

2.         As a result of amalgamation, some of the new councils had some surplus posts.  In order to address that surplus, each of the relevant new councils invited various staff to consider applying for “severance”, pursuant to that particular council’s severance scheme.

 

3.         The Mid Ulster District Council is referred to below as “the New Council”.  It replaced the previous Councils of: (1) Cookstown, (2) Magherafelt and (3) Dungannon & South Tyrone.

 

4.         These two cases are lead cases in respect of a multiple.  That multiple consists of five cases.  (In this Decision, the claimants in those five cases are referred to collectively as “the relevant claimants”). 

 

5.         The names of the “other” relevant claimants (the relevant claimants other than the claimants in these two cases), together with the relevant case reference numbers, are as follow:

 

(1)          Alan Burke (1377/15)

 

(2)          Brendan Currie (1378/15)

 

(3)          Thomas McClelland (1376/15)

 

6.         Prior to amalgamation:

 

            (1)       Mr Glendinning was employed by Magherafelt District Council (“Magherafelt”).

 

            (2)       The other four relevant claimants were employed by Dungannon & South Tyrone Borough Council (“Dungannon”). 

 

7.         Until 1 April 2015:

 

            (1)       Mr Glendinning was the Director of Building Control of Magherafelt. 

 

            (2)       Mr Beggs was the Head of Economic Development of Dungannon.

 

            (3)       Mr Alan Burke (“Mr Burke”) was the Chief Executive of Dungannon. 

 

            (4)       Mr Brendan Currie (“Mr Currie”) was the Director of Human Resources of Dungannon. 

 

            (5)       Mr Thomas McClelland was the Director of Building Services of Dungannon. 

 

8.         On 1 April 2015, each of the relevant claimants became an employee of the New Council.  The effect of a scheme which was made pursuant to Schedule 8 of the Local Government Act (Northern Ireland) 2014 (“the 2014 Act”) is that, for all purposes which are significant in the present context, each relevant claimant acquired the same entitlements, against the New Council, as he would have had if:

 

            (1)        the New Council had been a private employer and

 

            (2)       he had become an employee of the New Council pursuant to a relevant transfer within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 2006. 

 

9.         Each relevant claimant’s contract of employment was terminated pursuant to the New Council’s severance scheme (“the Severance Scheme”).

 

The claims

 

10.      The New Council is a respondent in each of these two cases.  (In the Glendinning case, it is the sole respondent).

 

11.      Each relevant claimant claims that:  (1)  the New Council was under a contractual obligation, implied pursuant to Article 118 of the Employment Rights (Northern Ireland) Order 1996 (“ERO”), to provide him with the due notice of termination of employment which is provided for in Article 118; and  (2)  it failed to do so.  These two cases (the Glendinning and Beggs cases) are lead cases in respect of those notice claims.  Neither claimant makes a notice claim on any contractual basis other than the implied contractual notice term which is provided for by Article 118 of ERO.

 

12.      For several years, until 1 February 2015, Mr Beggs had been working a three-day week.  Throughout the period beginning on 1 February 2015 and ending on the date of termination of his employment, Mr Beggs was working five days a week.  For the purpose of calculating his severance entitlements, the New Council based his pay on the weekly salary entitlement which he had had when he had been working for only three days a week.  In these proceedings, Mr Beggs claims that the New Council is in breach of relevant legal obligations by failing to pay his severance entitlements on the basis of the salary which he was earning while working five days per week.  That is the underpayment claim.

 

The evidence

 

13.      In respect of the evidence which we received in this case, our summary is as follows:

 

(1)       On the claimants’ side of these two cases, we received oral testimony from three of the relevant claimants: Mr Glendinning, Mr Beggs and Mr Currie.

 

(2)       On the respondent’s side of the case, we received oral testimony from Mr Anthony Tohill (the Chief Executive of the New Council) and from Ms Marissa Canavan (who was the lead HR Lead Officer of the New Council at the time of the terminations of the employments of Mr Glendinning and of Mr Beggs). 

 

(3)       We saw a large agreed bundle of documents, consisting of hundreds of pages.

 

(4)       We told the parties that, for evidential purposes, we would have regard to any document within the bundle only if our attention was specifically drawn to that particular document, by one, or several, or all of the parties.  

 

(5)       We also saw some miscellaneous documents.  (The miscellaneous documents were provided to us, during the course of the main hearing, by one, or several, or all of the parties).

 

14.      At the request of the New Council, witness summonses were issued, requiring the attendance of Mr Currie and Mr Burke as witnesses for the New Council.

 

15.      However, in the end, the New Council did not call either of those two witnesses.

 

16.      As already noted above, Mr Currie was called by the claimants as a witness.

 

17.      We invited Mr Beggs to consider calling Mr Burke as a witness in respect of his underpayment claim.  He decided not to do so.

 

18.      We do not consider that it would be appropriate, in all the circumstances of the Beggs case, to draw adverse inferences (of the type which were contemplated in Lynch v Ministry of Defence [1983] NI 216), against either Mr Beggs or against the New Council, in relation to their respective omissions to call Mr Burke as a witness.

 

The arguments and the Submissions   

 

19.      The main hearing of this case took place in February and March 2016 and on 7 October 2016. 

 

20.      At the end of the February/March stage of the hearing, the parties presented their oral arguments in these two cases.  In addition, at that time, each party provided us with a written submission (a “First Submission”).

 

21.      We had initially hoped that the Decision in this case would be issued in July 2016.  However, during a Case Management Discussion which was held on 1 July, I informed the parties that it would be helpful if they would address certain additional queries, which had been set out in writing in an email which had been sent to the parties on 28 June 2016.  (In this Decision, the list of queries which was set out in that email is referred to as “the Queries List”).  Those queries were as follows:

 

“1.          What are the relevant implications (if any) of the provisions of subsections (3) and (4) of section 123 of the Local Government Act 2014?  And, in that context, are there any relevant implications of: (a) the last two sub-paragraphs of paragraph 1.8 of the Severance Scheme and (b) of paragraph 3 of the covering letter which accompanied the Severance Scheme?  (The attention of the parties is drawn to the provisions of the [2015] Compensation for Loss of Employment Regulations: [SRNI 2015 No.68]).

 

2.           Keeley v Fosroc [2006] EWCA Civ 1277 is a case in which there was an issue as to whether an enhanced redundancy scheme had become incorporated into individual contracts of employment.  Does any party wish to make representations in relation to that case?

 

3.           Paragraph 3.0 of the Severance Scheme says that any disputes about the interpretation of the scheme will be considered by the [Joint] Forum, who will be the final arbiters in respect of that dispute.  Does that provision have any implications for the power of an industrial tribunal to interpret the scheme?

 

4.           Guidance on the Interpretation and Application of the RPA Severance Scheme was issued in February 2015.  Does any party wish to make any submissions in relation to that guidance?

 

5.           Article 118 of the Employment Rights Order is the latest version of statutory provisions which were originally contained in the [GB] Contracts of Employment Act [1963].  Against that background, in Article 118(3), is “waiving” a reference to the common law concept of “waiver by estoppel”.  (See “Chitty on Contracts”, Thirty-First Edition, at paragraphs 24-007 and 24-008; see also the English Court of Appeal decision in Kosmar Villa Holidays plc v Trustees of Syndicate 1243 [2008] EWCA Civ 147, at paras. 36-38). 

 

6.           In the Beggs case, did the relevant authorisation of the Council Committee only envisage additional staffing in respect of short term projects, and did the implementing contract of employment purport to relate to an indefinite period?  If so, was that purported contract ultra vires?;  If so, what are the relevant consequences in this case?”

 

22.      During the course of the 1 July CMD, it was agreed between the parties that each of them would, by 16 September 2016, provide an additional written submission (a “Second Submission”) in respect of the Queries List.  During that CMD, the parties also agreed that, in each of these two cases, a further hearing would be held on 7 October 2016, for the purpose of considering any oral arguments which either party might then wish to make, either in respect of the opposing party’s Second Submission, or in respect of the subject-matter of the Queries List generally.  I approved of those arrangements.

 

23.      I am sorry that the 28 June queries were not brought to the attention of the parties at a much earlier time.  That is my fault.  The issues which were set out in the Queries List only came to my attention when the preparatory work for the drafting of this decision was at an advanced stage; and some of them (not all of them) seemed to me to be of considerable potential significance.

 

24.      In arriving at our ultimate conclusions in respect of these cases, we have paid careful attention to all of the arguments which have been made to us, whether in the course of a Submission or in the course of oral argument.  Specific reference has been made to some of those arguments during the course of this Decision.  The Submissions provide a permanent record of much of the argument on each side of the case.  In those circumstances, it is unnecessary to provide comprehensive details in this Decision of all of the arguments.

 

The facts

 

25.      We made the findings of fact which are set out in the following sub-paragraphs:

 

(1)       The New Council did not take over the functions of its predecessor councils until 1 April 2015.  However, for several months beforehand, the New Council existed in “shadow” form.  At that time, the New Council already had some staff, including Mr Tohill and Ms Canavan (see paragraph 13 above) and it was already involved in addressing the manpower issues which were bound to arise once the amalgamation of the predecessor councils took place.

 

(2)       Among those manpower issues were questions relating to the following: (a) Which posts would be surplus in the New Council?  (b) What opportunities for redeployment would exist for the holders of any such surplus posts?  (c) What severance arrangements would be made for post-holders of surplus posts who did not wish to seek redeployment, or who were not successful in seeking redeployment?  All of those questions were addressed by Mr Tohill and Ms Canavan during the Winter and Spring of 2014/15.

 

(3)       Any relevant severance arrangements which were made by the New Council were made in accordance with the provisions of Circular LGRJF/11, which was issued on 4 February 2015.  In this Decision we refer to that circular as “the Circular”.  (See paragraphs 107 to 109 below).

 

(4)       The Circular allowed councils the freedom to choose between different options which were specified within that circular.  However, subject to that freedom of choice, no new council was entitled to deviate in any respect from any of the provisions of the Circular.

 

(5)       The New Council did indeed adopt the model severance scheme terms which were set out in the Circular.  Those terms became terms of the New Council’s own specific, severance scheme.  In this Decision, we refer to the New Council’s particular and specific severance scheme as “the Severance Scheme”.

 

(6)       In February 2015, the Local Government Reorganisation (Compensation for Loss of Employment) Regulations (Northern Ireland) 2015 were made.  In this Decision, we refer to those Regulations as “the 2015 Regulations”.  (See paragraph 112 below).

 

(7)       Mr Glendinning was employed by Magherafelt District Council from 1 April 1975 until 1 April 2015.  With effect from that date, by operation of law, he became an employee of the New Council.  On 1 April 2015, he held the post of Director of Building Control in respect of the geographical area within which Magherafelt District Council (“Magherafelt”) had operated.

 

(8)       On 18 November 2014, Ms Canavan sent a letter to Mr Glendinning.  That letter told him that, as a result of the formation of the New Council, his post would be “... directly affected” and that it would be “matched” to a Director’s post in the new structure (of the New Council).

 

(9)       On 18 November 2014, Mr Tohill sent a letter to Mr Glendinning.  That letter told Mr Glendinning that the New Council was then seeking expressions of interest in “Voluntary Severance”.  That letter invited employees whose posts had been identified as being “directly affected” to indicate whether they would be interested in voluntary severance.  Mr Tohill’s letter of 18 November 2014 asked Mr Glendinning to indicate any interest by 26 November 2014. 

 

(10)     On 28 November 2014, the New Council sent an email to Mr Glendinning, which invited him to take part in a limited selection competition in respect of a Director’s vacancy.  The email specified that any relevant application form had to be completed by 10 December 2014.

 

(11)     Mr Glendinning did not fill out any such application form. 

 

(12)     Mr Glendinning subsequently advised the New Council of his interest in the Severance Scheme.  The New Council sent Mr Glendinning a letter dated 5 December 2014 which gave him an illustration of the severance compensation which the New Council was willing to pay if he decided to avail of the Severance Scheme terms.  The New Council requested Mr Glendinning to fill out a Severance Scheme application form, and to return it to the New Council by 10 December 2014, if he was interested in availing of the Severance Scheme.

 

(13)     Mr Glendinning submitted a Severance Scheme application form on 8 December 2014.  On 12 February, the New Council informed Mr Glendinning that his application had been approved “in principle” and that his leaving date would be 15 April 2015.

 

(14)     Ms Canavan sent a letter to Mr Glendinning on 12 March 2015 which provided more detailed calculations in relation to his severance terms.  That letter stated that, in the event of his employment being terminated pursuant to the Severance Scheme, his leaving date would be 15 April 2015.  That letter also suggested that a meeting should be arranged, which Mr Glendinning, Mr Tohill and Ms Canavan would attend.

 

(15)     Mr Glendinning did attend such a meeting, with Mr Tohill and Ms Canavan, on 23 March 2015.

 

(16)     Ms Canavan sent another letter to Mr Glendinning on 30 March 2015.  That letter, in effect, contained a severance offer and stated:

 

“I can confirm that the Business Case regarding your Voluntary Severance was approved at the Council meeting on Thursday 26^th March 2015”.

 

That letter also stated the following:

 

            “Leaving Date will be 15 April 2015”.

 

(17)     On 1 April 2015, Mr Glendinning accepted that severance offer.

 

(18)     Mr Beggs was employed by Dungannon and South Tyrone District Council from April 1972 until 1 April 2015.  With effect from the latter date, he became an employee of the New Council.  His employment came to an end on 17 April 2015.

 

(19)     The post which Mr Beggs held on 1 April 2015 was the post of Head of Economic Development in respect of the geographical area in which Dungannon carried out local government functions.

 

(20)     In November 2014, at a meeting of the New Council, Mr Tohill presented a list of personnel whose posts were surplus to requirements.  The post held by Mr Beggs was among those posts.

 

(21)     From April 2009 until 31 January 2015, Mr Beggs worked 22.2 hours per week.

 

(22)     With effect from 31 January 2015, until the termination of his employment on 15 April 2015, Mr Beggs worked a 37 hour week.

 

(23)     According to Mr Beggs, the effect of that January 2015 increase in hours was to vastly increase the amount of compensation which was due to him pursuant to the Severance Scheme.  However, he told us that that allegedly consequential increase in his Severance Scheme compensation was just an unanticipated consequence of the 2015 increase in hours.  He also told us that a desire to increase his Severance Scheme compensation was not one of the reasons for that augmentation of his working hours.  The New Council has not argued the contrary.  Therefore, we have decided this case on the basis that the relevant factual assertions, on the part of Mr Beggs, are accurate.

 

(24)     On 6 February 2015, Mr Beggs received an email from Ms Canavan which contained details of the Severance Scheme.

 

(25)     On 11 February 2015, Mr Beggs submitted “an Illustration Request Form” in respect of the Severance Scheme.

 

(26)     Ms Canavan sent the claimant a letter dated 5 February 2015.  That letter advised the claimant that as a result of the formation of the New Council, his post had been “... directly affected”.  That letter also advised Mr Beggs that it would be possible for him to enter into a matching process which would aim to match his post to the Heads of Service posts in the New Council’s structure.  The letter stated the following:

 

“If you do not wish to be considered in the matching process, I would ask you to inform me by return and no later than Wednesday
11 February 2015 at 4.00 pm”.

 

(27)     On 6 March 2015, Mr Beggs stated that he had no interest in the matching process and was interested in the Severance Scheme.

 

(28)     The New Council sent a letter to Mr Beggs dated 12 March 2015.  That letter attached an illustration of the severance payments which the New Council would be willing to pay to Mr Beggs.  The same letter indicated that if Mr Beggs proceeded with his application, his leaving date would be 15 April 2015.

 

(29)     Mr Tohill forwarded the claimant another letter dated 5 February 2015.  That letter advised Mr Beggs that “[the New Council] is seeking expressions of interest in voluntary severance ...”.  That letter invited employees whose posts had been identified as “directly affected” to show their interest in voluntary severance.  Mr Tohill asked Mr Beggs to indicate any such interest by 11 April 2015.

 

(30)     Mr Beggs attended a meeting with Mr Tohill and Ms Canavan on 25 March 2015.  During that meeting, it was confirmed that notice pay would not be included alongside the compensation payments which would be payable pursuant to the Severance Scheme.

 

(31)     In a letter dated 30 March 2015, the New Council told Mr Beggs that if his employment was terminated pursuant to the Severance Scheme, his date of termination would be 15 April 2015.

 

(32)     On 31 March 2015, he met with Ms Canavan, who confirmed that his Severance Scheme application had been approved and that his leaving date would be 15 April 2015, if he chose to leave.

 

(33)     On 8 April 2015, Mr Beggs did finalize his Severance Scheme application and his employment ended on 17 April 2015.

 

(34)     The New Council calculated and paid Mr Beggs’ Severance Scheme compensation on the basis of the salary which he had earned when he had been working a three day week.

 

(35)     At all material times, Mr Beggs made it clear that he did not accept that a compensation payment calculation based on a three day week was correct.  Instead, at all material times, Mr Beggs made it clear that he considered that his Severance Scheme payments should be calculated on the basis of the salary which he had been earning while working a five day week.

 

(36)     In the interests of readability, and in order to minimize avoidable duplication, we have set out additional findings of fact elsewhere in this Decision.

 

The notice claims

 

26.      Article 118 of ERO, so far as material, provides as follows:

 

“118.—(1) The notice required to be given by an employer to terminate the contract of employment of a person who has been continuously employed for one month or more—

 

          (a)          ...

 

          (b)          ...

 

          (c)           is not less than twelve weeks' notice if his period of continuous          employment is twelve years or more.

 

(2)  The notice required to be given by an employee who has been continuously employed for one month or more to terminate his contract of employment is not less than one week.

 

(3)  Any provision for shorter notice in any contract of employment with a person who has been continuously employed for one month or more has effect subject to paragraphs (1) and (2); but this Article does not prevent either party from waiving his right to notice on any occasion or from accepting a payment in lieu of notice.

 

...”

 

The issues

 

27.      In each of these two cases, the claimant:

 

(1)       had been employed for more than twelve years at the time of the termination of his employment and

 

(2)       was given only two weeks’ notice of the termination of his employment.

 

28.      In each of these two cases, the claimant’s notice claim is based on the following propositions:

 

(1)          In the circumstances of the termination of his employment, the Article 118 implied term (as to notice) applied.

 

(2)          The claimant did not waive that notice entitlement.

 

29.      In each case, the defence is based on two propositions: 

 

(a)          The Article 118 notice term did not apply in the circumstances of the relevant claimant’s case. 

 

(b)          If there was or had been any such notice entitlement, that entitlement was waived by the claimant.

 

Was there a potential Article 118 entitlement?

 

30.      In each of these two cases, it is convenient first to deal with the question of whether (subject to any waiver defence) the claimant had any Article 118 entitlement to notice.

 

31.      The provisions of Article 118 of ERO are practically identical to the provisions of Section 86 of the Employment Rights Act 1996 (“ERA”), which applies in Great Britain.  Accordingly, decisions on the interpretation of section 86, and decisions in respect of the interpretation of the statutory predecessors of section 86, are of considerable assistance in carrying out the task of interpreting the provisions of Article 118. 

 

32.      The notice required pursuant to Article 118 only has to be given by the employer if it is the employer who is terminating the contract.  (See paragraph (1) of Article 118).

 

33.      As is pointed out at paragraph 458 of Division A II of “Harvey on Industrial Relations and Employment Law” (“Harvey”):

 

                     “The parties having agreed to make a contract can at any time agreed to unmake it; each may agree to release the other from future performance and the contract is thereby discharged.  The courts will, however, be slow to find that the contract has been terminated in that way unless the evidence is clear because the employee’s statutory rights to redundancy payments and to compensation for unfair dismissal depend on his being dismissed as defined, and consensual termination is not ‘dismissal’...”.

 

34.      Paragraph 460 of the same Division of Harvey is in the following terms:

 

“[460]

 

Fairly fine distinctions can arise when considering the issue of consensual termination Birch and Humber v University of Liverpool [1985] IRLR 165, [1985] ICR 470, CA. In circumstances where members of the University's technical staff applied, under a premature retirement compensation scheme, to be retired early, it was held that there was no dismissal for redundancy payment purposes when the employer accepted the request. The Court of Appeal approved the EAT's distinction between a contract which is terminated unilaterally (albeit without objection, and perhaps even with encouragement from the other party) and a contract which is terminated by mutual agreement. The facts in Birch fell into the latter category, unlike [Burton, Allton and Johnson v Peck [1975] IRLR 87] which fell into the former.”

 

35.      In Peck, the employee had become ill and was placed on the sick list in September 1972 and never worked again for the employers.  He was not replaced and his work was shared among other employees.  After six months, he received no more wages.  In September 1973, the employers told him that he could not be made redundant while he was on the sick list; that he would be made redundant if it were legally possible; and that it would be in his interests to accept redundancy.  On 26 November 1973, the employee reported for work.  Nothing was said at that time about his health or about his fitness to resume work; he was given no work and no pay and he was sent home, with the hope that the employers would decide his redundancy position.  Shortly afterwards, the employee visited the labour exchange with representatives of the employers, and no further action was taken by the employers.  In deciding in favour of the claimant in that case (in the context of his application for a redundancy payment), the tribunal noted that it had rejected the employer’s evidence that they were willing and anxious to employ the employee if he was fit for work and that there was also evidence that the employers had not employed anyone else to do the claimant’s work.  The tribunal’s decision was upheld upon appeal.

 

36.      At paragraphs 335-338 of Division D1 of Harvey, the implications of the decision of the Court of Appeal in Birch are explained, in the following terms: 

 

“[335]

 

A similar approach was adopted by the Court of Appeal in [Birch], a redundancy case. There the respondents were members of the University's technical staff who applied for retirement under the University's Retirement Compensation Scheme. They had volunteered to be retired after the University had announced to all its staff that there had been a reduction in funds and that there would, accordingly, have to be a reduction in the number of staff employed. The tribunal held that in these circumstances there was a dismissal. They relied upon the case of [Peck], a case which establishes that where an employer states that some workers will have to be made redundant, and volunteers come forward to accept redundancy, this is still treated as a termination by the employer and not a mutual agreement to terminate the contract. However, in Birch the EAT upheld the University's appeal ([1984] IRLR 54) and distinguished the [Peck] case as follows:

 

 

'' ... the fact that an employee has no objection to being dismissed, or even volunteers to be dismissed, does not prevent his dismissal, when it occurs, from being a dismissal within the meaning of the Act. We do not read the judgment as encroaching in any way upon the distinction which exists in law between a contract which is terminated unilaterally (albeit without objection, and perhaps even with encouragement from the other party) and a contract which is terminated by mutual agreement. The phrase "consensual dismissal" which the [employment] tribunal used seems to us, with respect, to blur this critical distinction. In every case it will be necessary to determine what it is that has had the effect, as a matter of law, of terminating the particular contract, and on the undisputed facts of the present case it seems to us clear for the reasons already given that the termination was effected by mutual agreement and not by dismissal'.'

 

[336]

 

The Court of Appeal upheld the decision of the EAT, and the comments quoted above from the decision of Nolan J, giving judgment for the EAT, were 'wholeheartedly endorsed' by Ackner LJ. Slade LJ added that in deciding whether or not the contract had been terminated by the employer 'the authorities ... require one to look at the realities of the facts rather than the form of the relevant transactions'. Ultimately, therefore, as Ackner LJ recognised, the issue is essentially one of fact and degree. As he put it:

 

 

''was there any pressure placed upon the employee to resign and if so was the degree of pressure such as to amount in reality to a dismissal?''

 

[337]

 

As the EAT noted in Scott v Coalite Fuels and Chemicals Ltd [1988] IRLR 131, [1988] ICR 355, a decision which expressly followed the analyses in the Martin and Birch decisions, because the issue is significantly one of fact, it will be rare for a point of law to arise in this context.

 

[338]

 

It must be said, however, that this test is easier to state than to apply. Perhaps the real distinction between the [Peck] and [Birch] cases is that it would be contrary to fairness and good industrial relations practice to deprive persons who volunteer for redundancy of their redundancy pay by treating them as having left by agreement. No such considerations arose in the [Birch] case where the employees benefited from acceptable early retirement terms. Putting the distinction in more formal legal terms, it is that volunteers for redundancy do not agree to terminate their contracts: rather they agree to be dismissed for redundancy. In the [Birch] case, in contrast, the employees could be said to have agreed to terminate (as opposed to agreeing to be dismissed) on the early retirement terms. Indeed, in the slightly different context of collective redundancy consultation for the purposes of s 188 TULR(C)A 1992, the EAT upheld the approach of the tribunal at first instance to treat a number of volunteers for redundancy as being dismissals without having to investigate the precise facts and circumstances of each case: see Optare Group Ltd v Transport and General Workers Union [2007] IRLR 931, EAT”.

 

37.      Mr Glendinning and Mr Beggs both received statutory redundancy payments.  But they were not entitled to notice if they are treated as having left by agreement, as distinct from agreeing to be dismissed.

 

38.      Against that background:

 

(1)       As will have been noted, Harvey suggests, at para 338 of the extract which we have quoted above, that the real distinction, between cases in which there is deemed to be a termination by mutual agreement and cases in which there is deemed to be a termination by dismissal, is that it would be contrary to fairness and good industrial relations practice to deprive a redundancy volunteer (somebody who volunteers for redundancy) of his redundancy pay by treating him as having left by agreement.  We see a lot of sense in that suggestion.

 

(2)       We also see the logic of the suggestion (in the same paragraph of Harvey) that redundancy volunteers do not agree to terminate their contracts, but instead agree to be dismissed, and that the appropriate contrast is between:

 

(a)          employees who can be said to have agreed to terminate their contracts, and

 

(b)          employees who have agreed to allow the employer to terminate those contracts.

 

39.      In Khan v HGS Global Ltd [UKEAT/0176/15/DM], the claimant made a claim of unfair dismissal.  The employment tribunal found that there had been a consensual termination of the claimant’s contract of employment and thus, for the purposes of the unfair dismissals legislation, no dismissal.  On appeal to the Employment Appeal Tribunal, it was argued that, because of the ET’s finding that the claimant had agreed to the termination of his employment and had agreed to the mechanism by which this was to be carried out, the ET was bound to find that this was a dismissal for the purposes of the unfair dismissals legislation.  Judge Eady dismissed the appeal, mainly on the following grounds:   

 

(1)          She stated that the question for the ET had been: who had really ended the claimant’s employment? 

 

(2)          The ET was required to have regard to the substance and not merely to the form of the transaction.

 

(3)          Having done so, the ET had been satisfied that the claimant had voluntarily agreed that his contract of employment should be terminated, at a time and in circumstances in which there would otherwise have been no dismissal.  The ET had therefore arrived at a factual conclusion that, by merely agreeing to the consensual termination of his employment and to the agreed severance terms, the claimant was not volunteering to be dismissed.

 

(4)          That was a conclusion which had been open to the ET on the evidence; therefore, it could not be said that the ET had thereby erred in law. 

 

40.      We note that, in Khan, the claimant had received a statutory redundancy payment from the employer.  In that situation, we are surprised that the EAT upheld the employment tribunal’s conclusion that that claimant had agreed to the termination of his employment (as distinct from agreeing to allow the employer to terminate it).  However, we think that Khan should be seen mainly as a reassertion of the primacy of the employment tribunal in its role as the judicial fact-finder.  (See paragraph [337] of the extract from Harvey which is set out above at paragraph 36). 

 

41.      In each of these two cases, we are satisfied that a contractual term was implied (into the relevant contract of employment) by Article 118 of ERO and that, as a result, the New Council became subject to a contractual obligation to provide the relevant claimant with 12 weeks’ notice of the termination of his employment.

 

42.      In each case, we are satisfied that the New Council became subject to the Article 118 obligation because, as a matter of law, the New Council is deemed to have been the terminator of the relevant contract of employment.    

 

43.      We use the phrase “deemed to have been the terminator” for good reason.  In our view, in a situation in which an employee applies to the employer to be made voluntarily redundant, most people would regard that employee as being the main instigator of the termination.  However, for very good policy reasons, there is a consistent line of case law which decides that, as a matter of law, employers are often to be regarded as being the terminator of the contract of employment if that termination takes the form of a voluntary redundancy.    It is clear law that someone who was dismissed pursuant to a voluntary redundancy application can often be regarded as having been dismissed, even if he or she wanted that to happen, and even if he or she had asked the employer to make it happen. 

 

44.      It will be recalled that in Birch (see para 36 above) the Court of Appeal decided that:

 

(1)          the claimants, who had applied to the University of Liverpool for premature retirement, were the terminators of their respective contract of employment;

 

(2)          the University was not the terminator of those contracts; and

 

(3)          as a result, neither of the claimants was entitled to a statutory redundancy payment.

 

45.      The facts of the Birch case are very far removed from the facts of the present two cases.  In Birch, the claimants had been successful applicants under a Premature Retirement Compensation Scheme.  In that case:

 

(1)          One of the provisions of that Scheme explicitly stated that it was not a redundancy scheme. 

 

(2)          In the definitions part of that Scheme, it was stated that, for the purposes of the Scheme, a premature retirement was retirement before normal retirement age by some underlying agreement between the employee and the employer. 

 

46.      However, in each of the present two cases:

 

(1)          The relevant claimant’s current post was surplus to the New Council’s requirements.

 

(2)          If the claimant had decided not to apply under the Severance Scheme, he would not have been able to stay in his current post on anything other than a relatively short-term basis.

 

(3)       The New Council accepted that the claimant was entitled to a statutory redundancy payment and it made a statutory redundancy payment to him.  (See sub-paragraph (a) of paragraph (1) of Article 170 of ERO, which refers to an employee being “dismissed”).

 

47.      Against that background, and for those reasons, in each of these two cases, we are satisfied that:

 

            (1)       the termination of the claimant’s employment was a termination which took place in a context which was at least analogous to a voluntary redundancy context and

 

            (2)       the New Council was the terminator of the employment. 

 

48.      Therefore, in each of these two cases, subject to the waiver issue (which is addressed below), we conclude that the New Council came under an Article 118 implied obligation to provide notice. 

 

Was the entitlement waived?

 

49.      In each of these two cases, we next need to deal with the question of whether the claimant waived that entitlement. 

 

50.      It will be recalled that the Employment Rights Act applies in Great Britain.  Section 86 of ERA is the equivalent of Article 118 of ERO.  In particular, subsection (3) of section 86 is the equivalent of paragraph (3) of Article 118.

 

51.      In light of the wording and the enactment contexts of Article 118 of ERO and of section 86 of ERA respectively, it is clear that Article 118 is intended to have the same meaning and scope as the provisions of section 86.

 

52.      The earliest statutory predecessor of section 86 was section 1 of the Contracts of Employment Act 1963.  Section 1 contained threshold requirements which were more onerous than those which are now imposed by section 86 and Article 118.  (An employee had to be continuously employed for 26 weeks or more, before he or she could avail of the entitlement to a minimum period of notice).  Furthermore, the notice period entitlements conferred by section 1 of the 1963 Act were much less generous than those which are now conferred by section 86 and by Article 118 respectively.  (Under section 1 of the 1963 Act, an employee was entitled only to four week’s notice even if he or she had been continuously employed for five years or more).  Nevertheless, the legislative structure and wording of section 86 of ERA is very similar indeed to the legislative structure and wording of section 1 of the 1963 Act.

 

53.      The scheme of section 1 (of the 1963 Act) can be summarised as follows:

 

(1)       Subsection (1) of section 1 created an implied contractual term which created notice entitlements (in favour of an employee) if an employer terminated a contract of employment.

 

(2)       Subsection (2) created an implied contractual term which created a notice entitlement (in favour of an employer) if an employee terminated his or her contract of employment.

 

(3)       Subsection (3) provided that any provision for shorter notice in any contract of employment was to have effect subject to the implied terms which were being imposed respectively by subsections (1) and (2).

 

(4)       Subsection (3) provided that:

 

          “... this section shall not be taken to prevent either party from waiving his right to notice on any occasion ...”

 

(5)       Subsection (3) also specified that section 1 was not to be taken to prevent either party from accepting a payment in lieu of notice.

 

            Subsections (1), (2) and (3) of section 86 of ERA contain provisions which (for all purposes which are relevant in the present context) are practically identical to those provisions of the 1963 Act which have been highlighted in the last preceding paragraph above.

 

54.      In particular, subsection (3) of section 86 of ERA is cast in practically identical terms to the provision which was contained in subsection (3) of section 1 of the 1963 Act.  That subsection had provided as follows:

 

“(3)  Any provision for shorter notice in any contract of employment with a person who has been continuously employed [for a period which is sufficient to trigger the relevant statutory notice entitlement] shall have effect subject to the foregoing subsections, but this section shall not be taken to prevent either party from waiving his right to notice on any occasion, or from accepting a payment in lieu of notice”.

 

55.      A key question is as follows:  In subsection (3) of section 1 of the 1963 Act, what did the reference to “waiving his right to notice” mean?

 

56.      One thing which is clear is that, in the present context, it is not possible for the parties to a severance scheme to contract out of the Article 118(1) entitlements:  See the opening words of paragraph (3) of Article 118; and see also Article 245 of ERO.

 

57.      Article 245 is headed “Restrictions on contracting out”.  Paragraph (1) of article 245 creates a general rule, which is that any provision in an agreement is void in so far as it purports to exclude or limit the operation of any provision of ERO (The provisions of paragraph (1) of Article 118 are of course provisions of ERO).  There are exceptions to that general rule.  However, none of those exceptions is applicable in the circumstances of these two cases, and Mr Hamill has not argued otherwise.

 

58.      Waiver has to be distinguished from contracting out.  When a person contracts out, they agree that a particular right will not exist.  When that person waives an entitlement, he/she still has that entitlement: he/she is merely prevented from invoking that entitlement.

 

59.      Section 1 of the 1963 Act created contractual entitlements.  In our opinion, “waiver” is not a concept which was invented by the 1963 Act.  Instead, in our view, in subsection (3) of section 1 of the 1963 Act, the reference to “waiving” was a reference to the contract law concept of “waiver by estoppel”.

 

60.      In “Chitty on Contracts”, Thirty-First edition (“Chitty”), at paragraph 24-007, the latter concept was explained in the following terms:

 

            “...  A second type of waiver may be called “waiver by estoppel” and it arises when the innocent party agrees with the party in default that he will not exercise his right to treat the contract as repudiated or so conducts himself as to lead the party in default to believe that he will not exercise that right”.

 

61.      As is pointed out at paragraph 24-008 of Chitty, waiver by estoppel can be successfully invoked only if both of the following conditions apply:

 

(1)       The party seeking to rely upon the alleged waiver must show a clear and unequivocal representation, by words or conduct, by the other party, that that other party will not exercise his strict legal rights.

 

(2)       The party to whom the representation is made must rely on that representation so as to make it inequitable for the representor to go back upon his representation.

 

62.      The scope of the concept of contractual waiver by estoppel was also explored at paragraphs 36, 37 and 38 of Kosmar Villa Holidays plc v Trustees of Syndicate 1243 [2008] EWCA Civ 147.  Incidentally, although insurance contracts were the particular context of the relevant statements of principle in the Kosmar judgment, those statements (in respect of the scope of, and the requirements for, contractual waiver by estoppel) are statements which apply generally, throughout the whole field of contract law.

 

63.      At paragraph 37 of his judgment in Kosmar, Rix LJ quoted from a speech by Lord Goff in a 1990 House of Lords case, during the course of which Lord Goff had made the following comments about the concept of contractual waiver by estoppel:

 

            “... Election is to be contrasted with equitable estoppel ... Equitable estoppel occurs where a person, having legal rights against another, unequivocally represents (by words or conduct) that he does not intend to enforce those legal rights; if in such circumstances the other party acts, or desists from acting, in reliance upon that representation, with the effect that it would be inequitable for the representor thereafter to enforce his legal rights inconsistently with his representation, he will to that extent be precluded from doing so. 

 

            There is an important similarity between the two principles, election and equitable estoppel, in that each requires an unequivocal representation, perhaps because each may involve a loss, permanent or temporary, of the relevant party’s rights.  But there are important differences as well ... [E]quitable estoppel requires an unequivocal representation by one party that he will not insist upon his legal rights against the other party, and such reliance by the representee as will render it inequitable for the representor to go back on his representation.  ... The party to an equitable estoppel is representing that he will not in future enforce his legal rights.  His representation is therefore in the nature of a promise which, though unsupported by consideration, can have legal consequences; hence it is sometimes referred to as promissory estoppel”

 

64.      At paragraph 38 of his judgment in Kosmar, Rix LJ went on to make the following comments:

 

            “... Estoppel ... is a promise, supported not by consideration but by reliance.  It is a promise not to rely upon a defence (per Lord Diplock or a right (per Lord Goff)).  It requires a representation, in words or conduct, which must be unequivocal and must have been relied upon in circumstances where it would be inequitable for the promise to be withdrawn.  The need for such unfairness probably means that the reliance of the representee has to constitute a detriment, but even a detriment has, I would think, to be such as to make it inequitable for the promise to be withdrawn ...  An unequivocal representation without the necessary reliance, or reliance without the necessary unequivocal representation, are each insufficient ...”

 

65.      The parties were given an opportunity to comment upon the applicability, or otherwise, of the concept of waiver by estoppel in the circumstances of this case.  In the course of their respective Second Submissions, they did take that opportunity.  We have taken account of those comments.

 

66.      In light of the foregoing, we have concluded, in each of these two cases, that the relevant claimant will only have waived his entitlement to notice if both of the following two requirements have been met:

 

(1)          The claimant must have made an unequivocal representation (either in words or in conduct) that he would not enforce his Article 118 entitlement to notice. 

 

(2)          The New Council must have relied upon that representation in circumstances in which it would be inequitable for the claimant’s promise to be withdrawn.

 

In our view, in each of these two cases, neither of those two requirements has been met.

 

67.      We respectfully agree with the general thrust of the commentary on the effect of section 86(3) which is set out at Division Q of Harvey:

 

                        “Clear evidence of waiver is necessary, which must be the result of a genuine agreement, not merely the reluctant acceptance of a peremptory demand: McAlwane v Boughton Estates Ltd [1973] ICR 470 ...” 

 

68.      Both parties accept that, prior to the termination of his employment, at various times, Mr Beggs made it clear both that he considered himself to have an entitlement to notice and also that he intended to pursue that entitlement, after the termination of his contract of employment, through industrial tribunal proceedings if necessary.   In particular, he made those points to Mr Tohill during a meeting on 8 April 2015.

 

69.      There is disagreement between the parties on the question of whether Mr Glendinning ever raised the question of notice pay with the New Council, at any time prior to the acceptance by the New Council of Mr Glendinning’s Severance Scheme application.  In particular, there was a dispute between Mr Glendinning and Mr Tohill as to whether or not, at a pre-termination meeting which Mr Tohill had had with Mr Glendinning, the issue of notice payments being paid, or not being paid, was a matter which was mentioned by Mr Glendinning.  (In connection with that controversy, the crucial evidence consists of the oral testimony of Mr Glendinning and the oral testimony of Mr Tohill).

 

70.      Mr Glendinning told us that the relevant question was indeed asked during the course of that meeting.  Mr Tohill told us that he did not recall that question being asked and that he believed that it was not asked.

 

71.      We were shown notes which Mr Tohill had produced in respect of pre-termination meetings which he had had separately with each of a considerable number of the New Council’s Severance Scheme applicants.  Mr Tohill’s note in respect of the pre-termination meeting which he had with Mr Glendinning does not refer to any query having been raised by Mr Glendinning in respect of notice. In respect of each relevant pre-severance meeting, the relevant note, in most instances, records only one point.  It seems unlikely that most severance candidates raised only one issue with Mr Tohill.  Accordingly, we consider it likely that each relevant note is not a comprehensive record of everything which was discussed.  Therefore, we consider that the fact that no reference to any notice pay query has been included in Mr Tohill’s note of his meeting with Mr Glendinning is a fact which is of only limited significance in the context of our task of determining whether Mr Glendinning’s version of events on this matter is more accurate than Mr Tohill’s.

 

72.      Mr Glendinning told us that he remembered that, during the relevant meeting with Mr Tohill, he had informed him that he considered that he was entitled to notice.  Mr Tohill told us that he had no recollection of any such comment and that he believed that Mr Glendinning did not in fact make that comment, or any similar comment.

 

73.      We regarded Mr Glendinning as an entirely honest witness.  We regarded Mr Tohill as an honest witness also. 

 

74.      In our view, on that controversy, Mr Glendinning’s testimony is more accurate than Mr Tohill’s testimony.  Mr Glendinning was dealing only with one redundancy and that was his own redundancy; therefore, he had good reason to clearly recall all of any pre-termination issues which he had raised with the New Council.  On the other hand, Mr Tohill was simultaneously dealing with 17 redundancies.  Against that background, it is not at all surprising that Mr Tohill has forgotten a point which had been raised by Mr Glendinning in respect of notice pay. 

 

75.      In any event, even if we had preferred Mr Tohill’s recollection of events in this connection, the requirements for a valid waiver would not have been made out.  In particular:

 

(1)          The New Council has not provided any evidence of any unequivocal representation by Mr Glendinning that he would not enforce his Article 118(1) rights.  (See paragraph 67 above).

 

(2)          We have received no evidence that, in deciding whether or not to accept Mr Glendinning’s Severance Scheme application, the New Council relied upon any such representation. 

 

76.      In each of these two cases, Mr Hamill has, in substance, consistently argued the following:

 

(1)       Each of the relevant claimants knew that, if his Severance Scheme application was accepted, the New Council would be unwilling to give notice, or to pay him in respect of lieu of notice.

 

(2)       The relevant claimant knew that those were “the rules of the game”.

 

(3)       Accordingly, that claimant cannot now legitimately complain in respect of the failure of the New Council to make a notice payment.

 

In our view, that argument is tantamount to an argument that the Council was entitled to contract-out of its Article 118(1) obligations.  We reject that argument because of the statutory provisions which have already been referred to at paragraph 56 above.

 

77.      In each of these two cases, the Severance Scheme “Offer” was contained in a letter which was sent to the relevant claimant.  That letter was as follows:

 

                        “Further to our [previous correspondence to you], I can confirm that the Business Case regarding your voluntary Severance was approved at the Council Meeting on Thursday 26 March 2015.  I would draw to your attention that the Council agreed to exercise its discretion only within Option 1A and 1B of the RPA Staff Voluntary Severance Scheme for Local Government Staff.  It did not agree to exercise its discretion under Option 2, due to additional cost implications.  It also decided that it would not require you to work your notice but would permit you to depart on [a date in April which was specified in the letter].  Please note that under this arrangement the Council would not intend to make any notice payment.

 

... 

 

                        If you proceed with your application, the following terms will apply;

 

·         Leaving Date will be 15 April 2015.

 

·         Annual Leave is to be used in advance of agreed leaving date.

 

...

 

·         No Notice Pay due.

 

                        If you would like to proceed with your Voluntary Severance application under the Scheme on this basis, please sign acceptance of this offer no later than [the date specified in the letter]. 

 

                        ...”.

 

            At the end of that letter, under Ms Canavan’s signature, were the following words:

 

                        “I agree to accept the offer as outlined above:”

 

78.      Our comments on the implications of that letter are as follows:

 

(1)          According to the letter, one of the terms of the New Council’s Severance Scheme was that “No Notice Pay [is] due”.  However, for reasons which have already been explained at paragraph 56 above, such attempted contracting out was legally ineffective.

 

(2)          In any event, the terms of that letter have to be construed in light of the fact that the Severance Scheme of the New Council only had validity if it was approved by the relevant Government Department (see paragraph 111 below) and it is clear that the relevant Department only approved severance schemes which were entirely in line with an unamended version of the provisions set out in the Circular.  The Circular was entirely silent on the question of whether Article 118 notice of termination was to be given.  (In relation to the Circular, see paragraphs 107-109 below). 

 

(3)          It is noted that, earlier in the letter, a more circumspect wording was used, when it was stated that “... the Council would not intend to make any notice payment”. [our emphasis]

 

(4)          In each of these two cases, the relevant claimant was required to sign a copy of the offer letter below the words: “I agree to accept the offer as outlined above”. 

 

(5)          However, neither of the relevant claimants was ever asked or required to expressly waive his Article 118 notice pay contractual entitlement and neither of them did so.  (See sub-paragraph (1) of paragraph 66 above).

 

79.      In our view, the New Council’s attitude was as follows.  It would accept a Severance Scheme application, if all other requirements for doing so were met, even if the relevant applicant was threatening to go subsequently to a tribunal, to enforce alleged notice pay entitlements.  In other words, the question of whether or not a particular applicant was willing to desist from enforcing his Article 118 notice rights was not a question which had any influence on any decision, of the New Council, in respect of the acceptance or rejection of that applicant’s Severance Scheme application.  (The New Council’s treatment of the Beggs severance application is indicative of its general attitude in this regard).

 

80.      Before we move on from this part of our Decision, we wish to deal briefly with the implications of two cases to which our attention was drawn during the hearing.

 

(1)       First, we refer to Trotter v Forth Ports Authority [1991] IRLR 419.  In that case, the Court of Session was considering the scope of the concept of waiver, as provided for in section 49(3) of the Employment Protection (Consolidation) Act 1978.  (Section 49 of the 1978 Act was a statutory predecessor of section 86 of ERA).  In our view, Trotter is authority only for the following propositions: (1) In any particular situation, the question of whether or not there was an effective waiver of the right to notice as a fact-sensitive question.  (2) If the right to notice has itself been effectively waived, there is no right to pay in lieu of notice.

 

(2)       The second of the cases to which we briefly wish to refer is the case of Baldwin v British Coal Corporation [1995] IRLR 139.  In that case, the claimant was one of a number of employees at a colliery who accepted voluntary redundancy in March 1988.  There was some urgency in putting the voluntary redundancies into effect so as to enable those concerned to receive an additional payment of £5,000, which was payable only pursuant to redundancy terms which were due to expire on 26 March 1988.  Accordingly, the claimant’s employment was terminated on that date without the full 12 week’s notice to which he was contractually entitled.  He received no payment in lieu of notice.  In that case, which was a High Court breach of contract case, Garland J dismissed the notice claim, primarily on the basis of his factual conclusion that the claimant had agreed that no notice would be paid.  (Although the 1978 Act contained provisions analogous to the provisions of Article 245(1) of ERO, it is unclear whether those provisions were mentioned during the course of argument in that case).  In his judgment in Baldwin, the judge concluded that, if he was wrong about there being an agreement to forego the notice entitlement, he would nonetheless dismiss the claim because he was satisfied that there had been a waiver of the entitlement to notice.  In arriving at the latter conclusion, he does not seem to have addressed questions relating to the concept of waiver, in the context of the statutory notice pay provisions, to any detailed extent.  On the waiver issue, we do not consider his reasoning to be persuasive.  In any event, the judge’s ultimate conclusions in Baldwin were based on a factual matrix in that case which was very different from the factual context of the waiver issue in each of these two cases.  

 

81.      Against that background and for those reasons, in each of these two cases, we have concluded that the relevant Article 118 entitlement was not waived.

 

Overall conclusion on notice claim liability

 

82.      Accordingly, in each of these two cases, the New Council was obliged to give the relevant claimant the notice of termination of employment which is provided for in paragraph (1) of Article 118 of ERO.  On 26 March 2015, each of these two claimants had been employed by the relevant council for more than 12 years.  Therefore, at the end of March 2015, each of them was entitled to 12 weeks’ notice. 

 

83.      Throughout the period beginning in April 2014 and ending in April 2015, all the staff of each of the constituent councils (the three old councils which were to be amalgamated to form the New Council) knew that most of the local government reorganisation-related terminations of employment were likely to take place in April 2015, or soon thereafter, if any such terminations took place at all.  However, for a long time, nobody knew for certain that any such terminations would ever actually take place.  Furthermore, until 26 March 2015, the New Council did not irrevocably commit itself to terminating the contracts of employment of Mr Glendinning and of Mr Beggs.

 

84.      On 12 February 2015, Mr Glendinning was told that his Severance Scheme application was acceptable “in principle”.  However, neither Severance Scheme application was finally approved until a meeting of the New Council which took place on 26 March 2015.  Accordingly, the reality is that, prior to 26 March 2015, neither of these two claimants was notified of the actual termination of his employment.

 

85.      Therefore, each of them received only approximately two weeks’ notice of the actual (as distinct from the prospective or hypothetical) termination of his employment.

 

86.      Accordingly, against that background and for those reasons, in each of these two cases, the claimant’s notice claim is well-founded.

 

 

How much compensation?

 

87.      Mr Glendinning’s employment came to an end on 15 April 2015.  Mr Beggs' employment came to an end on 17 April 2015.  

 

88.      Accordingly, in each of these two cases, the relevant period (the period in respect of which compensation is potentially due) is a period beginning in mid-April 2015 and ending ten weeks later, during the second half of June 2015.

 

89.      The relevant implied contractual obligation is an obligation to provide notice, as distinct from being an obligation to provide notice pay.  Accordingly, a failure to comply with an obligation to provide notice does not automatically, in every case, result in an entitlement to be compensated in respect of that failure.  However, if there is a failure to provide notice, a claimant is entitled to compensation for any financial loss which he or she suffers as a result of that failure to provide notice.

 

90.      A duty to mitigate applies in the context of any claim for any such loss.  However, any failure to mitigate has to be proven, by the employer; in the absence of such proof, there can be no reduction in compensation on account of a failure to mitigate.

 

91.      In each case:

 

(1)          We first have to ascertain the amount of net pay which the relevant claimant would have received from the New Council in respect of the relevant period, if due notice of dismissal had been given.

 

(2)          From that amount, we have to deduct any salary and/or pension payment which the relevant claimant received in respect of the relevant period, if, and only if, that “new” salary and/or that pension payment became available to him because of the premature termination of his employment (the termination of his employment without due notice).

 

(3)          From the sub-paragraph (1) amount, we also have to deduct the amount of any social security benefits which actually or potentially became available to the relevant claimant because of the lack of due notice of the termination of his employment. 

             

92.      In each of these two cases, the following process should be followed.

 

93.      The parties should engage in pragmatic, realistic and sensible discussions with a view to arriving at an agreed figure as to the amount (if any) which is due to the relevant claimant in respect of the failure to comply with his notice entitlement.

 

94.      In the context of those discussions, the parties will find it helpful to have regard to the information/submissions which are contained respectively in recent correspondence from Mr Glendinning’s solicitor, from Mr Beggs’ solicitor, and from the New Council’s solicitor.  (In the course of that correspondence, each of the parties was responding to directions which had been issued with a view to narrowing the differences between the parties in respect of the notice claim remedies issues).

 

95.      In each of these two cases, a remedies hearing will be held, to determine the amount of compensation due to the relevant claimant in respect of notice pay, if discussions between the parties in respect of the relevant amount do not result in an agreed outcome.

 

The Beggs underpayment claim

 

96.      The underpayment claim is as follows.  Mr Beggs claims that the New Council is in breach of relevant legal obligations by failing to pay him compensation, under its Severance Scheme, on the basis of the salary which he was earning while working five days per week (as distinct from paying him compensation based on his weekly earnings when he had been working for only three days a week).

 

The issues

 

97.      In relation to the underpayment claim, the main issues are as follows:

 

(1)          Is that claim a “contract claim” (within the meaning of the relevant legislation) and, if so, which type of contract claim is it?

 

(2)          Is this tribunal precluded from interpreting the Severance Scheme?

 

(3)          Did the Severance Scheme entitle the claimant to receive severance compensation based on a five day week?

 

The contract claims issue

 

98.      The Industrial Tribunals Extension of Jurisdiction Order (Northern Ireland) 1994 [1994 No. 308] (“the 1994 Order”) is a statutory rule. That rule was made pursuant to the Industrial Relations (No. 2) Northern Ireland Order 1976 (“the 1976 Order”). 

           

99.      Paragraphs (1) and (2) of Article 57 of the 1976 Order had provided as follows:

 

                        “57. – (1)  The Secretary of State may by order provide that on any claim to which this Article applies or any such claim of a description specified in the order, being in either case a claim satisfying the relevant condition or conditions mentioned in paragraph (3), proceedings for the recovery of damages or any other sum, except damages or a sum due in respect of personal injuries, may be brought before an industrial tribunal.

 

                        (2)  Subject to paragraph (3), this Article applies to any of the following claims, that is to say –

 

(a)      a claim for damages for breach of a contract of employment or any other contract connected with employment;

 

(b)      a claim for a sum due under such a contract;

 

(c)       a claim for the recovery of a sum in pursuance of any statutory provision relating to the terms or performance of such a contract;

 

being in each case a claim such that a court in Northern Ireland would under the law for the time being in force have jurisdiction to hear and determine an action in respect of the claim.”

 

100.    Article 57 of the 1996 Order was repealed by the Industrial Tribunals (Northern Ireland) Order 1996 (“the 1996 Order”).  Paragraphs (1) and (2) of Article 5 of the 1996 Order now provide as follows:

 

“5.—(1) The Department may by order provide that proceedings in respect of—

 

(a)       any claim to which this Article applies, or

 

(b)       any claim to which this Article applies and which is of a description specified in the order,

 

may, subject to such exceptions (if any) as may be so specified, be brought before an industrial tribunal.

 

(2)  Subject to paragraph (3), this Article applies to—

 

(a)     a claim for damages for breach of a contract of employment or other contract connected with employment,

 

(b)     a claim for a sum due under such a contract, and

 

(c)     a claim for the recovery of a sum in pursuance of any statutory provision relating to the terms or performance of such a contract,

 

if the claim is such that a court in Northern Ireland would under the law for the time being in force have jurisdiction to hear and determine an action in respect of the claim.”

 

101.    Accordingly, in essence, paragraphs (1) and (2) of Article 5 of the 1996 Order contain provisions which are equivalent to those which had previously been made in paragraphs (1) and (2) of Article 57 of the 1976 Order. 

 

102.    By the time of the enactment of the 1996 Order, the 1994 Order had already been made, pursuant to Article 57 of the 1976 Order.  No statutory rules have ever been made for the purpose of implementing the provisions of Article 5 of the 1996 Order.  Accordingly, paragraphs 1 and 2 of Schedule 2 of the 1996 Order are relevant in the present context:

 

“1.       The substitution of this Order for the provisions repealed or revoked by this Order does not affect the continuity of the law.

 

 2.        Anything done, or having effect as done, (including the making of subordinate legislation) under or for the purposes of any provision repealed or revoked by this Order has effect as if done under or for the purposes of any corresponding provision of this Order.”

 

Therefore, the 1994 Order must now be treated as though it had been made under the 1996 Order.

 

103.    Article 3 of the 1994 Order provides as follows:

 

“3.       Proceedings may be brought before an industrial tribunal in respect of a claim of an employee for the recovery of damages or any other sum (other than a claim for damages, or for a sum due, in respect of personal injuries) if –

 

(a)          The claim is one to which Article 57(2) of [the 1976 Order] applies and in respect of which a court in Northern Ireland would under the law for the time being in force have jurisdiction to hear and determine an action;

 

(b)          The claim is not one to which Article 5 applies; and

 

(c)          The claim arises or is outstanding on the termination of the employee’s employment”.

 

104.    In the circumstances of the Beggs underpayment case:

 

(1)       Article 5 of the 1994 Order is irrelevant.

 

(2)       Mr Beggs’ underpayment claim certainly arose, or was outstanding, on the termination of Mr Beggs’ employment.

 

105.    The remaining question is whether the underpayment claim falls within one of the categories of claim to which Article 57(2) of the 1976 Order applied.  (See paragraph 99 above). 

 

106.    In our view, the underpayment claim is a contract claim only if it is one of the following: 

 

(1)       a claim for damages for breach of Mr Beggs’ contract of employment;

 

(2)       a claim for damages for breach of any other contract connected with his employment (“a Connected Contract”);

 

(3)       a claim for a sum due under his contract of employment;

 

(4)       a claim for a sum due under a Connected Contract;

 

(5)       a claim for the recovery of a sum in pursuance of any statutory provision relating to the terms or performance of his contract of employment; or

 

(6)       a claim for the recovery of a sum in pursuance of any statutory provision relating to the terms or performance of a Connected Contract.

 

107.    Circular LGRJF/11 was issued on 4 February 2015.  (Below, we refer to that circular as “the Circular”).  It was issued by the Local Government Reform Joint Forum (“the Joint Forum”).  The Circular was entitled “RPA Staff Severance Scheme for Local Government Staff”.  (“RPA” is an acronym for “Review of Public Administration”).

 

108.    The Circular had been agreed between the Employers’ Side and the Trade Union Side of the Joint Forum.  The Circular was recommended by the Joint Forum for adoption by councils.  The Circular contained provisions setting out terms of severance in respect of those local government staff who would be ceasing to be employed by relevant councils because of local government reorganisation.  The Joint Forum recommended that each new council should adopt those provisions (without modification) as the basis for that council’s own individual severance scheme.

 

109.    The Circular was indeed adopted by the New Council (without any relevant modification) as the basis for the New Council’s own severance scheme.  (In this Decision, we refer to the New Council’s own, specific, scheme as “the Severance Scheme”).

 

110.    When the Joint Forum issued the Circular, it was accompanied by a covering letter.  At paragraph 3, that letter stated that the RPA Scheme “... is underpinned by the Local Government Reorganisation (Compensation for Loss of Employment) Regulations (NI) 2015 currently being progressed by the Department of the Environment.”  The last two sub-paragraphs of paragraph 1.8 of the Circular itself stated the following:

 

                        “The Local Government Act (NI) 2014, Section 123 requires the Department of the Environment to make regulations for the purpose of the payment of compensation for loss of office or diminution of emoluments.

 

                        The Department has indicated that this RPA Scheme will provide the basis for the Statutory Regulations, which are required under Section 123.” 

 

111.    The parties are agreed that any severance payment paid or payable to Mr Beggs was paid or payable pursuant to the powers conferred by section 123 of the Local Government Act (Northern Ireland) 2014 (“the 2014 Act”).  Subsection (3) of section 123 provides as follows:

 

                        “(3)      Compensation in respect of loss suffered by a person to whom this section applies is, subject to subsection (5), to be paid only in accordance with regulations made for the purposes of this section under Article 19 of the Superannuation (Northern Ireland) Order 1972; and accordingly no local government body is to pay any such compensation under any other statutory provision, by virtue of any provision in a contract or otherwise.

 

In the circumstances of this case, Subsection (5) is irrelevant.  Subsection (4) of section 123 goes on to provide as follows:

 

                         “(4)     Subsection (3) does not preclude the payment of compensation if it forms part of a severance arrangement which has been sanctioned by the [Department of the Environment].  The Department must satisfy itself that the arrangement is reasonable.” 

 

112.    The Local Government Reorganisation (Compensation for Loss of Employment) Regulations (Northern Ireland) 2015 [2015 No. 68] (“SRNI”) were made on 17 February 2015 and came into operation on 1 April 2015.  Those regulations were amended in July 2015, but not in any respect which is material in the context of the underpayment claim.  In this Decision, we refer to those February 2015 regulations as “the 2015 regulations”.

 

113.    The introductory words of the 2015 regulations show that those regulations were made pursuant to powers conferred by Article 19 of the Superannuation (Northern Ireland) Order 1972. 

 

114.    Against the background which has been set out at paragraphs 110-113 above, we wondered whether in reality, the severance payments which were made to Mr Beggs were payments which had been made pursuant to the provisions of the 2015 regulations, as distinct from being made pursuant to the Severance Scheme.

 

115.    In the context of the Beggs case, that was a significant question, not least because, if any such payment was paid or payable pursuant to the 2015 regulations, the underpayment claim might be a claim for “the recovery of a sum in pursuance of any statutory provision relating to the terms or performance” of a contract of employment (as distinct from being a claim in respect of Mr Beggs’ contract of employment or a claim in respect of any Connected Contract).  We asked the representatives, on both sides of the Beggs case, to make relevant enquiries.

 

116.    The response of both parties was that the relevant money had been paid pursuant to the Severance Scheme, as distinct from being paid pursuant to the Regulations.  Accordingly, both parties have implicitly or expressly agreed that all relevant payments were paid or payable pursuant to subsection (4) of the 2014 Act.  (See paragraph 111 above.) 

 

117.    Therefore, items (5) and (6) of the paragraph 106 list have become irrelevant. 

 

118.    During the course of the hearing on 7 October 2016, Ms Best made it clear that it was not being alleged that there had been any relevant breach of a Connected Contract, or that there was any relevant sum due under a Connected Contract.  (For the definition, in the present context, of a Connected Contract, see sub-paragraph (2) of paragraph 106 above).  Therefore, items (2) and (4) of the paragraph 106 list have also become irrelevant.

 

119.    That leaves only items (1) and (3) of the paragraph 106 list.

 

120.    During the course of the 7 October 2016 hearing, Ms Best expressly confirmed that the underpayment claim is a claim brought only under or in respect of Mr Beggs’ contract of employment.

 

121.    In effect, Mr Beggs’ argument is that, in being willing only to provide him with Severance Scheme compensation limited to the weekly pay which he earned while working three days per week, the New Council was breaching the terms of its Severance Scheme and was therefore breaching his contract of employment.  We think that the underpayment claim must also be construed as a claim for a sum due under the contract of employment (that sum being the difference between the amount which Mr Beggs would have received if his pay had been calculated on the basis of the weekly pay which he earned while working five days per week, and the amount which he actually did receive).

 

122.    It was contended on behalf of Mr Beggs that the terms of the Severance Scheme had been incorporated into his individual contract of employment.

 

123.    In considering whether the New Council’s Severance Scheme was incorporated into Mr Beggs’ individual contract of employment, we have had regard to the statements of principle which were set out in the Court of Appeal judgment in Keeley v Fosroc International Ltd [2006] EWCA Civ 1277.

 

124.    In their Additional Submissions, each of the parties made arguments in respect of any implications of the Keeley principles.  In arriving at our conclusions in respect of this matter, we have taken due account of those arguments.

 

125.    Not without hesitation, we have come to the conclusion that, as soon as the New Council adopted the Severance Scheme, the relevant terms of that Scheme did indeed become incorporated into Mr Begg’s individual contract of employment.  In arriving at that conclusion, we have in particular, had regard to the following matters:

 

(1)          The terms of a voluntary redundancy scheme are usually apt for incorporation within an individual contract of employment, and the courts have often held that the terms of a particular voluntary redundancy scheme have indeed become incorporated into individual contracts of employment.

 

(2)          We note that, in identifying what is available, pursuant to it, to persons whose contracts of employment are terminated in the context of RPA, the Circular purports to address the affected individuals in the second person (“You will be entitled” [emphasis added]). 

 

(3)          We note that the relevant provisions of the Circular use the language of entitlement (“You will be entitled to ... “ [emphasis added]).

 

126.    Against that background and for those reasons, we have concluded that we have jurisdiction to entertain the underpayment claim, and that it is a claim of breach of Mr Beggs’ contract of employment or a claim for a sum due under that contract.

 

            Is this tribunal precluded from interpreting the Scheme?

 

127.    Paragraph 3.0 of the Circular provides as follows:

 

                        “... Any disputes about the interpretation of the provisions of this RPA Scheme will be considered by the Joint Forum who will be the final arbiters”.

 

            In our view, the quoted part of paragraph 3.0 constitutes an arbitration clause; although that clause is limited in the scope of its subject-matter, it is an arbitration clause nonetheless.

 

128.    In the Queries List, we drew the relevant provision of the Circular to the attention of the parties and invited them to provide submissions on the implications, if any, of that provision for the power of an industrial tribunal to interpret the Scheme.

           

129.    In arriving at our conclusions on this sub-issue, we have noted and applied the statements of legal principle which are set out at paragraphs 38-44 of the judgment of Slade J in Clyde & Co LLP v Van Winkelhof  [2011] EWHC 668 (QB).

 

130.    In Clyde, the arbitration clause was ineffective because of the provisions of section 144 of the Equality Act 2010 and because of the provisions of section 203 of ERA.  However:

 

(1)       Contract claims are not brought under discrimination legislation.  Accordingly, no Northern Ireland equivalent of section 144 of the Equality Act is relevant in the context of this case.

 

(2)       Section 203 of ERA is the equivalent of Article 245 of ERO.  The general rule created by Article 245 of ERO (by which contracting out of statutory rights is prevented) is a rule which applies only in respect of rights which are created by the ERO itself, or in respect of remedies which are available under the ERO.  Contract claim entitlements were not created by ERO, and a contract claim is not brought under ERO.  Therefore, in the circumstances of the Beggs case, the Article 245 general rule is irrelevant.

 

131.    Section 9 of the Arbitration Act 1996 provides a mechanism by which parties can be prevented from pursuing litigation in the High Court or in the County Court in respect of matters which are within the scope of an arbitration clause.  The key subsection of section 9 is subsection (1):

 

                        “(1)      A party to an arbitration agreement against whom legal proceedings are brought (whether by way of claim of counterclaim) in respect of a matter which under the agreement is to be referred to arbitration may (upon notice to the other parties to the proceedings) apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter”.

 

132.    Accordingly, subsection (1) creates what amounts to a general rule, which is as follows: A party to an arbitration agreement can prevent the other party from pursuing proceedings in the High Court or in the County Court in respect of a dispute which is within the scope of the relevant arbitration clause.  (That can be done by applying to the relevant court to stay any such litigation).

 

133.    There is an important exception to that general rule, which is created by subsection (3) of section 9.  According to subsection (3), a stay application may not be made by a person after he has taken any step, in the relevant legal proceedings, to answer the substantive claim.

 

134.    In this case, the respondent has indeed taken steps in these proceedings to answer the substantive claim.  Accordingly, if the Beggs underpayment claim had been brought in the High Court or the County Court, a stay application under section 9(1) could not have been made successfully, because of the fact that those steps had been taken in the proceedings.

 

135.    An industrial tribunal is not a “court” within the meaning of the 1996 Act.  Section 9 of the 1996 Act therefore does not apply in this case.  Nevertheless, the circumstances outlined at paragraph 134 above are relevant in the context of making any determination, pursuant to Rule 10(2)(h) of the Industrial Tribunals Rules, as to whether we ourselves should stay these proceedings.

 

136.    Rule 10(2)(h) provides us with the discretionary power to stay proceedings in respect of the Beggs underpayment claim.  In deciding whether to exercise that power, we considered two matters to be of considerable importance:

 

(1)       If these proceedings had been brought in the High Court or in the County Court, the respondent would now not be able to successfully apply for a stay under Section 9 of the Arbitration Act (because of the fact that the respondent has taken steps in these proceedings to answer the substantive claim).

 

(2)       During the course of the 7 October hearing, both parties to the Beggs case confirmed that they did not argue that this tribunal should stay these proceedings on account of the existence of the paragraph 3.0 “interpretation” clause.

 

137.    Against that background, and for those reasons, we have decided not to stay the Beggs underpayment claim.

 

Was the claimant underpaid?

 

138.    We now address the question of whether the claimant was actually paid less, pursuant to the Severance Scheme, than the amount to which he was contractually entitled.

 

139.    It will be recalled that, in relation to the underpayment claim, the respective positions of the parties are as follows:

 

            (1)       The claimant contends that he should have been paid on the basis of the salary which he was earning in February, March and April 2015, while working a five-day week.

 

            (2)       The New Council contends that the claimant was only entitled to compensation based on the weekly salary which he was entitled to when he was working a three-day week.

 

140.    We drew the attention of the parties to the Decision in Serplus v Belfast Institute of Further and Higher Education [CRN 1941/04, decision issued on 18 January 2007].  In that case, I set out a statement of the legal principles which I thought were then applicable, in construing the meaning of the particular provisions of the particular employment-related document which was under consideration in the Serplus case.  That statement was set out at paragraphs 55-64 of the Serplus Decisions, in the following terms:

 

“55.     In construing the provisions of any agreement, to what extent, if any, can regard be had to the conduct of the parties?  As might be expected, Chitty on Contracts (Twenty-Eighth Edition) accurately states the relevant principles.  As is pointed out at paragraph 12-043 of Chitty:

 

                                 “The task of ascertaining the intention of the parties must be approached objectively: the question is not what one or other of the parties meant or understood by the words used [in an agreement], but “the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract”.  The cardinal presumption is that the parties have intended what they have in fact said, so that their words must be construed as they stand.  That is to say the meaning of the document or of a particular part of it is to be sought in the document itself.  “One must consider the meaning of the words used, not what one may guess to be the intention of the parties”.  However, this is not to say that the meaning of the words in a written document must be ascertained by reference to the words of the document alone.  In the modern law, the courts will, in principle, look at all the circumstances surrounding the making of the contract which would assist in determining how the language of the document would have been understood by a reasonable man”.

 

56.      In that context, which circumstances can be looked at?  As Lord Clyde pointed out in BCCI v Ali [2002] 1 AC 250, at 281, 282:

 

                                                    “The knowledge reasonably available to [the hypothetical reasonable man] must include matters of law as well as matters of fact.  The problem is not resolved by asking the parties what they thought they intended.  It is the imputed intention of the parties that the court is concerned to ascertain.  The parties may well have never applied their minds to the particular eventuality which has subsequently arisen, so that they may never in fact have had any conscious intention in relation to that eventuality.  It is an objective approach which is required and a solution should be found which is both reasonable and realistic.  The meaning of the agreement is to be discovered from the words which they have used read in the context of the circumstances in which they made the agreement.  The exercise is not one where there are strict rules, but one where the solution is to be found by considering the language used by the parties against the background of the surrounding circumstances”.  [Emphasis added].

 

So the words of the document, to which an agreement has been reduced, are of primary importance.  However, they can and must be construed in the light of the circumstances, because the court (or in this case the tribunal) must place itself in the same “factual matrix” as that in which the parties were situated at the time of the making of the relevant agreement.

 

57.      In Reardon Smith Line Ltd v Yngvar Hanson-Tangen [1976] 1 WLR 989, 995-996, Lord Wilberforce gave an example of this factual matrix in the context of a commercial contract, when he made the following observation:

 

“In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating”.

 

58.      The parties are agreed that Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 is a leading authority on the principles which are set out above.  However, according to Ms Finnegan, the scope of admissible and relevant evidence as to the dealings between the parties is broader than is indicated in the Investors case, because of certain comments which were made by Lord Nicholls in BCCI.  However, I cannot accept that proposition.  The views of Lord Nicholls in BCCI were obiter.  The principles which are set out in Investors continue to be applicable.  Furthermore, the comments of Lord Clyde (as quoted above) continue to be an accurate statement of relevant legal principles.

 

59.      In Mannai Investment Co Ltd – v – Eagle Star Assurance Co Ltd [1997] 3 All ER 352, 369, Lord Steyn suggested that Reardon Smith provides support for the following three propositions:

 

(1)   “First, in respect of contracts and contractual notices the contextual scene is always relevant”.

 

(2)   “Secondly, what is admissible as a matter of the rules of evidence under this heading is what is arguably relevant.  But admissibility is not the decisive matter.  The real question is what evidence of surrounding circumstances may ultimately be allowed to influence the question of interpretation.  That depends on what meanings the language read against the objective contextual scene will let in”

 

(3)   “Thirdly, the enquiry is objective: the question is what reasonable persons, circumstanced as the actual parties were, would have had in mind”.

 

60.      Accordingly, it seems to me that the factual matrix does not allow one to ignore the actual wording of the document, or documents, in which the agreement has been recorded.  However, it is of course necessary and appropriate to consider the surrounding facts when construing the words actually used in the relevant documentation.

 

61.      As is pointed out in Lewison’s “Interpretation of Contracts”, First Edition (at paragraph 2.05):

 

“Drafts of the contract and preparatory negotiations may not in general be relied upon in interpreting the contract which the parties eventually make”.

 

62.      Lewison also notes that, in construing a particular provision of a document, it is necessary to consider that provision within the context of the whole of the document.  (See paragraph 6.02 of Lewison).

 

63.      It appears that, where several documents form part of one transaction, each of those documents can be read to explain the meaning of any other document in the group.  Therefore, the articles of association of a company could be read to explain the memorandum; and a prospectus which invited applications for deposit notes on certain terms could be read together with that deposit note.  (See Chitty at 12-065).

 

64.      Chitty points out (at paragraph 12-124) that the House of Lords has held that it is not legitimate to use as an aid, in the construction of the contract, anything which the parties said or did after it was made; subsequent actions are therefore inadmissible to interpret a written agreement.”

 

141.    The law on the interpretation of contractual documents has continued to develop since 2007.  Nevertheless, we consider that the Serplus statement of principles (the statement of principles which was set out in the quoted paragraphs of Serplus) continues to be a broadly accurate statement of the relevant case law.  Accordingly, in these proceedings, we adopt, and have applied, that statement of principles. 

 

142.    Our summary of the Serplus statement of principles is as follows:

 

(1)       The subjective understanding of either or both parties, as to the meaning of any particular contractual provision, is neither here nor there.  (Serplus, paragraph 55).  Therefore, there is no point in asking the parties what they thought they intended.  It is their imputed intention which the court is concerned to ascertain.  (See paragraph 56 of Serplus).

 

(2)       The central issue is this: What meaning would the document convey to a reasonable person having all the background knowledge which would reasonably be available to the parties in the situation they were in at the time of the contract?  (Serplus, paragraph 55).

 

(3)       The meaning of a document is to be found in the document itself.  However, the document interpreter can and should look at the circumstances, to assist in determining how the language of the document would have been understood by a reasonable person.  (See Serplus, at paragraph 56).

 

(4)       Drafts of the contract and the preparatory negotiations may not in general be relied upon in interpreting the contract which the parties eventually made.  (Serplus, paragraph 61). 

 

(5)       It is not legitimate to use as an aid, in the construction of the contract, anything which the parties said or did after it was made.  (Serplus, paragraph 64).

 

(6)       In construing a particular provision of a document, it is necessary to consider that particular provision within the context of the document as a whole (Serplus, at paragraph 62).

 

(7)       If several documents form part of one transaction, any one of that group of documents can be read to explain the meaning of any other document within the group.  (Serplus, paragraph 63).

 

143.    In construing the Circular, we have paid particular regard to the wording of the 2015 Regulations.  Why?  Mainly for the following reasons:  First, as we have already noted at paragraph 110 above, paragraph 1.8 of the Circular stated that the relevant Government Department had indicated that the Circular was to provide the basis for the 2015 Regulations.  Secondly, paragraph 4 of the covering letter, which accompanied the Circular when it was issued in February 2015, noted that the Circular’s provisions were “... underpinned by the [2015 Regulations] ...”.  Thirdly, as has already been noted at sub-paragraph (7) of paragraph 142 above, if several documents form part of one transaction, any one of that group of documents can be read to explain the meaning of any other document within the group.

 

144.    Having considered the detailed provisions of the Circular and the detailed provisions of the 2015 Regulations respectively, and having considered each of those sets of provisions within the context in which each set was drafted or enacted, we have no doubt that those who drafted the Circular were keen to make sure that staff who accepted RPA severance terms would receive the same severance amount regardless of whether the relevant payment was being made pursuant to a council severance scheme or pursuant to the 2015 Regulations.

 

145.    The relevant provisions of the 2015 Regulations were drafted with greater legal precision than the relevant provisions of the Circular.  Accordingly, in the following paragraphs, we focus on the relevant provisions of the 2015 Regulations, in light of our conclusion that the (imputed) intention of the drafters of the Circular was that persons receiving payments pursuant a Council’s severance scheme would receive no less and no more than they would have received if they had been given those payments pursuant to the 2015 Regulations.

 

146.    A council does not make a statutory redundancy payment to an employee pursuant to contract or pursuant to the 2015 Regulations.  Instead, it does so because it has a statutory duty (which is imposed by Part XII of ERO) to do so.

 

147.    Councils have the statutory power to increase the amount of a statutory redundancy payment.  That power is conferred by regulation 4 of the Local Government (Early Termination of Employment) (Discretionary Compensation) Regulations (Northern Ireland) 2007 [SRNI 2007 No. 93].  The scheme of that regulation can be summarized as follows:

 

(1)       Paragraph (1) of regulation 4 empowers a council to pay compensation (of the type which is envisaged by regulation 4) to a person, on the termination of his employment, if that person is entitled to a statutory redundancy payment in respect of that termination.

 

(2)       Paragraph (2) of regulation 4 quantifies the maximum extent of the regulation 4 compensation, in the following terms:

 

“(2)      The amount which may be paid must not be more than the difference between –

 

(a)          the redundancy payment to which he is entitled under Part XII of [ERO]; and

 

(b)          the payment to which he would have been entitled if there had been no limit on the amount of a week’s pay used in the calculation of his redundancy payment.”

 

148.    Regulation 2 of the 2015 Regulations contains a definition of “enhanced redundancy payment”.  According to that regulation, the enhanced redundancy payment consists of:

 

(1)       the statutory redundancy payment entitlement and

 

(2)       the compensation payment which is payable under the 2015 regulations.

 

149.    In the present context, the reference to the statutory redundancy payment entitlement is a reference to the payment due under Part XII of ERO, after it has been increased pursuant to regulation 4 of the 2007 regulations (“the uncapped redundancy payment”).

 

150.    The calculation of the compensation payment which is payable under the April 2015 Regulations is provided for in regulation 5 of those Regulations.

 

151.    An analysis of the provisions which have been mentioned at paragraphs 148 – 150 above shows that the compensation payable pursuant to regulation 5 of the 2015 Regulations, to any local government officer who leaves pursuant to an RPA-related severance arrangement, is:

 

(1)       a multiple of the uncapped statutory redundancy payment;

 

(2)       minus the uncapped statutory redundancy payment.

 

152.    Accordingly, in the context of determining Mr Beggs’ underpayment claim, the following issue is of fundamental importance:  What amount of statutory redundancy payment would properly have been payable to Mr Beggs were it not for the existence of Article 23 of ERO?  The answer to that question matters, because:

 

(1)       If that uncapped amount should be calculated on the basis of Mr Beggs’ augmentation of hours, his underpayment claim would be well-founded.

 

(2)       If, on the other hand, the statutory redundancy payment, before account is taken of the Article 23 maximum, is properly to be calculated on the basis of Mr Beggs’ wages while working three days per week, his underpayment claim is not well-founded.   

 

153.    We next wish to draw attention to the following statutory provisions in respect of redundancy pay:

 

(1)       In Great Britain, the provisions in respect of redundancy payments are contained in Part XI of ERA, which consists of sections 135-181 inclusive.

 

(2)       In Northern Ireland, the provisions on redundancy payments are contained in Part XII of ERO, which consists of Articles 170-215 inclusive.

 

            The provisions of sections 135-181 of ERA are practically identical to the provisions of Articles 170-215 of ERO.

 

154.    Both ERA and ERO contain provisions in respect of the calculation of “a week’s pay”:

 

(1)       Chapter II of Part XIV of ERA is entitled “Week’s pay”.  The provisions of that chapter consist of sections 220-229 inclusive.  Those provisions are relevant in applying the redundancy payment provisions of Part XI of ERA.

 

(2)       Provisions equivalent to sections 220-229 of ERA are to be found at Chapter IV of Part I of ERO.  That chapter is entitled “a week’s pay” and consists of Articles 16-25.

 

155.    The provisions of sections 220-229 of ERA are in all relevant respects identical to the provisions of articles 16-25 of ERO.

 

156.    Section 220 of ERA provides that the amount of a week’s pay of an employee, for the purposes of all the provisions of ERA, including its redundancy pay provisions, is to be calculated in accordance with sections 220-229 of ERA.

 

157.    Subsections (1) and (2) of section 221 of ERA provide as follows:

 

“221.—(1) This section and sections 222 and 223 apply where there are normal working hours for the employee when employed under the contract of employment in force on the calculation date.

 

(2)  Subject to section 222, if the employee's remuneration for employment in normal working hours (whether by the hour or week or other period) does not vary with the amount of work done in the period, the amount of a week's pay is the amount which is payable by the employer under the contract of employment in force on the calculation date if the employee works throughout his normal working hours in a week.”

 

            The provisions of paragraphs (1) and (2) of Article 17 of ERO are practically identical to the provisions of subsections (1) and (2) of section 221 of ERA.

 

158.    Against that legislative background, we refer to the judgment of the Employment Appeal Tribunal in Dutton v Jones t/a Llandow Metals [UKEAT/0236/12/ZT].  (During the hearing, we drew that judgment to the attention of the parties, and they then had the opportunity to make representations in respect of any relevant implications of that judgment).

 

159.    The relevant factual aspects of that case can be summarised in the following terms. 

 

            (1)       In Dutton, the claimant had been employed by the employer for over 20 years.

 

            (2)       Until June 2011, he worked five-and-a-half days a week and his gross weekly pay was £250. 

 

            (3)       From June 2011, as a result of the economic downturn, he was put onto short-time working of just one day a week, and his gross weekly pay then reduced to £48.

 

            (4)       In October 2011, he served notice on his employer, claiming a redundancy payment on account of lay-off.  Because of the service of that notice, the claimant ultimately became entitled to redundancy pay. 

 

160.    In that case, the employment judge had held as follows:

 

(1)       For statutory redundancy payment purposes, the calculation date had to be four weeks before the employee had served his notice claiming a redundancy payment

 

(2)       Therefore, the calculation date was a date on which the employee had been on short-time working.

 

(3)       Accordingly, for redundancy pay purposes, the employee’s weekly pay should be calculated as amounting to £48.

 

161.    The employee appealed against those determinations.  On appeal, The EAT decided as follows:

 

(1)          Within the meaning of section 221(1) of ERA, there were normal working hours for the employee, under the contract of employment which was in force on the calculation date. 

 

(2)          Therefore, for redundancy pay purposes, the employee’s week’s pay would be calculated, pursuant to section 221(2) of ERA, as being the amount which he would have been paid if he had been working his normal hours. 

 

(3)          On the calculation date, the claimant’s normal working hours were the hours which he had consistently worked until June 2011; therefore he was entitled to redundancy pay calculated on the basis of those hours.

 

162.    In our view, in respect of employments which fall within the scope of section 221 of ERA (and of article 17 of ERO), the Dutton principles apply in the context of the calculation of redundancy payments generally, and not just in situations in which there has been short-time working.  In particular, in our view, those principles apply within the context of a temporary increase of working hours.   

 

163.    Accordingly, if a employee’s remuneration for employment in normal working hours does not vary with the amount of a worker’s output within a relevant period, the amount of a week’s pay, for redundancy pay purposes, is the amount which would be payable by the employer under the contract of employment in force on the calculation date if, on that date, the employee had been working throughout his normal weekly working hours.

 

164.    Before applying that statement of legal principle to this underpayment claim, we must set out some of our findings of fact which are particularly relevant in the present context.  Those facts are set out in the paragraphs which immediately follow below.

 

165.    In his capacity as Director of Human Resources of Dungannon, Mr Currie was the author of a paper which was presented to the Strategic Support Services Committee of Dungannon at its meeting on 26 January 2015.  Paragraph 2 of that paper was entitled “Resource Requirements” and was as follows:

 

            “At the 14/01/15 meeting of the Councillors’ working group in respect of potential industrial land development and Enterprise Zoning (Ballygawley) the consultant from Branniff Associates advised of the need for concerted additional input/work from Council in order to finalise the exercise through the preparation of a submission for [the New Council] and DETI/DOE Ministers.  The [Chief Executive] advised members that this would be difficult without further resources being made available and that Ann Street market-testing exercise was also due to begin.  It was therefore agreed that he should liaise with the Director of HR/OD and obtain the necessary support required. 

 

            The DOHR/OD proposes to identify with the CE the additional resources required (max 20 hours per week) and implement with immediate effect. 

 

            Recommendation: The DOHR/OD’s Proposal is agreed”.

 

            The relevant committee did accept that proposal. 

 

166.    The relevant work, in respect of preparation of the submission and in respect of the Ann Street market-testing exercise, was always seen, by all concerned, as involving very short-term projects.  That work had in fact substantially been completed by the date of the termination of Mr Beggs’ employment.

 

167.    In their evidence to this tribunal, both Mr Beggs and Mr Currie accepted that the basis for the February 2015 augmentation of Mr Begg’s hours was solely provided by the relevant committee’s approval of the Currie paper.  We agree that that is the true position.

 

168.    It is clear that the claimant had been consulted prior to the drafting of the relevant 26 January paper.  This is evident from an email dated 7 January 2015 which was sent by Mr Beggs to Mr Burke, with a simultaneous copy being provided to Mr Currie.  The introductory paragraph of that email was as follows:

 

                        “Discussion with Brendan [Currie] and set out thus,

 

                        Initial thought is to present this to party leaders to command support ... Followed by letter of instruction from you to Brendan to submit to next meeting”.

 

            The remainder of that email sets out six reasons which could be given to the relevant committee as a basis for increasing available manpower within the claimant’s field of activity.  The existence of the Ann Street exercise was one of those suggested reasons.

 

169.    On 15 January 2015, Mr Burke had sent Mr Currie an email to the following effect:

 

                        “At yesterday’s meeting of Councillors working group in respect of potential industrial land development and Enterprise Zoning (Ballygawley) the consultant from Branniff Associates advised of the need for concerted additional input/work from council in order to finalise the exercise before the end of March through preparation of a submission for [the New Council] and DETI/DOE Ministers.  I advised members that this would be difficult without further resourcing being made available and that Ann Street Market testing exercise was also due to begin.  It was therefore agreed that I should liaise with yourself and obtain the necessary support required.  Grateful if you could consider and determine the best way forward.  Happy to discuss any options available”.

 

170.    On 30 January 2015, there was an exchange of correspondence between Mr Currie and Mr Burke.

 

(1)       At 14:27 on that day, Mr Currie wrote to Mr Burke in the following terms:

 

                        “Hello Alan

 

                                    Further to last Monday’s SSSC agreement that additional resources (max 20 hours per week) should be procured to assist with additional work to be undertaken within the unit, I have looked at a number of options, so far without success.  As specific economic development related skills/experience are required, I have been unable to identify any internal [Dungannon] availability and have also been unable to source any assistance from the other 2 councils in the cluster group. 

 

                                    In view of the urgency of the situation, can you offer any suggestions?” [Our emphasis].

 

(2)       At 16:00 on the same date, Mr Burke replied in the following terms:

 

            “Brendan

 

            What about existing staff with experience undertaking overtime if willing?”

 

(3)       At 16:09 on the same date, Mr Currie again wrote to Mr Burke, this time in the following terms:

 

                        “Hello Alan

 

                        I spoke to Paul McCready earlier and he was unable to identify any appropriate internal resources, including overtime opportunities.  There would also be significant costs involved in the overtime rates”.

 

(4)       Eight minutes later, at 16:17, Mr Burke replied to that email, in the following terms:

 

                                    “Brendan

 

                                    Maybe an Employment agency could be considered or failing that is there anybody in Council working job share or reduced hours who could provide the cover?  Alan”

 

(5)       At 16.32 on the same date, Mr Currie replied to Mr Burke, in the following terms:

 

                                    “Hello Alan

 

                                    Even if we could get someone from an agency prepared to work 20 hours a week or less, it would take at least a week to complete the recruitment exercise with possible notice having to be worked after that.  Would it be worthwhile asking Vinny to consider reverting to normal hours or even working 4 days per week? 

 

                                    Iain is the only other possibility I can think of but I would be fairly certain he wouldn’t consider it”.

 

(6)       At 4:39 pm, Mr Burke replied in the following terms:

 

                                    “Brendan

 

                        Happy enough to progress if you can on the off chance persuade Vinny or failing that Iain to consider increased hours.  Alan”.

 

171.    By the following day, Mr Beggs had informally agreed that he would augment his working hours, by working 37 hours per week instead of the 22.2 hours per week which he had been working from 10 November 2009 until the end of January 2015.

 

172.    Those revised arrangements were formalised in an exchange of correspondence between Mr Currie and Mr Beggs. 

 

173.    Mr Currie sent or gave the claimant a letter dated 31 January 2015.  That letter was headed “Hours of Duty” and was in the following terms:

 

                        “At its meeting held on 26 January 2015, Strategic Support Services Committee members agreed that an additional resource (max 20 hours per week) should be identified by the Chief Executive and Director of HR/OD in order to assist with additional Economic Development workload. 

 

                        Following a review of resources available I am writing to offer you the opportunity to revert to full time working i.e. 37 hours per week with effect from 01/02/15. 

 

                        Your other terms and conditions of service will remain unchanged.  I trust this detail meets with your approval and you are therefore requested to sign the attached copy of this letter indicating your acceptance of increased hours”. 

 

174.    On or about 5 February 2015, Mr Beggs did sign a copy of that letter.  Above that signature were the words “I agree to accept terms and conditions specified above”.

 

175.    Throughout the period of augmentation, the effects of that augmentation were as follows.

 

(1)       The claimant was obliged to work for 37 hours per week (instead of his previous working hours of 22.2 hours per week).

 

(2)       The claimant was entitled to work for 37 hours per week.

 

(3)       The claimant was entitled to a full-time salary (based on 37 hours per week, instead of the previous 22.2 hours per week).

 

176.    Because of the Dutton principles (see paragraph 161 above), an important question for us is whether those revised arrangements had the effect of making 37 hours per week the claimant’s normal hours of work, or whether 22.2 hours per week continued to be the claimant’s normal hours of work.

 

177.    The letter which was issued to Mr Beggs on 31 January 2015 did not expressly specify whether the revised arrangements which it envisaged were to be of indefinite duration, or whether those arrangements were intended to last only as long as the situations which had given rise to those arrangements lasted. 

 

178.    During the course of his oral testimony, Mr Beggs told us that, when he signed the letter in February 2015, his clear understanding of the effect of his acceptance of the terms of the 31 January letter was that the increase in hours was going to be permanent.  During the course of his oral testimony in these proceedings, Mr Currie told us that, at the time he issued the January letter, it was his own clear understanding that the effect of that letter was that the augmentation of the claimant’s hours was going to be permanent.  But it doesn’t matter what Mr Beggs actually thought at the time, or what Mr Currie actually thought at the time.  (See sub-paragraph (1) of paragraph 142 above).

 

179.    The letter of 31 January 2015 has to be construed in light of the context in which it was issued:

 

(1)       In November 2009, Mr Beggs had sought and obtained flexible retirement.  (Mr Currie was the person who, on behalf of Dungannon, had formally agreed to that flexible retirement request).  As a letter dated 10 November 2009, from Mr Currie to Mr Beggs, makes clear, Dungannon’s agreement to the flexible retirement request was based on “... a reduction in workers hours of 40% of the previous hours worked ...”.  In 2009, Mr Beggs’ flexible retirement was intended to be a permanent flexible retirement.

 

(2)       The new contractual arrangements had the effect of expanding the temporal scope of the post which Mr Beggs held, in his capacity as the Head of Economic Development of Dungannon.  That post was going to become surplus to requirements with effect from April 2015.  The Dungannon Council was about to “die”.  Both Mr Beggs and Dungannon knew that his post was not going to survive the demise of the Dungannon Council. 

 

(3)       Any relevant need for additional resources was a short-term need.  At the time he signed the copy of the letter Mr Beggs knew, or should have known this, as is clear from his email of 7 January 2015 to Mr Burke.  (See paragraph 168 above).  At that time, Mr Currie, author of the letter and author of the relevant authorising Council paper, also knew this, or should have known this.  (See sub-paragraph (2) of paragraph 142 above).

 

            (4)       Mr Beggs was a senior and very experienced local government officer.  He knew that, in the circumstances prevailing in January 2015, it would have been grossly imprudent for Dungannon to enter into arrangements, on anything other than a temporary and short-term basis, for a substantial increase of his working hours.   (Again, see sub-paragraph (2) of paragraph 142 above).

 

            Against that background, any reasonable person, having all the background knowledge which would reasonably have been available to the parties to the 2015 January hours increase arrangements, would have come to the conclusion that the relevant increase in the number of weekly hours was temporary and short-term.

 

180.    Therefore, in April 2015 (on the “calculation date” for statutory redundancy payment purposes), 37 hours per week were not Mr Beggs’ “normal working hours”, within the meaning of Article 17 of ERO; instead, at that time, 22.2 hours per week were his “normal working hours”.

 

181.    We now revert to the issue which we mentioned at paragraph 152 above:  What amount would properly be payable to Mr Beggs as a statutory redundancy payment were it not for the existence of Article 23 of ERO?

 

182.    Our answer to that question is that that amount should be calculated on the following basis:

 

(1)       There were normal working hours for Mr Beggs; and he was not paid on the basis of output.  (Instead, he was paid a salary).  Therefore, paragraphs (1) and (2) of Article 17 of ERO (the equivalents of subsections (1) and (2) of section 221 (1) of ERA) did apply to him.

 

(2)       The “calculation date”, was a date in April 2015.  On that date, 22.2 hours per week still constituted Mr Beggs’ “normal working hours” for the purposes of paragraph (2) of Article 17.

 

(3)       Therefore, for the relevant purpose, Mr Beggs’ weekly wage should be calculated on the basis of a 22.2 hour week.

 

183.    Accordingly, pursuant to the Dutton principles, Mr Beggs’ entitlement to a statutory redundancy payment was entitlement based on a working week of only three days per week.

 

184.    In April 2015, £490 was the statutory maximum which had been fixed, pursuant to Article 23 of ERO, in respect of a week’s pay, for statutory redundancy payment calculation purposes.  Even on a three-day week, Mr Beggs’ weekly pay was greater than £490.  Accordingly, for the purpose of calculating his entitlement to a capped statutory redundancy payment, it doesn’t matter that Mr Beggs’ statutory redundancy payment entitlement has properly to be based upon a three day working week, as distinct from a five day working week. 

 

185.    However, for the purpose of calculating Mr Beggs’ uncapped statutory redundancy payment amount, it is of considerable significance that the calculation has to be based only on the 22.2 hour week.

 

186.    Mr Beggs was entitled to a statutory redundancy payment based only on his normal working hours of three days per week.  That was the basis upon which the New Council calculated the amounts payable to him in respect of severance.  That was the correct basis for those calculations.

 

 187.   Against that background, and for those reasons, Mr Beggs’ underpayment claim is not well-founded. 

 

 

 

 

The ultra vires issue

 

188.    As already noted (at paragraph 21 above), the following potential issue was identified in the Queries List:

 

                        “6.       In the Beggs case, did the relevant authorisation of the Council Committee only envisage additional staffing in respect of short-term projects, and did the implementing contract of employment purport to relate to an indefinite period?  If so, was that purported contract ultra vires?  If so, what are the relevant consequences in this case?”

 

In light of our conclusions on the Severance Scheme interpretation issue (see paragraphs 138-186 above) we do not consider it to be necessary to arrive at any definitive conclusions in relation to any ultra vires issues or implications.

 

 

 

 

 

 

Employment Judge:

 

 

Date and place of hearing:     2-4 February, 21 March and 23 March and
 7 October 2016, Belfast

 

Date decision recorded in register and issued to parties: