United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR R THACKER (of Counsel) Ms J Fogg-Elliot Solicitor Free Representation Unit 49-51 Bedford Row London WC1R 4LR
For the Respondents	MS I SIMLER (of Counsel) The Treasury Solicitor Queen Anne's Chambers 28 Broadway London SW1H 9JS


 


JUDGE D M LEVY QC: By an application dated 25 June 1995 received by an Industrial Tribunal on 4 July 1995, Ms Cicely Julien ("Ms Julien") complained of unfair dismissal under the Sex Discrimination Act 1975 and under the Employment Protection (Consolidation) Act 1978. Her application showed her employer to be the Home Office and the dates of her employment were from 4 March 1991 to 13 May 1995. The Home Office in its Notice of Appearance entered on 30 November 1995 complained that the Originating Application was out of time and sought a preliminary hearing.

There was a preliminary hearing and at that hearing it was determined that the claim for sexual discrimination was out of time, but that there was a claim to go forward for unfair dismissal. That claim was heard by an Industrial Tribunal sitting at Stratford on 21 June 1996. The decision of the Tribunal was sent to the parties on 8 July 1996.

The unanimous decision of the Tribunal was to dismiss the claim by Ms Julien of unfair dismissal. At the hearing itself Ms Julien had the assistance of Counsel from the Free Representation Unit and Ms Simler appeared for the Home Office, as she has done before us today.

At the hearing before the Industrial Tribunal, Counsel for Ms Julien sought to introduce a claim for redundancy payment. No formal leave was given to him to introduce that claim but Ms Simler has told us that the merits of that claim were argued and it is apparent to us that a paragraph of the Reasons for the decision reflect this.

We are satisfied that the Industrial Tribunal considered that Ms Julien had no valid claim for a remedy from an Industrial Tribunal either for unfair dismissal or for redundancy payment and this is encompassed in its decision from which an appeal was made by Ms Julien, by Notice of Appeal dated 14 August 1996.

Between the hearing before the Industrial Tribunal and today, the Employment Appeal Tribunal has decided the case in Housing Services Agency v Cragg, ("the Cragg decision") the appeal reference of which is EAT/460/96. The judgment was delivered on 11 March 1997 by a panel headed by Judge Clark. It is apparent to all parties that that decision is in point here and we will be referring to it in due course.

The appeal is of a very short compass and relates to what is now section 197 of the Employment Rights Act 1996, which reads as follows:

"Fixed term contracts.

(1) Part X [that is of course the part dealing with unfair dismissal in the 1978 Act] does not apply to dismissal from employment under a contract for a fixed term of one year or more if -

(a) the dismissal consists only of the expiry of that term without its being nenewed, and

(b) before the term expires the employee has agreed in writing to exclude any claim in respect of rights under that Part in relation to the contract.

(2) Subsection (1) does not prevent Part X from applying if the dismissal is regarded as unfair by virtue of section 101.

(3) An employee employed under a contract of employment for a fixed term of two years or more is not entitled to a redundancy payment in respect of the expiry of that term without its being renewed (whether by the employer or by an associated employer of his) if, before the term expires, the employee has agreed in writing to exclude any right to a redundancy payment in that event.

(4) An agreement such as is mentioned in subsection (1) or (3) may be contained -

(a) in the contract itself, or

(b) in a separate agreement.

(5) Where -

(a) an agreement such as is mentioned in subsection (3) is made during the currency of a fixed term, and

(b) the term is renewed,

the agreement shall not be construed as applying to the term as renewed; but this subsection is without prejudice to the making of a further agreement in relation to the renewed term."

It is common ground that the Cragg decision expressly considered the redundancy parts of section 197, although there is useful obiter on the unfair dismissal parts of that section.

The facts of this case are not in dispute and can be taken from the chronology helpfully prepared by Mr Thacker on behalf of Ms Julien.

On 23 January 1991 the Home Office wrote to the Ms Julien offering employment on a three-year fixed contract as Team Leader on Newham Drugs Prevention Team. It is necessary to read out two or three paragraphs from the letter. The first paragraph says:

"I am pleased to formally offer you an appointment as a Team Leader with the Local Drug Prevention Team in Newham for a period of 3 years in the first instance, with a possibility of extensions to a maximum of 5 years [we point to this sentence because a 5 year period is invoked at the start]."

There is a paragraph towards the end of the letter which reads as follows:

"We have to make it a condition of fixed term appointments that an officer whose appointment is not renewed at the end of the term cannot regard himself as having been unfairly dismissed for the purpose of the Employment Protection (Consolidation) Act 1978 (which provides for the exclusion by agreement of any claim in respect of unfair dismissal in these circumstances). As regards redundancy payments, the 1978 Act does not apply to the Crown, but Government Departments have made arrangements analogous to it. An officer holding a period of appointment should have no expectation of serving beyond that period and he is therefore not to be regarded as redundant at the end of that period. It follows that you will not be eligible for compensation under the analogous arrangements. I must therefore ask you to sign the statement at Annex A disclaiming any statutory rights."

Two further paragraphs further down:

"If you are willing to accept employment on the basis of the terms contained or referred to in this letter I should be glad if you would sign and return to me the enclosed copy together with the form concerning bank details and the attached Annex A."

The Annex A, which is at page 23 of our bundle, has the signature of Ms Julien and a date 4.2.1991 and it sets out the appropriate provisions of the 1978 Act.

On 4 March 1991, after she had signed that waiver, Ms Julien commenced her employment. For reasons which we do not understand, a further letter was written to her on 3 April 1991 setting out in the first paragraph, much the same as was in the letter which we have set out and again containing a disclaimer which she was encouraged to sign, and which she did sign on 30 May 1991.

On 6 April 1993, that is when there was some considerable time of her three-year contract still to run, the Home Office wrote to Ms Julien in these terms:

"I am pleased to offer you a renewal of your appointment to the Newham Drugs Prevention Team until 31 March 1995.

Your terms and conditions of employment will remain as stated in our letter of 23 January 1991.

If you are willing to accept this renewal of service I should be grateful if you would sign one copy of this letter and return it to me as soon as possible."

A copy of that letter was signed by Ms Julien and returned. The signed copies are in our bundle. We do not know when it was returned; as we say her employment ended on 31 March 1995, that is undisputed.

One of the submissions that Mr Thacker has made is the renewal letter is unsatisfactory under the Act because there is no document, no agreement, setting out in full the terms of waiver. In answer to that Ms Simler has referred us to a judgment of this Tribunal in BP Oil Ltd v Richards, where Mr Justice Browne-Wilkinson gave the judgment of this Tribunal, the reference being EAT/768/82. It is a decision in a situation similar to those raised on this appeal. At page 5 of the transcript there is this passage:

"Then the question arises whether on the true construction of the last contractual document (i.e. the letter of 30th April 1981) there was validly incorporated into it a condition that Miss Richards was agreeing to exclude all her rights to redundancy payments and compensation for unfair dismissal? That seems to us to be primarily a matter of construction of the letter of 8th April 1981. On the one hand, it can be said that the letter refers to Miss Richards' then existing contract continuing in force, as had the previous extension letter of 30th April 1979. That presupposes a continuing contractual relationship on the same terms. On that basis, since condition 4 had been rendered void in the letter of 10th March 1978, it would not be a term of the contractual arrangements in April 1981.

However, ... the factors on the other side outweigh that."

The Tribunal sets out those factors. We bear in mind the Industrial Tribunal found that Ms Julien was an extremely intelligent lady, and they did not think that their decision in any event ought to do her any injustice for she, no doubt, always understood she was agreeing to the exclusion of her right to allege unfair dismissal at some future time. We have no doubt at all that there was a proper agreement for the purposes of Section 197 (4) and (5) on the true construction of the exchange of correspondence in 1993.

We turn to consider the Cragg decision as to redundancy. Under the heading Redundancy payment waiver at page 18 of the transcript there are five terms:

"(1) There must be a fixed term contract [and we add 'containing a waiver provision']

(2) It must be, in the first instance, for a term of two years or more. It is not permissible to aggregate successive fixed terms so as to amount to two years or more."

We interpose to say that those two terms are clearly satisfied in the agreement the Appellant signed.

"(3) before the expiry of the fixed term under (2) above the parties must enter into a waiver agreement as defined in s.197(4). ..."

In our judgment the document signed in 1993 was just that. If we are wrong on this, we accept Ms Simler's submission that the document signed in the second agreement might be just that.

"(4) if dismissal, consisting of the expiry of the fixed term without its being renewed (on the same terms) ... occurs, the employee is excluded from the right to bring a claim for a redundancy payment under s.135(1)."

We are satisfied that that did not occur.

"(5) if there is no dismissal under (4) above because the contract is renewed or the employee is re-engaged on different agreed terms (see s.138) then, if the original fixed term is renewed for a further fixed term (see s.235(1)), whether for a period of two years or less, and during that extended term the parties enter into a s.197(4) waiver agreement, then dismissal arising out of the expiry of the original fixed term as extended will not give rise to a claim for a redundancy payment (s.197(3) read with (5))."

The judgment in Cragg proceeded to give further explanation in regard to proposition (5), which Mr Thacker in his submissions has suggested, may be wrong. We, for our part, could see nothing wrong with the reasoning of the Employment Appeal Tribunal thereafter set out in the passages, but where a decision has been reached, reviewing all the authorities on the subject, in our view it is right for this Tribunal to follow such a decision unless satisfied that it is erroneous and that we will do. In our judgment therefore, there was no entitlement to a redundancy payment. Ms Julien had waived her right to a redundancy payment in this case.

The requirements for unfair dismissal are thus set out at page 16 of the judgment:

"Unfair dismissal waiver:

The following requirements must be met;

(1) there must be a fixed term contract. It is immaterial that it contains a notice provision.

(2) it must be for a term of one year or more. It is not permissible to aggregate successive fixed terms so as to amount to one year or more.

(3) there must be a term of the contract, or separate agreement (s.197(4)) entered into before the expiry of the fixed term excluding the right to claim unfair dismissal. No question of consideration arises in a contractual sense. It is sufficient that there is an agreement made between the parties in writing to that effect.

(4) if dismissal, consisting of the expiry of the fixed term without its being renewed (on the same terms) (s.95(1)(b); s.197(1)(a)) occurs, the employee is excluded from the right to bring a complaint of unfair dismissal under s.94(1).

(5) if there is no dismissal under A(4) above, the parties must start again. Whether by renewal or re-engagement, if the employment continues for a further fixed term that must be for a term of one year or more, and there must be a waiver agreement complying with s.197(4) entered into before the expiry of the new term (s.197(1)(a))."

In our judgment, what clearly happened in this case was the early parts of the requirements were clearly met. There was a fixed term contract for more than one year or more and it did have the waiver clause in it.

There are two ways that the sub-paragraphs (4) and (5) of this paragraph can be considered in the context of Ms Julien's case. First, there was one contract extending over the whole period. That is the way the Industrial Tribunal appeared to have considered it, and on the facts of this case we do not think that can be considered wrong. Alternatively, there was a three-year contract extended by a period of one year with the waiver being clearly agreed by Ms Julien. In the circumstances of this case, if that was what happened, again we think there was no unfair dismissal. We accept that this passage of the Cragg decision is obiter, but Mr Thacker has not persuaded us that the law has not been correctly stated.

We have carefully considered other submissions which Mr Thacker has made on what might be unsatisfactory if this route is followed, but on the facts of this particular case, although reaching the same decision as the Industrial Tribunal, albeit by a different route, we are satisfied that the Industrial Tribunal came to the right decision. They did not have the benefit of the Cragg decision. We suspect that if they did have that judgment they would have found it rather easier to reach their decision than in fact they did.

We thank Counsel for their helpful submissions in this case.