United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR P WILSON (of Counsel) Instructed by: Messrs Jordan Solicitors The Grain Store Woolpacks Yard Wakefield West Yorkshire WF1 2SG
For the Respondent	MR J CORNWELL (of Counsel) Instructed by: Kirklees Council Legal Services Civic Centre 111 PO Box 1274 Huddersfield West Yorkshire HD1 2WZ


 


SUMMARY

Jurisdictional Points: Claim in time and effective date of termination

Claimant was suspended from duty as a teacher and entered into negotiations with Respondent for a compromise agreement whereby he would be compensated for termination of his employment. It was envisaged that under the agreement the parties would agree that his employment terminated on 31 October 2006. This was included in a preamble to a draft agreement that was never in fact agreed and was marked "without prejudice" and "subject to contract". In the expectation that the agreement would be executed, the Respondent removed the Claimant, to his knowledge, from the payroll effective 31 October 2006. The Employment Judge held that there was a freestanding agreement that the Claimant's employment should be terminated as at 31 October 2006 and the three-month time limit began to run for the purpose of section 11 of the Employment Rights Act from that date; the Claimant, asserted the EDT was later and that if his EDT was correct his application was in time. Appeal allowed on the basis that it was impossible to construct a freestanding agreement and the Claimant's EDT accepted. The Respondent sought to argue that the case was on all fours with Robert Cort & Son Ltd v Chapman [1981] IRLR 437 and that the decision to take the Claimant off the payroll amounted to a termination of his employment with immediate effect. Held that Cort v Chapman required there to be something equivalent to an unequivocal dismissal. On the facts of the instant case the decision to remove from the payroll appeared to be made in the expectation that the draft agreement would be executed and to give effect to it rather than with a view to termination of the employment in any event.

HIS HONOUR JUDGE SEROTA QC

Introduction

1. This is an appeal by the Claimant, Robert Radecki, from a decision of the Employment Tribunal; the Employment Judge being Mr P Hildebrand sitting alone at Leeds. His decision is dated 23 May 2007. His order was that the Claimant's claim for unfair dismissal was presented out of time. It was not brought within three months, he found, of the effective date of termination (the 'EDT') and he was not prepared to extend time. The claim, therefore, fell foul of the three-month time limit set out in section 111 of the Employment Rights Act.
2. The matter came before HHJ McMullen QC, who disposed of it under rule 3(7) on 16 August of last year. The Claimant pursued an application under rule 3(10) of the Employment Appeal Tribunal Rules to HHJ Burke QC, and HHJ Burke  sent the matter to a full hearing, but dismissed ground 7(C) which relate to the refusal of Mr Hildebrand to extend time.

The Facts

3. The relevant factual background can be taken quite shortly. The Claimant was employed in September 2005 at the Hartshead Moor School in Cleckheaton as a teacher. The Respondent, local authority Kirklees Metropolitan Council, is responsible for the school. The Claimant had only been employed for a matter of weeks when he was suspended on 21 October 2005 after a number of concerns had been raised, including concerns as to his skills and experience, and relationship difficulties with other staff members. These allegations have never been adjudicated upon and I do no more than mention them.
4. A disciplinary hearing was arranged. It took some considerable time for arrangements to be made, and the first date for the hearing was on 25 April 2006. This was postponed and re-fixed for June, but it was again adjourned in June because of negotiations taking place between the Claimant, through his Union NAS/UWT, and the Respondent. The allegations made in the disciplinary proceedings included allegations of dishonesty and that his conduct had led to a breakdown of trust and confidence on the part of his employers.
5. Throughout the time that I have mentioned, the Claimant was suspended but was being paid. The parties negotiated and, indeed, a draft document for execution was produced. This document has some importance and I therefore need to refer to it. The document is a compromise agreement. It is clearly expressed to be without prejudice and subject to contract. It is important to note that it is a document passing between the Claimant's Trade Union, through a regional official, and the Respondent's Assistant Human Resources Manager, Joanne Burnand. Both the Trade Union official, Christine Rinder, and Ms Burnand are professionals and they have access to legal advice. They can therefore have been under no illusions as to the effect of the draft agreement being headed "without prejudice" and "subject to contract".
6. The agreement is in the form of the parties having agreed (see the preamble at page 60). Part of that preamble is that (b):

"the Employee's employment with the Council and Governing body will terminate by mutual consent on 31^st October 2006 ('the Termination Date')"

7. That is thereafter referred to as the termination date. It is clear that in fact attempts to negotiate, if not negotiations, continued after this date until November.
8. The agreement in clause 6 provides that it is a full and final settlement agreement, and it contains a warranty at clause 7.1.2, as required by section 203 of the Employment Rights Act, that the Claimant had received independent legal advice from a relevant legal advisor as to the terms and effects of the agreement and, in particular, its effect on his ability to pursue rights before an Employment Tribunal. In fact, as the agreement is in draft, the identity of the relevant independent advisor who advised Mr Radecki had not been inserted. Clause 7.3 is an acknowledgement on the part both of the Claimant and of the Council and Governing Body that conditions regulating compromise agreements set out in a list of statutes, including section 203(3), have been complied with.
9. I should also, I think, refer to clause 10 at page 69.

"10. Whole & Binding Agreement

This agreement sets out the entire compromise between the parties. Upon receipt by the Council and Governing Body of the executed Agreement, notwithstanding it is headed "without prejudice and "subject to contract", it will be treated as on the open record and binding parties."

10. It is right to say that all parties, once this draft had been agreed, anticipated that the agreement would be executed. That includes not only the Claimant's Trade Union but the Claimant himself.
11. On 1 November 2006, in the body of an email from Joanne Burnand of the Respondent to Christine Rinder, she sent a revised compromise agreement with amendments previously agreed incorporated:

"Just to let you know that payroll deadline for November pay is 7^th November, so I will be instructing Payroll then to terminate Mr Radecki on the payroll, so if there are any further queries can we discuss them before then."

12. I think it is right to say that I can assume that the contents of that email were communicated to Mr Radecki shortly afterwards. Mr Wilson, who has appeared on behalf of Mr Radecki, appeared to accept that this was the case.
13. The Claimant, therefore, was removed from the Respondent's payroll and was not paid for the month of November, or indeed the months of December, January or February. He sought to persuade Mr Hildebrand that he was unaware that this was the case, but his evidence was rejected by Mr Hildebrand, who found that he knew that he had been removed from the payroll and was not being paid.
14. The Claimant agreed the terms of the draft agreement and, on 10 November, he sent a signed slip to NAS/UWT saying he was content with the terms, and permitting the Union to send the papers to the Union's solicitors to enable him to be advised in accordance with section 203. He was referred to the Union's solicitors but he expressed unhappiness at his representation.
15. There is a letter of 6 November 2006 from the Union to the Claimant suggesting that he could, if he wished, and did not approve the settlement agreement, take proceedings in the Employment Tribunal. The letter is at pages 84 and 85, and noted that the Respondent would have had the right to dismiss him before he had obtained the protection from unfair dismissal afforded by 12 months' service because of the delay in taking disciplinary proceedings or bringing matters to a head. However, he was warned that the employer could resume the disciplinary process if he decided not to accept the compromise agreement. If he chose to resign now rather than to accept the compromise agreement or face a dismissal hearing, he could be held to the contract until April 2007 and his employer could still proceed with a disciplinary hearing even if he chose not to attend. If the employer agreed to an earlier resignation, this would allow him to go on to the Kirklees supply register. It is certainly not being made clear to him in that letter of 6 November that the Union understood he had agreed to the termination of his agreement on 31 October or that his employment had in fact been terminated, but that, perhaps, is neither here nor there.
16. For whatever reason, the Claimant was unhappy with the terms of the compromise agreement. This led to the Union, which evidently was happy with the terms of the compromise agreement, to decline to give him further assistance. On 22 February, he informed the Respondent that he rejected the draft compromise. The Trade Union withdrew its representation by a letter of 23 February 2008 and, in a letter dated 5 March 2008, which I have at page 96 in my bundle, Kirklees asserted that:

"You were terminated on the payroll system and your employment ended on that date [31 October 2006] and this was mutually agreed. Your trade Union representative stated that you had signed documentation to confirm you would sign the compromise agreement when this was forwarded to a solicitor for completion. The School and the Local Authority have been led to believe that you are in agreement with the compromise agreement and that your employment ended mutually on 31 October 2006."

17. The letter went on to say:

"Therefore the current position remains, i.e. your employment ended on 31 October 2006. We had hoped that a signed agreement would be received, however as you have not informed either myself or your Trade Union representative until this point that this would not happen, the Authority and the School are unable now to enter into further discussions with you.

I therefore confirm that the Authority have acted in good faith on an agreement reached."

18. Shortly afterwards, the Claimant received his P45. The termination date is expressed as being 31 October 2006 and on 7 March the Claimant presented his ET1. If the termination date was 31 October 2006, it was presented out of time. If, as the Claimant sought to assert, his employment was terminated by the letter of 5 March, it of course would have been in time.
19. I now refer to the decision of Mr Hildebrand. Mr Hildebrand has recited the facts and he addressed himself by reference to section 111 of the Employment Rights Act and the statutory provisions relating to the effective date of termination. At paragraph 30 he recorded the Respondent's submission:

"… from 31 October, the fundamental basis of the contract was at an end: the Respondent was no longer paying the Claimant; the Claimant was not required to attend work; the Claimant was not required to attend a Disciplinary Hearing; and even though the School closed, the Claimant's place of work was not transferred to another School.

The Respondent further contends that even if the failure to pay the Claimant was a breach of a fundamental term of the Claimant's contract which gave the Claimant the right to accept the repudiation or affirm the contract, the Respondent relies on authority for the proposition that the EDT is a purely statutory concept, and that failure to accept repudiation does not have the effect of continuing the contract when it has clearly been terminated."

20. Mr Hildebrand referred to the well-known decision in Cort v Chapman together with a passage from Harvey and a further authority of Dedman v British Building and Engineering Appliances Limited [1973] IRLR 379. He quoted at paragraph 33 from Browne-Wilkinson J's decision in Cort v Chapman. I shall read out that passage.

"We consider it a matter of the greatest importance that there should be no doubt or uncertainty as to the date which is the 'effective date of termination'. An employee's right either to complain of unfair dismissal or to claim redundancy are dependent upon his taking proceedings within three months of the effective date of termination (or in the case of redundancy payments 'the relevant date'). These time limits are rigorously enforced. If the identification of the effective date of termination depends upon the subtle legalities of the law of repudiation and acceptance of repudiation, the ordinary employee will be unable to understand the position." The Dedman rule fixed the effective date of termination at what most employees would understand to be the date of termination, i.e. the date on which he ceases to attend his place of employment."

21. It is right to say that this passage must be seen in the context of what is still an unresolved question as to whether, at common law, one party can, in effect, unilaterally bring a contract to an end by a repudiatory breach, even if that repudiatory breach is not accepted by the other side to the contract.
22. The principle established in Dedman and in Cort is that where an employer summarily dismisses an employee for the purposes of s111, or what is now s111, the effective date of the termination which starts time running for the presentation of an ET1 is the date of the purported termination.
23. The Employment Judge then considered the material before him, including the email of 1 November and the acceptance slip of 10 November 2006 when the Claimant expressed himself content with the terms of the proposed compromise agreement, and a further letter written to Ms Rinder of 23 October when he said:

"At this time I have no problem in accepting I am, and shall continue to be, willing to give full consideration to a compromise agreement between myself and the LEA over this matter. I am appreciative of your efforts in continuing to make amendments to the agreement/reference and am fully satisfied that the LEA should continue to believe I wish to seek an agreement, and that nothing which follows runs contrary to this."

24. I would interpolate by saying that nothing that I have seen suggests that the Claimant was unwilling to enter into a compromise agreement. He simply wished to enter into a compromise agreement on terms that he wished to enter into, rather than on those which the Respondent and perhaps his Union thought were appropriate.
25. At paragraph 39 the Employment Judge, having looked at the dealings between the parties, said it was clear that the correct interpretation of events lies in the case put forward by the Respondent. The Claimant, through his Union representative, held himself out as agreeing to a compromise whereby his employment was to end on 31 October 2006. At paragraph 40, which is perhaps the crucial part of the decision, the Employment Judge said this:

"The Claimant's contention is that, since the Compromise Agreement was without prejudice and subject to contract, it is of no effect until it is signed in accordance with statute, on the basis of advice received from a qualified advisor. However, the factual basis on which the Compromise Agreement took effect was that the Claimant agreed to consensual termination of his employment on 31 October 2006. In response to that agreement, the Respondent terminated payment to the Claimant. Accordingly, the Claimant's employment came to an end by mutual consent on 31 October."

Accordingly, the claim was out of time and the Employment Judge considered that it was reasonably practicable for the claim to have been brought within the three-month period and, if he was wrong about that, it was not presented within such further time as he considered reasonable. I have already indicated that the appeal against that part of the judgment has been disposed of.

The Claimant's Submissions

26. The Claimant's submissions can be taken quite shortly. Firstly, it was submitted by Mr Wilson that the Respondent could not rely upon the draft agreement. It was expressed to be subject to contract and without prejudice. He refers to the decision of the High Court, I believe of Lewison J, in Confetti Records v Warner Music UK Limited [2003] EWCh 1274 (Ch) paragraphs 67 and 92 - 93. I do not believe that this principle is controversial.
27. He went on to submit that the decision of the Employment Tribunal was perverse in finding there was an agreement on the part of the Claimant that his employment should terminate on 31 October. On analysis, this is not really a perversity argument because the submission is really that the Employment Judge misconstrued the preamble to the draft agreement and also misconstrued the evidence, on the basis that he ignored the fact that all the matters upon which the Respondent sought to rely showing that there had been an agreement to terminate employment as from 31 October were done in anticipation or expectation of the execution of the draft compromise agreement, which, in its preamble, did provide for termination on that date.
28. Mr Wilson submitted there is no case for finding that there was a freestanding agreement separate and apart from the draft compromise agreement, and perhaps evidenced by the preamble, which would in effect have meant that the Claimant had agreed that his employment should terminate as of 31 October regardless of whether any form of compromise was agreed or not. There was no evidence, it was submitted, that the Claimant ever agreed to termination of his employment as at 31 October, save in the context of the draft being executed as the parties hoped and perhaps expected. This execution, of course, was never fulfilled. Accordingly, Mr Wilson submitted the contract continued until the 5 March letter at page 96, which was effective, as Mr Wilson put it, either as an actual or as a constructive dismissal.

The Respondent's Submissions

29. The Respondent's submissions started with the submission, which I have to some extent already dealt with, that the effective date of termination is a statutory concept, and includes cases where there has been a wrongful dismissal without notice, rather than depending on the acceptance or date of acceptance of any repudiatory breach of contract. As in Cort v Chapman, in such cases the effective date of the termination is the date when the Claimant ceases work and ceases to attend his place of work. I made available to the parties the decision of the Court of Appeal in Fitzgerald v the University of Kent at Canterbury [2004] ICR 737. It is perhaps convenient to refer to paragraph 7 now:

"The concept of the effective date of termination (EDT) is a statutory one. It has been present in the employment legislation since its origin in 1971. Its purpose is to give a fixed point of time by which to calculate such things as eligibility for protection against unfair dismissal, continuity of employment, loss of rights on reaching retiring age, the amount of the basic award and (as in this case) the time for lodging an originating application."

30. Sedley LJ referred to section 97(2) of the Employment Rights Act as having the effect that:

"… the subsection does not postpone the effective date of termination for the purposes of making a claim: here the employee who is dismissed summarily must start counting the three months from the day his or her job ends, not when by contract it should have ended."

31. In answer to the question as to whether the parties could agree an effective date of the termination that was not consonant with the facts on the ground, so as to speak, Sedley LJ said:

"That answer in my judgment is that the effective date of termination is a statutory construct which depends on what has happened between the parties over time and not on what they may agree to treat as having happened."

32. Mr Wilson submitted to me that the Employment Judge did not decide the case on the basis of the draft agreement. In any event, he submitted, the recital could represent a prior agreement. He elaborated on this in his Skeleton Argument, paragraphs 15 to 17.
33. I interpolate here, and I will not return to this point, that it seems to me that the only meaning, properly construed, one can give to the preamble is that the parties agreed that 31 October 2006 should be the termination date subject to the execution of the agreement and as part of that agreement, and not as a freestanding agreement.
34. Mr Cornwell submitted that, on the facts, the Employment Judge was entitled to find that there had been a termination agreement which was effective to terminate the Claimant's employment.
35. An alternative submission was made that if I was unable to uphold the decision on the basis that there had been an agreement that the employment should terminate on 31 October 2006, the agreement had been terminated by the communication of the decision to take the Claimant off the payroll on 1 November 2006. I should also have regard to the fact that the Claimant was not paid from any date after 31 October. He did not attend work after 31 October and was not required to, although, of course, he had not attended work for the previous 12 months or so. He was not required to attend a disciplinary hearing and had been told by his Union that he had a choice of accepting the agreement or facing the disciplinary hearing. Further, the school at which he had taught had closed and he had not been redeployed. I was reminded that the Claimant was aware that his pay had been stopped. Although he had disputed this, that was the finding of the Employment Judge.
36. In the round, therefore, Mr Cornwall submitted that all the remaining elements of the employment relationship had been severed; there was nothing left of the employment relationship as at 1 November. He submitted that I should conclude therefore that albeit what took place may have been a repudiatory breach of contract, it was tantamount to summary dismissal as described in the case of Cort, Dedman or Fitzgerald.

Conclusion

37. My conclusions are as follows: I find it impossible to uphold the Employment Judge's decision on the basis that there was an agreement to terminate employment as from 31 October. It is clear that everything agreed to by the Claimant was subject to contract and without prejudice and could not be relied upon against the Claimant to show there had been a freestanding agreement. In any case, it is clear in the context that the recital and the agreement to terminate were conditional upon the compromise agreement being executed. I cannot see any basis for regarding there having been a freestanding agreement, and I underline the word agreement, which would require the consent of both parties to the proposition that the employment contract should terminate as from 31 October regardless of whether the compromise agreement was executed.
38. It is important, I think, to bear in mind that a compromise agreement such as this is required by section 203(3) of the Employment Rights Act to identify a legal advisor and confirm that all conditions set out in section 203 relating to compromise agreements had been satisfied. That, of course, includes the fact that the Claimant had been given appropriate legal advice. It is in the nature of compromise agreements in an employment context, especially those that are expressed to be without prejudice and subject to contract, that a party is at liberty to withdraw at any time before execution of the agreement, and that has to be the common expectation for both parties.
39. In my opinion, as I have said, the Chairman has drawn an inappropriate inference from the preamble to that agreement. It seems as though the Claimant has given effect to that preamble in concluding that there was such a freestanding agreement, but the compromise agreement never came into effect and, in my opinion, the Claimant's agreement was clearly conditional on it coming into effect by execution, as I mentioned.
40. In relation to Mr Cornwell's alternative point, I of course accept that the effective date of termination is a statutory concept, and a wrongful dismissal can and will generally give rise to an effective date of termination and thus start time running for the purposes of s111 when the Claimant ceases work and ceases to attend his place of work. But the facts of this case do not, in my opinion, justify a finding that there has been an act which could be regarded as an unequivocal termination or the contract of employment, such as one finds in Cort and Dedman.
41. The matters that have been relied upon by Mr Cornwell are all explicable and should be seen in the context of continued negotiations or the expectation that a compromise in the terms of the draft would be effected. These include the fact that the Claimant was not paid: he was aware that his pay had been stopped. The fact that he was not required to attend work and did not. He was, of course, in any event, on suspension. The fact that he was not called to a disciplinary hearing again is referable to the fact of the expectation of there being a settlement. It is by no means clear that all remaining elements of the employment relationship were severed. In my opinion, there is nothing on the evidence that could have led the Employment Judge, had he been minded to do so, to find that what took place on 1 November was tantamount to a dismissal or termination, whether wrongful or otherwise. I would note that if, contrary to my view, the GDT was the date when the Claimant realised or should have realised his employment had been terminated this date would of necessity have been soon after 31 October.
42. In my opinion, there was no sufficiently unequivocal statement by the Respondent that could have been regarded as terminating the employment relationship, or the employment contract as having been at an end, until the letter to which I have referred of 5 March at page 96. Accordingly, I have to find that this ET1 was presented in time and the case must therefore proceed in the Employment Tribunal.
43. It only remains for me to thank Mr Wilson and Mr Cornwell for their most helpful submissions, including their most helpful Skeleton Arguments.