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BAILII case number: [1993] UKEAT 220_91_1901

Appeal No. EAT/220/91

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 15th & 16th September 1992

Judgment delivered on 19th January 1993

Before

THE HONOURABLE MR JUSTICE WOOD MC (PRESIDENT)

Ms B DEAN

MR J R CROSBY

BARCLAYS BANK Plc APPELLANTS

(1) MR A O'BRIEN & ORS

(2) MR K DAVIS RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

APPEARANCES

Mr N Underhill QC

Instructed by -

For the Appellants Messrs Lovell White Durrant

Solicitors

65 Holborn Viaduct

LONDON EC1A 2DY

Ms J McNeill

(of Counsel)

Instructed by -

For the 1st Respondents Messrs Lawford & Co

Solicitors

102-104 Sheen Road

Richmond

Surrey TW9 1UF

and by -

For the 2nd Respondent Messrs Pattinson & Brewer

Solicitors

30 Great James Street

LONDON WC1N 3HA

MR JUSTICE WOOD (PRESIDENT) By Originating Applications presented in August 1990, six Applicants alleged unfair dismissal by their employer Barclays Bank Plc (the Bank). Save for Mr O'Brien who was dismissed on his 60th birthday (17th May 1990), they were each dismissed on 30th June of that year. This was found to be the effective date of termination (EDT) in each case. On that date the Applicants were aged respectively -

Mr Lock60 years 6 mths

Mr Curtiss61 " 9 "

Mr Goodacre64 " 6 "

Mr Davis62 " 11 "

Mr McDonald63 " 9 "

Mr Hughes62 " 8 "

Mr Taylor64 " 3 ".

The reason given for dismissal was redundancy. Section 54 of the Employment Protection (Consolidation) Act 1978 gives each employee a right not to be unfairly dismissed and S.64 provides the qualifying period and upper age limit. Unless an applicant can satisfy a Tribunal that he falls within the provisions of S.64 he is unable to achieve any remedy under the Acts.

The Bank raise the issue of the qualifying age limit under S.64(1) and it was therefore for the Applicants to establish that the Industrial Tribunal could hear their claims. The relevant wording is in S.64(1)(b), the text of which reads -

"S.64

(1) Subject to subsection (3), section 54 does not apply to the dismissal of an employee from any employment if the employee -

(a) ... or

(b) attained the following age on or before the effective date of termination, that is to say -

(i)if in the undertaking in which he was employed there was a normal retiring age for an employee holding the position which he held and the age was the same whether the employee holding that position was a man or a woman, that normal retiring age; and

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

The "normal retiring age" (NRA) is a creature of statute. It is not the contractual date of retirement. In his dissenting judgment in the Court of Appeal in Hughes v. DHSS [1984] ICR 557 at p.581H Sir John Donaldson described it as follows -

"... A "normal retiring age" is something of an abstraction. It is an aspect of an employer's employment policy. If there is a normal retiring age or ages in an organisation, the statutory policy is that those who are retired in accordance with that policy are not allowed to complain of having been unfairly dismissed. Of course an employer may not have formulated such a policy in expressed terms, but it may nevertheless be apparent that he has one from the way in which he acts, taking account of deviations for compassionate or other special reasons. Alternatively he may have formulated and promulgated such a policy, bit it is clear either that this is a sham or that he has abandoned it. In such a case the statutory age will apply, as it will if there is admittedly no normal retiring age. But that is not this case. The DHSS had a very clear policy and there is no suggestion that it was a sham or had been abandoned or modified. That concludes the issue and it would make no difference if Mr Hughes and Mr Coy were the last people to whom it would apply or if indeed whilst there was someone else in the same position the policy would not be applied to him because, for example, he had insufficient reckonable service and he would be retained for a little longer on compassionate grounds."

The policy of an employer, in order to be effective should be clearly announced and notified with clarity to those employees involved.

The only other statutory provision to which we need refer is the definition of "position" in S.153(1) of the 1978 Act. It reads -

"position", in relation to an employee, means the following matters taken as a whole, that is to say, his status as an employee, the nature of his work and his terms and conditions of employment;"

We gratefully accept the apt definition of the issue to be decided from the leading judgment of Dillon LJ in Barber v. Thames Television Plc - CA Wed. 29th April 1992 - as yet unreported - where he says at p.5G of the transcript -

"In the jurisprudence which has developed under section 64, the persons who hold the same position as defined in section 153(1) as a particular employee have been referred to as "the group" to which that particular employee belongs. The word "group" is not to be found in the Act itself. It was introduced by Lord Fraser of Tullybelton in Waite v. Government Communications Headquarters [1983] 2 AC 714. A summary therefore of the effect of section 64(1)(b) is that a person whose employment is terminated because he has reached the normal retirement age of his group cannot complain of unfair dismissal. There is no jurisdiction to entertain his complaint because the opening words of section 64(1)(b) provide that section 54 does not apply to the dismissal of such an employee from his employment. But if there is no normal retirement age of his group, then he or she can claim for unfair dismissal if his employment is terminated by compulsory retirement under the age of 65, since 65 is the residual age referred to in (ii) in section 64(1)(b)."

We would only add, by way of comment, that if "Group" is to be understood in this technical sense, it is important to limit its use to that sense.

In the recent reported decision in the Court of Appeal of Brooks v. British Telecommunications Plc [1992] ICR 414 - the reserved judgments were given on 27th November 1991, but it is not cited and we believe was not referred to in Barber - the Court of Appeal posed the question to be answered as follows - (see Balcombe LJ at p.424D-E and Sir Christopher Slade at p.434D) -

"What at the effective date of termination of the applicant's employment and on the basis of the facts then known, was the age at which employees of all age groups in the applicant's position could reasonably regard as the normal age of retirement applicable to the group".

We would respectfully suggest a slight alteration from "of all age groups" to "of all ages" to meet the problem posed above.

Before this Industrial Tribunal both sides agreed that the relevant Group was "the messengers"

Contractual retirement age - age 60.

In paragraph 6 of the Decision the Tribunal found -

"6. From a review of the documents, and it has been confirmed by what happened in practice, we are satisfied that by the time of the amalgamation on 1 January 1985 each of the applicants were contractually subject to the conditions as have been alleged by the respondents, namely, that there was an obligatory retirement at the age of 60 and that thereafter they could apply each year for an extension of their employment up to the final age of 65."

Prior to 20th November 1987 - no normal retirement age.

In paragraph 7 of the judgment the Tribunal find -

"7. Further the evidence before us establishes that over the years the vast majority of those messengers did apply for an extension and that they did retire at various ages over 60 and up to a maximum of 65 years. Mr Underhill, who has presented the case for the respondents with great acumen, has accepted that prior to the 20 November 1987 there would be no 'normal retirement age' within the meaning of s.64(1)(b) of the Act. He also accepts that he would not be able to succeed under this section unless he can show some change in the reasonable expectations of messengers."

The reason for such wholesale extensions is that messengers were frequently late entrants - from the police or armed forces - and needed the additional work to tide them over between retirement from the bank and receipt of the State old age pension at the age of 65. As will be seen from paragraph 7, Mr Underhill for the Bank conceded that unless it can show that a normal retirement age had been established subsequently to November 1987, the Applicants must succeed as the only finding would then be that there was no normal retirement age and therefore that the relevant age was 65.

It is common ground that the burden rested upon the Applicants to establish that there was no normal retirement age. The Industrial Tribunal found in their favour and therefore found that they were entitled to seek their remedies under the 1978 Act. The Bank appeal.

The history, November 1987 to April 1988

At January 1988 the numbers of messengers employed by the Bank were -

Under age 55 - 948

55 - 60 (incl) - 345

61 - 64 (incl) - 181

______

Total 1474.

______

On 20th November 1987 the Bank issued a Head Office circular, P.140. The Industrial Tribunal describes its basic effect as follows -

"... The respondents issued a Head Office circular No P.140 ... in which it is recorded that it was the respondent's intention that 60 would be the normal retirement age in the future. Although the document does not state it, it is accepted that it was intended that there would be no discretionary extensions for messengers. That is certainly how the applicant's union understood the position to be."

That Circular started by explaining the need to set a common normal retirement age. It continued -

It is the Bank's intention that 60 will be the normal retirement age and our policies will be aimed to achieve this in time. ..."

The Circular then divided the messengers into two parts, which can broadly be described as those in Grades 1 - 3, which was 7¹/₂% of the total, and the remainder which was 92.5%. The first four named Applicants were in the smaller group with the higher salaries.

The broad effect of this Circular was that all those with contractual retirement ages of 65 would be entitled to serve until then, but otherwise the normal retirement age was to be 60. This was baldly stated and the Trade Unions understood, as indeed is clear from the documents, that there would be no discretionary extensions for messengers. They protested vigorously. This was a radical change from the past, not only in the statement of NRA but in the absence of any discretionary extensions.

There is a note of a joint meeting of 4th February 1988 which shows many valid arguments being put forward showing the hardship this would cause, and in particular the short period of time within which the messengers could re-organise their financial affairs. Many internal loans had been geared to anticipated retirement age. The note then indicates -

"The Bank would certainly give further consideration to the points brought forward by the Union but stressed that if there were any possibility of a change to the arrangements announced in the recent circular it would most certainly not be reverting to the previous situation."

A further meeting took place on 11th February 1988. The first paragraph of the note reads -

"The Bank opened by saying that it accepted that some hardship would arise to some staff due to the changes the Bank had made following the new legislation and it was prepared to address the problems encountered by such staff in their late fifties and sixties. The Bank stress that it had no intention of changing the rules described in Circular P140. The Bank was proposing, however, that staff who were aged 55 and over on 7th November 1987 should be permitted a further five years' pensionable service from the subsequent review. Such extension would be upon application after age 60, on an annual basis, and should be subject to the usual criteria of satisfactory health, attendance and conduct, to a suitable job being available, a performance category of 'C' or better, and to retirement taking place no later than the 65th birthday. This would mean, for instance, that 56 year olds could apply to age 62 and 59 year olds to 65. The Bank would obviously look for support for its proposals from both Unions."

After an adjournment the trade unions accepted the relaxations proposed and the note finally reads -

"The Bank reminded the Union that it was not amending P140 and that the changes proposed above must be considered as an exception to that Circular. The Bank's policy on normal retirement age is that laid down in P.140."

There was a further note of a meeting on 15th March 1988 when the retirement age was again brought up and the Bank's reply is noted as follows -

"The Bank noted the Union's comments although it had already said that no further changes would be made to Circular P.140. The Bank would be writing to all T & S staff to point out how Circular P.140 affects those age 55 or over on the five year phase out and also those under age 55 would be sent a copy of Circular P.140 and informed of their retirement age of 60."

Finally, by letters dated in April 1988 all messengers were sent individual letters. The 7¹/₂% group were sent a letter explaining P.140 and indicating that they could apply for extension on a non-pensionable basis up until the age 65.

The remainder received a letter, the content of which is essential to an understanding of this case. It read as follows -

"As you will know, 60 is the normal and contractual retirement age for all T & S staff although in the past some have been permitted to continue beyond the age of 60.

As a result of changes in legislation, the Bank has reformulated its policy on retirement and the Bank is, therefore, insisting that, as from 7th November 1987, T & S staff must retire at the normal retirement age of 60. This was laid out in circular P.140 and I am attaching a copy of that circular for your retention to remind you of the terms.

We understand that, in spite of this, some T & S staff have based their financial arrangements on the hope of being permitted to continue to 65 and those who would have retired shortly might have suffered considerable hardship. It has been decided, therefore as an exceptional matter, to permit members of the T & S staff who had, on 7th November 1987, passed their 55th birthday to apply for a limited extension in pensionable service beyond age 60.

Staff over 55 may apply for a maximum of five complete years from the birthday following 7th November 1987, although no extension will continue beyond the 65th birthday. You will need to apply on an annual basis for each year of service after age 60 which comes within the arrangements shown below. This will have the following effect:-

Age at 7.11.1987Latest birthday at which

Retirement will take place

Less than 5560

5561

5662

5763

5864

59 or over65

The same criteria as previously applied will continue in that there must be a suitably graded job available in the locality, the performance rating must be 'C' or better and staff must be in good health and have a good attendance record. In any event, extensions will not be granted beyond the date shown in the table above.

If you wish to apply for such an extension you should do so in writing through your line Manager at least six months in advance of your 60th or subsequent birthdays. If you are already aged 59 or more and within 6 months of your next birthday and wish to apply for an extension in the terms of this letter, you should do so within the next 4 weeks.

If you do not apply in this way the Bank will assume that you wish to retire on your birthday and will arrange for your pension to be calculated.

If you have any queries about how you are affected by this policy or about the scheduling of your staff loans, you should ask your line Manager as soon as possible.

Yours sincerely

RESOURCES DIRECTOR"

The criteria are of importance as any extension depended upon a suitably graded job being available.

During the autumn of 1989 it became clear that some redundancies of messengers would be necessary and the Bank applied their policy under P.140. This is clear from the documentation.

Mr Underhill's first submission was criticism of the reasoning in the Decision based upon the facts. Paragraph 10 and paragraph 17 read as follows -

"10. The respondents took on board the arguments and about the 27 April 1988 letters were sent off to each messenger. Under amended terms, messengers were going to be permitted to carry on as before provided they were over the age 55 as at the 7 November 1989. There was some variation in respect of the non-pensionable nature of the service but that does not effect the issue that we have to decide."

...

"17. In the instant case, there was no temporary shortage of messengers; indeed the opposite was the position. The respondents wanted to reduce numbers. The reason for the re-arrangement was union pressure following unrest amongst the staff. Further the personal circumstances of each employee was not considered because the concession applied to all messengers, 55 years and over, whether they wanted it or not. Some thereafter retired at 60 years and other went on to various ages up to 65 years; and at the relevant date some 30% would still expect to retire at ages over 60 years."

The Industrial Tribunal there say that after April 1988 the messengers were going to be permitted to carry on as before, provided they were over the age of 55 on 7th November 1987. This Mr Underhill submits is factually incorrect and that this error is perpetuated in paragraph 18:-

"18. It would seem to us that effectively, the previous system was continuing to run and would continue to do so until 1992, with a reducing but specified number of the same group being entitled to retire at different ages up to 65 years."

We agree. The Tribunal were considering those parts of the Group as different because of their actual ages, and this is in conflict with the principle laid down in Brooks which had not then been decided. The Industrial Tribunal did not have the benefit of that decision. There was in fact a change even for those of age 55.

The second criticism is made of paragraphs 13 and 21 which read -

"13. The question we have to decide is a difficult one and that is what was the reasonable expectation of the employee as at the date of dismissal. For these purposes it matters not whether we use the date of May 1990 or June 1990 in deciding what was the expectation of the normal retirement retiring age."

The question there posed refers to "an employee". It seems to us that here again the question posed is not the same as that laid down in Brooks which indicates that one must look at the whole group at all ages within the group.

The question is somewhat rephrased in paragraph 21 -

"21. The reference to 'an employee' does not mean a selected employee or an average one; it must mean a representative or even a hypothetical employee in that position. If a question was posed to such a 'messenger' in June 1990 about his expectations of the retirement dates of his 'group', the answer could only have been that one part were contractually bound to retire at 60, and the other smaller number could carry on to 65, subject to various tests."

We are satisfied therefore that without the assistance of Brooks this Industrial Tribunal did slip into error and that Mr Underhill's submissions are well founded. This decision must therefore be considered to be erroneous in law.

It is then for us to inquire whether there is sufficient evidence as found, or within the documentation, upon which we can decide what the result would have been upon a direction of law based on Brooks.

In addition to Brooks and Barber we were referred to -

Waite v. GCHQ [1983] ICR 653

Hughes v. DHSS [1985] ICR 419

Highlands Development Board v. MacGillvray [1986] IRLR 210.

Where there had previously been no normal retirement age, although there had in fact been a contractual date of retirement, an employer, as a matter of management policy, is entitled to state what in future is to be the normal retirement age. The policy must be genuine and provided the statement is clear, the contractual age is of little or no materiality for the purposes of the 1978 Act. The expectation has to be that of the group as a whole, but it need not be the universal expectation of each and every member. A small group by way of exception, may indeed have a different expectation. Statistics per se are unlikely to be helpful. The mere fact that some members of the group have retired at other than the stated NRA, perhaps for compassionate reasons - Barber per Staughton LJ - does not undermine that NRAs, save in the exceptional circumstances envisaged by Lord Fraser in Waite.

Miss McNeill, for the respondent Applicants, submits that P.140 was amended by agreement so as to permit messengers to apply for extension beyond the age of 60, as had occurred before 1987, subject to a maximum number of five years from the next birthday after 7th November 1987, ie those age 55 or over at the commencement date. She submits that this is sufficient to undermine the clear statement of policy that "NRA is 60", and that this is a finding of fact that cannot be reversed.

The evidence in this case is substantially that set out in the documentation, to much of which we have referred. It is the interpretation of that undoubted evidence in accordance with the binding legal principle which is the function of the Industrial Tribunal and of ourselves.

Upon a reading of the documentation in particular, we are satisfied that from April 1988 the general expectation of the group was that the NRA was 60. Did the exception introduced to help those over 55 undermine and therefore prevent the existence of that general expectation when judged objectively? There would be a gradual decrease in the number of those to whom the exception would apply until 1992 and the exception was purely discretionary depending upon the criteria. It was not the same exception as previously practiced before 1987.

In our judgment there is only one answer to the question posed in Brooks and that is the NRA was 60. The new policy introduced in 1987/88 was a single policy which included some limited temporary exceptions based upon an entirely understandable and appropriate measure of compassion. Those exceptions did not undermine the clearly stated policy.

One possible way of construing what occurred in 1987/88 is that this was "a phased policy". That, however, is in effect to split the group and to introduce the criterion of age in assessing the expectation of an individual. This is contrary to Brooks.

Different members of the group may individually have different expectations because falling within the exception but this is not the issue. The objective test is that in Brooks and one needs to ask, are the exceptions such or is the way in which the practice has been operated by management such, as to undermine the stated policy? Statistics may be of some relevance and weight depending upon the circumstances.

If the general statement of policy is clear and the reasoning behind the exception is equally clear and reasonable, it would need strong evidence of departure from that policy for an Industrial Tribunal to find that there was no NRA and therefore that the age of 65 applied.

We are quite satisfied here that the Appellants must succeed on this issue.

That however is not the end of this appeal.

Miss McNeill sought leave to raise an argument which had not been presented to the Industrial Tribunal. She submitted that the Applicants' positions should depend upon the matters set out in S.153(1) of the 1978 Act, and that in consequence the appropriate "groups" should be determined by reference to the compulsory retirement ages of each employee as set out in the Bank's letter of April 1988. The group of each Applicant should therefore be determined in accordance with the compulsory age set out in that letter.

In seeking leave to raise this point Miss McNeill relied upon Barber v. Thames Television Plc [1991] ICR 253, EAT. For the substance of her argument, if allowed to proceed, she relies upon Barber in the Court of Appeal. We allowed her to present her submissions de bene esse.

On the first issue the following points are clear. First, that the Applicants have at all times been in the hands of able, competent legal advisers. Secondly, that the relevant group has at all times during this case been agreed as "the messengers". In Barber this concession or agreement had not existed. Thirdly, if age of retirement is going to be examined as part of a S.153 investigation, then new evidence will be required. Fourthly, this point was open to the Applicants, there had been no change in the principles of law on this particular issue of defining the relevant group. A very similar point was taken before the Industrial Tribunal in Barber in August 1989.

Upon the merits, first, the facts in Barber are distinguishable as that was a fixed non-discretionary phasing; although not held to be contractual, the retirement age had become fixed and did not depend upon a discretion exercised by the employer. Secondly, in Barber the differences were related to joining date, whereas here it is related to age. Relating this factor to age is contrary to the principles enunciated by the Court of Appeal in Brooks. As Mr Underhill has pointed out, Brooks was a reserved judgment, it was not cited to the court in Barber. Thirdly, Ms McNeill's submissions could well lead to one man groups or one woman groups and this must indeed be contrary to the intention of the legislature.

We accept that this argument goes to jurisdiction, but as has been said, merely to state this does not open Pandora's box. In all the circumstances of the case applying the principles of Barber in the EAT and of the cases cited therein, we decline to exercise our discretion to allow this fresh argument to be raised.

If we were wrong in this, it is our opinion that the argument so ably advanced, offends against the principles emanating from the Court of Appeal in Brooks.

The appeal is therefore allowed and the complaints of the Applicants must be dismissed.

Leave to appeal.