United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR GRAHAM CLAYTON (Solicitor) Instructed By: Messrs Graham Clayton Solicitors Hamilton House Mabledon Place London WC1H 9BD
For the Respondent	NO APPEARANCE OR REPRESENTATION BY OR ON BEHALF OF THE RESPONDENT


 


MR JUSTICE WALL:

1. This is an appeal by Mr J.H. Puncher against the decision of the Employment Tribunal held at Lincoln on 29 March 2000. In his form IT1 the Appellant applied to the Tribunal claiming entitlement to a redundancy payment and unfair dismissal. In the event, as we understand it, the question of redundancy did not arise because a payment had been made by the Respondent. That left alive the question of unfair dismissal. The unanimous decision of the Tribunal was that it did not have jurisdiction to entertain the claim made by Mr Puncher principally because of a waiver of his rights contained in the contracts of employment which he had signed over the years.
2. The Respondent does not appear today to contest the appeal. We nonetheless have had full argument and citation of the relevant authority.
3. We can take the facts from the Decision and the Extended Reasons given by the Tribunal. The Respondent is a higher education college which, as the Tribunal found, operates on the normal higher education academic year. It employs a majority of permanent staff but supplements them by a small number of 'temporary' associate tutors of whom Mr Puncher was one.
4. The Tribunal found that, in advance of each academic year, the academic staff requirements were assessed by the college and that they could vary according to changes in the requirements for particular courses and their content. Mr Puncher was first engaged on a fixed term contract on 28 September 1992 with a termination date of 9 July 1993. As the dates indicate the contract ran from the beginning to the end of the academic year. There then followed the normal summer vacation. Mr Puncher was re-engaged on 20 September 1993 for a further academic year to 8 July 1994 and so on, up until his final contract which began on 1 September 1998 and terminated on 16 July 1999. That final contract was not renewed, and 16 July 1999 accordingly was the effective date of the termination of Mr. Puncher's employment.
5. Before going to the remainder of the facts, it is necessary to look only briefly at the contracts themselves. They are all in similar form. We have two of them. The remuneration was paid on a daily basis as per "authorised timetable attendance". The termination clause in the contract is at paragraph 17. Paragraph 17.1 reads:

"The Contract will terminate automatically on the date of the final teaching session or on the date notified to you in writing by the College. It may, however, be terminated earlier in the following circumstances."

Three provisions as to notice of termination are then given which do not apply in the instant case. Then, finally, in paragraph 20, we have the Waiver Clause:

"In accordance with Section 142 of the Employment Protection (Consolidation) Act 1978, I agree to waive my right(s) to claim unfair dismissal/and statutory redundancy payments on termination of the fixed term without renewal."

6. Turning to redundancy, whilst the Tribunal correctly directed itself that the question of redundancy payments and continuous employment in relation to redundancy was not determinative of the issues before them it is, we think, nonetheless important to see that on 29 July 1999 the Principal of the College wrote to the Appellant in these terms:

"Dear John

I am writing to you to formally confirm your redundancy by virtue of your fixed term contract having come to an end on 16^th July 1999.

The College will pay you your statutory redundancy entitlement. This is calculated on the number of full calendar years completed counting back from the end date of your current contract i.e. 16^th July 1999.

You started as an employee in September 1991 but left again in December 1991, so this period does not count. You then commenced a number of fixed term contracts as a temporary associate tutor [as] follows."

The dates are then given, starting with the first contract 28 September 1992 to 9 July 1993 and concluding 1 September 1998 to 16 July 1999. The letter continues:

"You have completed 6 full calendar years counting back from 16 July 1999, and you are entitled to the equivalent of 1.5 weeks pay per year at the statutory redundancy rate of £220 per week. This means you are entitled to the sum of £1980, which will be paid along with your salary by the end of this month."

7. Those being the facts, the Tribunal then turned to the law. They referred to two cases: Ford v Warkwickshire County Council [1983] IRLR 126, a decision of the House of Lords and British Broadcasting Corporation v Kelly Phillips [1998] IRLR 284, a decision of the Court of Appeal. The Tribunal approached these authorities in this way:

"12 Mr Anderson [for the Appellant] particularly relied upon a well-known statement in the former case by Lord Diplock, 'in cases of employment under a succession of contracts with intervals between them, continuity of employment for the purposes of the Act is not broken until, looking backward from the date of expiry of the contract on which the employee's claim was based, there can be found between one contract and its immediate predecessor an interval which cannot be characterised as short relative to the combined duration of the contract'. However it is apparent from Flack & Others v Kodak Ltd [1986] IRLR 255 that Lord Diplock's purely mathematical approach comparing each gap in employment with the antecedent and subsequent periods of employment was obiter, and was not intended as laying down a test in all cases. The correct approach is to take account of all the relevant circumstances and in particular to consider the length of the periods of employment as a whole. However, Sillars v Carrington Fuel Ltd [1989] IRLR 152 holds that an Employment Tribunal is entitled to apply the mathematical approach.

13 However, as Employment Tribunals are repeatedly being enjoined, we have ourselves referred back to the relevant statutory provisions. In the light of those cases and the statutory provisions to which we refer below, we have concluded that the correct analysis of this matter is as follows."

8. Before we turn to the conclusions reached by the Tribunal, we propose to put them in context by indicating the nature of the dispute which the Tribunal directed itself to resolve:

"4 Mr O'Rourke [for the Respondent] asked us to determine as a preliminary issue, the validity or otherwise of that waiver clause and its effect upon any entitlement of Mr Puncher to bring these proceedings. We have considered that matter without hearing evidence on the basis of facts agreed between the two advocates and also the contents of the agreed bundle to which we have referred.

5 In effect Mr O'Rourke submits that the waiver clause is valid on the basis that there has been continuity of employment of Mr Puncher for more than one year. Mr Anderson, on the other hand, in effect argues that the waiver clause is not valid but that nevertheless Mr Puncher has more than the minimum one year's continuous service to bring these proceedings."

9. The Tribunal then set out a series of propositions:

"14 Section 94 of the Employment Rights Act 1996 provides that an employee has the right not to be unfairly dismissed by his employer. That is in Part X of the Act.

15 Section 108(1) provides that Section 94 does not apply to the dismissal of an employee unless he has been continuously employed for a period of not less than one year ending with the effective date of termination.

16 Section 95(1)(b) provides that for the purposes of Part X an employee is dismissed by his employer if '… he is employed under a contract for a fixed term and that term expires without being renewed under the same contract …'."

10. The Tribunal then turned to the two authorities BBC v Kelly Phillips and Ford v Warwickshire County Council . They say this:

"17 It is apparent from what we have said about the pattern of contracts that on the face of it, each contract was not renewed in the sense of BBC v Kelly Phillips that it was varied and the period of the earlier contract extended. However, as Lord Diplock made clear in Ford v Warwickshire County Council, 'the words at the end of paragraph (b), renewed under the same contract, may not be the most elegant way of expressing what the draftsman obviously meant, vis under a new contract for a further term (whether fixed or indefinite) of which the provisions (except as in respect to term) do not differ from those of the contract that expired'. That is the case here. It follows therefore that a dismissal in the circumstances of this case by a non-renewal of a fixed term which has succeeded earlier contracts may be a dismissal to which Part X of the Act applies subject of course to the minimum of period of continuous service required by Section 108."

11. The Tribunal then sets out Section 197 which, of course, has now been repealed, but which we need, nonetheless, to read:

"(i) Part X 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 renewed, and (b) before the term expires the employee has agreed in writing to exclude any claim in respect of right under that part in relation to the contract."

12. The Tribunal then goes on to cite Section 212, and continues: -

"20 This case falls full square on it facts within Ford v Warwickshire County Council and taking both the mathematical approach into account, some ten or so months of employment out of each period of twelve months compare to about two months' absence for the summer vacation, and all the circumstances of the case particularly the practice of higher education in giving themselves flexibility by having the supplementary staff engaged in this way to meet the fluctuating demand of courses, we find that the summer vacations in Mr Puncher's case were absence on account of a temporary cessation of work. They must therefore be included in calculating his continuity of employment.

21 Finally, we refer to Section 203 which renders void any agreement which purports to exclude or limit the operation of any provision of this Act, but subsection 2(d) provides that this does not apply to any provision of an agreement relating to dismissal from employment such as is mentioned in Section 197(1) that is to say fixed term contracts of one year or more."

13. So far we have, we think, little quarrel with the reasoning of the Tribunal. However, in our judgment when they come to their final conclusion, they fall into error. What they say is this:

"22 As we have indicated, there is a waiver clause in all of the contracts which Mr Puncher has had. Whilst the first waiver clause in the first contract may not have been valid, the second and all subsequent waiver clauses are valid, including in particular the final waiver clause in the last contract. Therefore, it follows from the above analysis that Mr Puncher had a fixed term contract of more than one year which was not renewed and the waiver clause therefore validly operates to preclude him bringing a complaint of unfair dismissal under Part X of the Act.

23 If it were to be the case that we are wrong about of that, the position would be the final contract from 1 September 1998 to 16 July 1999 without adding to it for purposes of continuity the previous academic summer vacation and any previous contract, was a contract for less than one year. That of course is less than the qualifying period required to bring a claim under Section 108 of the Act.

24 Accordingly, in whichever way one approaches this matter, Mr Puncher does not have a basis of pursuing his complaint and (using the technical word) his application is misconceived and must be dismissed without proceeding any further."

14. With great respect of the Tribunal, we cannot agree with this reasoning. The waiver clause only applies if the contract was for a fixed term of one year or more. In our judgment none of the contracts signed by Mr Puncher was for a fixed term of one year or more; each was for less.
15. We take the view, basing ourselves, (as indeed the Tribunal did) on Ford v Warwickshire County Council that there is a material difference in law between the calculation of continuity for the purposes of redundancy, and the right to apply under Part X in relation to unfair dismissal. As far as continuity is concerned, it is common ground (applying Ford ) that Mr Puncher was employed throughout the entire period in relation to which he was subsequently paid redundancy. He therefore has continuity of employment. But when one comes to look at the waiver clause, it is self-evident that each contract contained the same clause; each contract was distinct; and the waiver was made in relation to each of the contracts individually. Those waivers cannot, in our judgment, be accumulated. Each must be looked at separately. If one does that, it is immediately self-evident that the waiver clauses are invalid since none of the contracts in questions was for a period in excess of one year. In our judgment the waiver clauses in the individual contracts cannot be added up in this way to obtain a period of employment for a period in excess of 12 months for the purposes of the Section. This, in our view, is an error in law on the part of the Tribunal.
16. We gain support for this line of thought in the decision of the Court of Appeal in the BBC v Kelly Phillips. That case was, of course, a case of a contract which was initially for substantially less than a year but was extended by variation to last for more than a year. The Court of Appeal, we respectfully agree, correctly decided that the waiver clause was valid. Whilst there appears to be no direct authority on the point we are being asked to decide, we gain considerable assistance from the judgment of Evans LJ in the BBC v Kelly Phillips, to which we were helpfully referred this morning by Mr Clayton. Taking up the matter at paragraph 49 the Lord Justice Evans says this :

"49 …. The issue is whether, if the period of a contract is extended by a variation of that contract, the fixed term referred to in s.197(1) is the whole of the period covered by the contract as so varied or the period added to it by virtue of the later contract which varies it.

50 The arguments are finely balanced. Some of the subsequent authorities have preferred one view, some have approved the other. We have been pressed with policy considerations and with different examples, of which I would identify the following:

(a) original contract for one year, extended by agreement for a further six months. Total period 18 months, but the final six months are contracted for by the subsequent agreement to vary.

(b) original contract for less than one year, extended successively for similar periods, each being less than one year, but in due course substituting a total period of one year or more for the original shorter period.

51 The first in effect is the present case. The second is the example given by Mr Hendy QC for the respondent as showing that a provision which was intended to protect an employee who benefits from a fixed-term contract of a certain length would be misused and could be side-stepped by aggregating a number of shorter periods each resulting from a separate agreement into a total period covered by the original contract as so varied.

52 In my judgment, the dilemma cannot be resolved merely by stating the issue in these legal terms. The extended period whose expiry counts as dismissal under s.95(1)(b) is contracted for by the agreement to extend, which is itself a contract, but in law it is governed by the original contract. There have been two contracts and both can be said to have been contracts of employment for the period which expires.

53 This is a powerful argument, and in my judgment it gains strength from the fact that, where the original contract can be for as long a period as two years, and the extension for as little as three months, the employer manifestly did commit himself prospectively (for a period of one year or more). That cannot be said where the total period is an aggregate of successive periods, each of less than one year.

54 It is important, in my judgment, that the employer can only rely on the s.197(1) exclusion when the employee has agreed in writing to waive his or her right to claim the statutory compensation. That agreement must be found in a contract of employment for a fixed term of one year or more. I would hold in agreement with my Lords that the statutory requirement is satisfied when the original contract was for such a period, notwithstanding that the employment was subsequently extended by an agreed variation of that contract, even for a period of less than one year."

17. We gain substantial re-assurance from that passage in reaching our conclusion. As we have already stated, we see no discrepancy between calculating a period of continuous employment by reference to the individual contracts and at the same time looking at each individual contract to see whether or not the waiver clause is valid in relation to that contract.
18. For these reasons there is no alternative in our judgment but that this appeal be allowed and the order of the Tribunal set aside, and the matter restored to a differently constituted Tribunal for hearing.