Agco Ltd. v Massey Ferguson Works Pension Trust Ltd & Ors [2003] EWCA Civ 1044

Case No A3/2003/0196

[2003] EWCA Civ 1044

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM CHANCERY DIVISION

Mr Justice Neuberger

Venue Royal Courts of Justice

Date Thursday 17 th July 2003

Strand,

London, WC2A 2LL

Before

LORD JUSTICE ALDOUS

LORD JUSTICE SEDLEY

LORD JUSTICE RIX

Between

AGCO LIMITEDClaimant/

(1)MASSEY FERGUSON WORKS PENSION TRUST LIMITEDDefendants/Respondents

(2) RONALD VINCENT BRADBURYRespondent

(3) ALAN SAMUEL CHATERRespondent

(Transcript of the Handed Down Judgment of

Smith Bernal Wordwave Limited, 190 Fleet Street

London EC4A 2AG

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Official Shorthand Writers to the Court)

Mr Nicholas Warren QC and Mr Michael Tennet (instructed by Messrs Slaughter and May) for Appellant

Ms Sarah Asplin QC (instructed by Messrs Mayer Brown, Rowe & Maw) for First Respondent

Mr Michael Furness QC and Ms Joanna Smith (instructed by Messrs Taylor Wessing) for Second and Third Respondents

Judgment

As Approved by the Court

[1]The essential issue in this case is whether an employee who(a) applies for voluntary redundancy or

(b) suffers compulsory redundancy is appropriately described in the rules of a pension scheme as a member who “retires from Service at the request of the Employer”.

[2]The employer, AGCO Limited, who is the claimant in these proceedings and here the appellant, says that such language is inappropriate to cover either case of redundancy. The pension trustee (Massey Ferguson Works Pension Trust Limited) and representative employees (Messrs Bradbury and Chater) are the defendants and here the respondents. The trustee remains neutral, and the burden of the litigation has been borne by the representative employees, whose case is that both kinds of redundancy are covered by the phrase. The judge, Neuberger J, agreed with the employees. He rightly described the point as short but not easy to resolve. The court has to construe that phrase in the context of the rules as a whole.

The background facts

[3]Two pension schemes are involved, the Massey-Ferguson Works Pension Scheme (the “Works Scheme”) and the Massey-Ferguson Staff Pension Scheme (the “Staff Scheme”). The underlying details, as distinct from the relevant provisions, of the schemes do not much matter, but I gratefully adopt the judge’s brief description of them. The two Schemes have been closed to new members since 31 March 1998, and the Staff Scheme was merged into the Works Scheme with effect from a deed of merger dated 31 January 2002, which provides that “benefits will not be affected”. The merged scheme is an approved contracted out occupational pension scheme. The present terms of both Schemes go back at least to definitive Deeds and Rules dated respectively 5 January and 10 August 1987. Indeed the Works Scheme’s predecessor scheme goes all the way back to 26 March 1961, and the Staff Scheme’s predecessor scheme goes back to 27 September 1955.

[4]The employer operated a tractor manufacturing plant in Coventry known as the Banner Lane plant, where it employed (among others) 1305 employees who were members of the Schemes. On 25 June 2002 the employer announced that it was to close the plant in two stages, which would inevitably involve most of the employees being made redundant. There have been negotiations between representatives of the employer and union representatives. As a result of those negotiations, the terms on which compulsory redundancies are being effected go well beyond the minimum statutory requirements. In the event about 1,090 employees under the Works Scheme have been or are in the course of being made compulsorily redundant. In addition there are a small number of redundancies, originally stated as numbering 13 but which may have risen to about 20, which are being required from employees under the Staff Scheme. In the latter case, however, these redundancies have been spoken of as being voluntary rather than compulsory because, as I understand the evidence, the employer has stated that it is willing “to match employees whose jobs are redundant with volunteers from jobs that are unaffected” (memo of 7 October 2002). As will become apparent when the relevant provisions of the rules are cited below, the issue for decision concerns only those who are over 50 at the time they are made redundant.

Employment and redundancy legislation

[5]The dispute between the parties has to be understood in the context of relevant employment and redundancy legislation. The Redundancy Payments Act 1965 introduced a new concept of compensation for years (subject to a minimum period) spent in a job for which an employee was no longer needed. When unfair dismissal, another new concept, was introduced under the Industrial Relations Act 1971, redundancy was recognised as one of the legitimate grounds for dismissal, but, as with all other grounds, the dismissal had also to be fair. In the case of redundancy this generally involves showing that there is a genuine diminution in the need for employees, and that the employer has gone fairly about the selection process which results in the particular employee’s dismissal. For this latter reason, employers, where they can, proceed in two stages: first they invite voluntary redundancies to see if these produce the needed reduction in the workforce; and if they do not, they require compulsory redundancies on some basis, such as “last in, first out”, which seeks to satisfy union concerns and the concept of fairness, subject to particular needs, such as the retention of particular skills. There is a requirement of prior consultation with union representatives.

[6]All redundancy, properly so-called, whether it is voluntary or compulsory, ultimately involves the dismissal of the employee. Without that dismissal, the statutory regime and statutory payments do not apply. A dismissal most commonly takes the form of dismissal on notice, but it may also arise where a fixed term contract expires without being renewed. An employee may apply for voluntary redundancy, but not be accepted for it by the employer, as for instance where the applications exceed the numbers sought. Ultimately, therefore, the decision to dismiss, even in the case of voluntary redundancy, may rest in the employer. That is not, however, necessarily the case. Thus there may be a binding agreement between employer and employee that the employee will be dismissed in return for an agreed financial package which may, for instance, go well beyond the statutory payment. That, however, remains redundancy for it involves the dismissal of the employee. On the other hand, the termination of employment may be arrived at, on terms, by mutual consent in such a way as not to involve a dismissal: in such a case, this is not statutory redundancy, see Birch and Humber v. The University of Liverpool

[1985] ICR 470

(1985) IRLR 87

. As Ackner LJ there said (at 479G/H, para 28):

“I put to her the simple example of an employer who envisages some time in the future, eg because of new technology, the need to slim down his workforce and makes an offer to those who are prepared to resign rather than wait to volunteer for redundancy and supports that offer with a financial inducement which is far in excess of what is likely to be obtained under the redundancy legislation. It seems to me clear that in such a situation, assuming no coercion of any kind, that if that offer is accepted there can be no question of there having been a dismissal.”

[7]In such circumstances the distinction between schemes for what may be called early retirement on the one hand or voluntary redundancy on the other may sometimes be elusive, and indeed the former could on analysis involve the latter. There is evidence in this case that earlier rounds of voluntary redundancy have been described in pension booklets as “early retirement”. The employer’s evidence includes the following paragraph, taken from the witness statement of Anthony Simons, its pension and benefits manager:

“In the interests of efficiency, the Claimant has been keen that those who volunteered for redundancy were, so far as possible, older employees. In order to encourage older employees to volunteer for redundancy, unreduced early retirement pensions were offered in the years 1984 to 1986 to all those made redundant who were aged 55 or over at the time of termination of employment (although I am aware that there were a few individual incidences where this age was lowered to 50); in the years 1987 to 1997 to all those made redundant who were aged 55 or over at the time of termination of employment (with one exception to my knowledge where this age was lowered to 50); and, in the years 1998 and 1999, to all those made redundant who were aged 60 or more at the time of termination of employment. No unreduced early retirement pensions have been offered to those made redundant since 1999.”

[8]It appears from Mr Simons’ evidence that in the years between 1984 and 1998 there were repeated programmes of voluntary redundancies. It seems that in the case of members of the Works Scheme, all such redundancies were voluntary; only in the case of members of the Staff Scheme were a minority of the redundancies compulsory.

[9]It has been pointed out in submissions that even in the case of what is called voluntary redundancy there can exist, like a “sword of Damocles”, the pressure of the fear that if an employer does not obtain all the redundancies he seeks from volunteers, then further compulsory redundancies may prove to be necessary. In the case of the Works Scheme members, there do not in fact appear to have been any compulsory redundancies during those earlier years. That position, however, has now changed in the latest round.

[10]In theory, however, and, as I understand the matter, in practice too it is possible for an employer who seeks voluntary redundancies to make it clear that he will make no compulsory redundancies in any event.

[11]The history of redundancies by the employer in the period from 1984 to the current round itself demonstrates how varied may be the circumstances in which such redundancies may occur. I have already referred to the fact that prior to the current round no compulsory redundancies had occurred among employees under the Works Scheme. It would seem from such evidence as is before the court, and I would infer, that that was a matter of deliberate policy, or was at any rate a policy which was available to the employer for all or most of that period. In 1998, however, it appears from notices dated 29 October 1998 that the employer stated plainly that if “sufficient volunteers are not forthcoming…then a selection process will be implemented to effect compulsory redundancies”. In 2001, on the other hand, a further round of redundancies seems to have been initiated by the employees themselves, for a notice issued in May 2001 stated that in response to a trade union generated request for “a voluntary early retirement/redundancy programme to facilitate a return to full-time working” the employer was willing to offer a lump sum of £10,000 for those who chose to leave. That 2001 round of reductions in the payroll took place pursuant to an entirely consensual scheme outside the statutory redundancy framework, since those employees who took up the offer were not dismissed.

The Rules

[12]The critical rule is rule 13 of the Works Scheme (rule 14 of the Staff Scheme), which occurs in Part IV of the Scheme, which is headed “Benefits” and “Section A – Pensions on Retirement”. Rule 13 is the first rule under Part IV and is itself headed “Retirement Pensions”. It starts by providing:

“Subject to the limitations and other provisions contained in the Rules, every Member shall upon the happening of any one of the following events, become entitled to the pension specified as appropriate to that event, that is to say…”

[13]There are then three sub-rules, (a), (b) and (c). Rule 13(a) is headed “Pension on retirement at the Normal Retirement Date” and provides:

“On the retirement of a Member from Service at the Normal Retirement Date he shall be entitled to a pension equal to…the Normal Retirement Pension…”

[14]Rule 13(b) is headed “Pension on retirement after the Normal Retirement Date” and reads:

“If by agreement with the Employers a Member remains in service and retires after the Normal Retirement Date he shall, at the date of his retirement, be entitled to the Normal Retirement Pension which would have been payable to him had he retired at the Normal Retirement Date but increased by such amount as the Trustee with the advice of the Actuary shall determine, having regard to the period by which his retirement has been deferred…”

[15]Rule 13(c) is more extensive and is the provision with which this litigation is primarily concerned. It is headed “Pension on retirement before the Normal Retirement Date”. It is concerned with three situations:(i) early (ie pre normal retirement date) retirement due to incapacity;

(ii) early retirement “of his own free will” within 5 years of the normal retirement date after 5 years’ pensionable service; and

(iii) early retirement “at the request of the Employer” after a member’s 50th birthday. The normal retirement date is defined in the Works Scheme as 65 for men (or 60 for women, but now, to avoid discrimination, 65 for both) and in the Staff Scheme as 60 for men (or 55 for women, and now 60 for both). In this judgment I shall use the figure of 65 applicable to the Works Scheme. Thus Rule 13(c)(ii) applies to members of 60 and over, provided they have been employed for five years. Rule 13(c)(iii) applies to early retirement “at the request of the Employer”, and is the critical provision under investigation in this appeal.

(c) read:

“(i) If a Member having completed five or more years’ Pensionable Service or such lesser period as the Trustee with the consent of the Company shall in any particular case approve, retires from Service at any time before the Normal Retirement Date on account of incapacity which, in the opinion of the Trustee Committee and the Employer, renders him permanently incapable of gainful employment with the Employer, medical evidence of such incapacity having been obtained…then he shall…be entitled to a Normal Retirement Pension but so that in calculating the amount of such pension his period of Pensionable Service shall be deemed to include one half of the period of Pensionable Service he would have completed if he had remained in Service up to, and retired on, the Normal Retirement Date. “(ii) If a member to whom paragraph (i) shall not apply retires from Service of his own freewill at any time within the period of five years prior to the Normal Retirement Date, having completed at least 5 years’ Pensionable Service, he shall…be entitled to a Normal Retirement Pension reduced by such amount as the Trustee shall determine on a basis certified as reasonable by the Actuary having regard to the period between the actual date of retirement and the Normal Retirement Date. “(iii) If a Member to whom paragraphs (i) and (ii) shall not apply retires from Service at the request of the Employer and after his 50th birthday he shall…be entitled to a Normal Retirement Pension.”

I have emphasised in italics certain passages in these provisions which fall for detailed discussion below.

[16]Rule 13(iv) is also relevant:

“(iv) A Member to whom either (ii) or (iii) of this paragraph (c) applies may, prior to the commencement of the pension under (ii) or (iii) aforesaid, whichever shall be appropriate to him, elect to receive the benefit under Rule 23.”

[17]Rule 23 is headed “Leaving Service” and is a catch-all provision relating to leaving service prior to the normal retirement date:

“(a) If a Member leaves Service before the Normal Retirement Date without becoming entitled to a pension under Rule 13(c) he shall…be entitled to a pension payable from the Normal Retirement Date of an amount equal to the Normal Retirement Pension… “(b) A Member who becomes entitled to a deferred pension under paragraph (a) of this Rule and who, when he left Service had completed five or more years’ Pensionable Service may (i) if suffering from incapacity which the Trustee Committee and the Employer, having considered such medical evidence as they shall require, consider renders him permanently incapable of gainful employment or (ii) if he is within five years of the Normal Retirement Date then he may apply by notice in writing to the Trustee to receive in lieu of such deferred pension an immediate pension of an equivalent amount, reduced in the case of a pension under (ii) above on a basis certified by the Actuary as reasonable. The Trustee may at its absolute discretion accept or reject such application…”

[18]Rule 25, headed “Augmentation”, deals with the trustee’s and employer’s powers, at the employer’s own cost, to augment benefits under the Scheme. Thus – “(a) At the request, or with the consent, of the Employers the Trustee may, subject…to the payment by the Employers to the Fund of such additional contribution or contributions (if any) as the Trustee may determine with the advice of the Actuary…augment any benefit payable to or in respect of a Member or a Pensioner or any other Beneficiary under the Rules on such terms as the Trustee may decide on the advice of the Actuary…”

[19]It will have been observed that rule 13 is drafted in terms of members who retire from service, whereas rule 23 is drafted in terms of members who leave service. This distinction is reflected elsewhere in the Rules, for instance in the definition section (rule 4) where “Pensioner” is defined as a “person who has retired from or left or is deemed to have retired from or left Service and is entitled to a pension (whether immediate or deferred) under Part IV”. It will also have been observed that in principle only members who reach normal retirement date are entitled to a full pension: either on retiring at or after the normal retirement date (rule 13(a) and (b)) or, if they leave service before the normal retirement date, on reaching the normal retirement date (rule 23(a)). In certain exceptional cases, however, a member may be entitled to receive a pension, but not a full normal retirement pension, in accelerated form: for instance if he retires through incapacity (rule 13(c)(i)), or if he retires when he is 60, ie within 5 years of the normal retirement date and with five years’ service (rule 13(c)(ii)) in which case his pension is discounted. A member who has already left service before suffering incapacity or reaching 60 is not entitled to an accelerated pension, but may apply for one (rule 23(b)). There is only one situation in which a full accelerated pension is available as a matter of right, and that is the situation covered by rule 13(c)(iii) where a person retires after the age of 50 “at the request of the Employer”.

[20]Finally, it is to be noted that the Rules nowhere refer expressly to redundancy, voluntary or compulsory, or indeed to dismissals of any kind, not even to dismissals for cause.

The relief claimed and granted

[21]In the employer’s claim form the relief claimed in relation to rule 13(c)(iii) of the Works Scheme (and corresponding relief was claimed in relation to the Staff Scheme) was a determination whether on the true construction of that sub-rule a member over 50 “retires from Service at the request of the Employer” if his contract of employment is terminated by the employer for redundancy, compulsory or voluntary, or for any other reason “eg misconduct or performance”. The judge’s order granted the following declarations:

“1. On the true construction of Rule 1[3](c)(iii) of the 1987 Works Rule a member who is over the age of 50 “retires from Service at the request of the Employer” and thereby qualifies for an unreduced Normal Retirement Pension if: (i) the member’s contract of employment is terminated by his or her employer for redundancy (other than in the circumstances mentioned in paragraph (ii) below; (ii) the member’s contract of employment is terminated by his or her employer in circumstances in which the member has volunteered for redundancy at the invitation of the employer; (iii) the member’s contract of employment is terminated on notice by his or her employer for any other reason.”

[22]In other words, rule 13(c)(iii) covers both compulsory and voluntary redundancy and dismissal on notice. The judge made it clear that he was making no decision about summary dismissal for cause. In his judgment the judge expressed his decision (at para 51) in these terms:

“In the event therefore, I conclude that Rule 13(c)(iii) extends to any employee over 50 and made redundant or is otherwise dismissed or laid off by the employer, albeit that I leave open the question of whether it could be relied on by any employee who is dismissed for misconduct.”

[23]That formulation is wide enough to cover voluntary as well as compulsory redundancies, albeit it was stated in a section of the judge’s judgment which was considering the issue of compulsory redundancy alone. The judge went on to consider the issue of voluntary redundancy at para 52 of his judgment. That issue was complicated by the opening words of rule 13(c)(iii) “If a Member to whom paragraphs (i) and (ii) shall not apply…” Rule 13(c)(ii) speaks of a member who “retires from Service of his own free will”. The judge accepted the employees’ submission that the effect of those words was to subordinate para (iii) to para (ii) in any case where para (ii) applied. If, therefore, it could be said that a voluntary redundancy within para (iii) also amounted to retirement “of his own free will”, then para (ii) would take precedence over para (iii) and the latter would not apply. That left the judge with a problem of fact: could the voluntary redundancies in issue be said to amount to retirements of the employees “own free will”?

[24]In truth, however, the proceedings were not geared to answering such a question of fact. The relief claimed raised a pure question of construction. A Part 8 claim form was used to initiate the proceedings. There were no pleadings. Evidence was essentially of a background nature. Save for the rules, this court was not taken to any of that evidence. There is a dispute as to whether the judge could properly have addressed himself to that issue, or was in a position to do so. At any rate the judge concluded (and he was I think implicitly referring to the latest round of redundancies, although he has perhaps been taken to be referring to all redundancy exercises since 1984) that none of the volunteers would fall within para (ii). He expressed his reasons as follows (at para 54):

“First and most importantly, the “request” from the claimant for volunteers appears to me to have been based on the understanding and assumption that, if insufficient employees from the relevant class volunteer for redundancy, some further employees from the class will have to be made involuntarily redundant by the claimant. Secondly, the claimant is not asking the volunteering employees to resign from service, they are being asked to put themselves forward in order to be made redundant, ie to be dismissed by their employer. Thirdly, there is no guarantee that a volunteer for redundancy will, in fact, be laid off by the employer; it remains a matter for the claimant.”

Those reasons are all of a general nature.

The essential issue

[25]The submissions made to this court, as to the judge below, are highly refined, and I have found the written and oral arguments of both Mr Nicholas Warren QC, who appears with Mr Michael Tennet for the employer, and of Mr Michael Furness QC, who appears with Ms Joanna Smith for the employees, to be persuasive in turn. The problem is an elusive one, perhaps because the rules are not drafted in terms of redundancy or dismissal at all, and also perhaps because the nature of voluntary and compulsory redundancy is quite different, albeit both end in dismissal. Moreover there is a tension in the concept of voluntary dismissal, expressed in the very words used to describe it. I am given to understand, however, that in financial terms the issue of compulsory redundancy is by far the more important one. The practical issue is whether redundancy of either kind falls within rule 13(c)(iii), but because redundancy is a form of dismissal the question is broader than the immediate problem. I find it helpful to remind myself therefore that the essential question, as I understand the arguments, is whether rule 13, when it speaks of an employee retiring from service, and para (iii) in particular, when it speaks of an employee retiring at the request of his employer, embraces dismissals. That issue has been argued with reference to the rules’ and in particular rule 13’s language, structure and purposes.

The employer’s submissions

[26]As for language, Mr Warren submits that “retires”, which is the verb found repeatedly in rule 13 and in para (iii) in particular, is an intransitive verb which does not embrace dismissal, a transitive concept. He illustrates that point by contrasting the usual intransitive meaning of the verb with its more recent and alternative transitive meaning, as in “The chairman should be retired early” (see the Oxford English Dictionary, 1989, vol XIII, at 783, under meaning 11). The OED gives the standard intransitive meaning of “retire” in the present context (at meaning 1.e at 782) as:

“to give up one’s business or occupation in order to enjoy more leisure or freedom (esp. after having made a competence or earned a pension”

. Mr Warren goes on to submit that the phrase “at the request of the Employer” supports and confirms the primary intransitive meaning. One is not dismissed “at the request” of an employer. Thus the juxtaposition of “retires” and “request” is a powerful indication that the rule is referring to retirement by choice, or resignation, and not to dismissal.

[27]As for structure, para (iii) is to be contrasted with para (ii), which grants an immediate but reduced pension if a member over 60 “retires…of his own free will”. The two paragraphs have to be read together, from which it is obvious that “of his own free will” is contrasted with “at the request of the Employer”. In that context, the real force of the former is that retirement proceeds from the member’s own initiative, whereas under para (iii) the initiative comes from the employer. The employer’s request allows an element of pressure or coercion, even to the extent of what is called constructive dismissal: but constructive dismissal is still a resignation or retirement “at the request”, albeit implicit, of an employer.

[28]Also as a matter of structure, the employees’ and the judge’s analysis gives rise to two insuperable anomalies. The first can be called the 50/60 (or perhaps the 50/59) anomaly. On the employees’ analysis the opening words of para (iii) – “If a Member to whom paragraphs (i) and (ii) above shall not apply” – demonstrates that a member may fall into both para (ii) and para (iii), and that is used to refute the concept that the two paragraphs are in contrast with one another. Thus a retirement at the request of an employer may be entirely voluntary, or, where it is accompanied by a degree of coercion or pressure, it may not. Where, however, such a retirement is entirely voluntary, ie where paras (ii) and (iii) overlap, then para (ii) prevails, on the express wording of the opening words of para (iii). Mr Warren, however, points out that, because of the different age limitations applying to the two paragraphs, the consequence of this analysis is that an employee who has completed 5 year’s service and is over 60 (ie within 5 years of the normal retirement date under the Works Scheme) is forced to receive the less valuable benefit of an immediate but reduced pension under para (ii) whereas the employee aged 50 to 59, whether or not he has done 5 years’ service, is entitled to an immediate full pension under para (iii). This is because para (ii) does not cover members under 60, and thus para (ii) cannot apply to such cases. This result is, however, anomalous in cases which otherwise overlap because one would expect that the 60 plus employees would and ought to be preferred to the 50 plus employees.

[29]The second anomaly is that of the employee summarily dismissed for misconduct. On the employees’ analysis, such a dismissal should prima facie be within para (iii). But if so, that would give an employee dismissed for misconduct, provided he was over 50, especially valuable pension rights. That could not be right. The judge contemplated that an exception for dismissal for misconduct might have to be implied in para (iii), but went on to reason that even if such an implication could not be made, it was an anomaly which he would be prepared to live with, on the basis that historically there were large numbers of dismissals for redundancy, but not a single dismissal for misconduct. He was not prepared therefore to “let the tail wag the dog”. In the end, he did not feel that he was obliged to decide the question of dismissal for misconduct and did not do so.

[30]Mr Warren also submitted that rule 23 provided a better source of pension rights in the case of dismissals, than was to be obtained by finding them, at any rate in the case of employees over 50, in rule 13(c)(iii).

[31]Thirdly, as to purpose, Mr Warren submitted that para (iii) was designed to provide an incentive for employees to take early retirement (or agree a consensual termination of service) where the employer wished this to happen. It did not make sense to enlarge its scope in such a way as to create the anomalies referred to above.

[32]For these reasons, neither compulsory nor voluntary redundancies can fall within para (iii). Such redundancies are dismissals, and rule 13 only encompasses resignations or consensual terminations of the kind found or discussed in Birch and Humbert v. University of Liverpool.

The employees’ submissions

[33]Mr Furness also addressed his submissions by reference to the language, structure and purpose of the Rules.

[34]As for language, he accepted that “retires” is an intransitive verb, but submitted that it has a broad, general meaning of “gives up work” which takes its specific inflexion from its immediate context. It is therefore a “neutral” word. Thus in rule 13(b) (retirement after normal retirement date) “retires” must include dismissal as well as resignation, because it is unthinkable that an employee who stays at work after normal retirement date loses his pension rights if perchance he is then dismissed. Similarly in rule 13(c)(i) (incapacity) “retires” takes its colour from the wording “on account of incapacity”: this could be triggered by dismissal as well as resignation. In rule 13(c)(ii) the critical wording is “of his own free will”, so that in that case both dismissal and resignation are equally excluded if there is any form of coercion or pressure, but the language can cover a truly voluntary case of consensual termination, even voluntary redundancy, as well as resignation. As for rule 13(c)(iii), the qualifying words are “at the request of the Employer”, so that if the employee gives up work at the employer’s request, which may happen in a whole range of situations, including compulsory and voluntary redundancy, then the paragraph applies, provided that, in a truly voluntary case, it is not excluded by the primacy which the opening words of para (iii) accords to para (ii). As for “request”, that is perfectly applicable even to a case of out and out dismissal, as the judge himself found: a request can include a demand which cannot be refused. As for para (ii), it is unrealistic to seek to reformulate “of his own free will” so as to give it the different sense of “of his own initiative”. It refers to the employee’s genuine and unconstrained choice.

[35]As for arguments to be derived from the structure of the Rules, Mr Furness is prepared to accept, albeit to mitigate, the anomalies relied on by the employer. Thus, as for the 50/60 anomaly, this is, he concedes, an unexpected result, for one would not expect to find early retirement benefits getting less favourable the closer the member gets to the normal retirement date, or to find shorter service members getting better benefits than longer serving members. However, this is dismissed as something “gone wrong with the drafting” as a result of mere oversight. It is suggested that the draftsman in fact intended those between 50 and 60 who retire of their own free will to be limited to the benefits of para (ii) and to be excluded from the greater benefits of para (iii), and that this might be achieved by implication.

[36]As for the anomaly of the employee over 50 dismissed for misconduct, Mr Furness avoids this by the submission that para (iii) does not apply to such a case. Where an employee repudiates his contract of employment by his own misconduct, an employer who accepts that repudiation by dismissing him is not requesting him to go, he is merely accepting that the contract has come to an end essentially of the employee’s own motion. If necessary, however, Mr Furness would, like the judge, simply accept the anomaly as not being a sufficient reason to reject the employees’ overall analysis.

[37]Mr Furness also rejoins, however, by pointing to anomalies and difficulties which on his submission arise out of the employer’s case. First, the line drawn between a resignation on the employee’s own initiative and a resignation triggered by an employer’s request is oddly positioned for sensible negotiations. An employer inviting a consensual termination is not permitted to negotiate more favourable pension terms, he is committed to them as soon as he makes a request. Secondly, rule 25 presents a perfectly adequate tool through which an employer can provide any pension rights enhancement which he feels it desirable to offer as part of a move towards consensual termination.

[38]As for a purposive rationale, the line between a consensual termination and voluntary redundancy is sufficiently narrow to make it odd that form should triumph over substance so that only the former is within para (iii).

[39]For these reasons, it is submitted that all three considerations, language, structure and purpose, combine to the result that dismissals of every kind, if need be even dismissals for misconduct, and thus certainly dismissals for redundancy, are within para (iii). The important thing to realise is that there is nothing incompatible between the concept of retirement at the request of the employer and dismissal.

[40]The judge preferred and adopted the submissions of the employees. He accepted those submissions as to the language of the Rules in their entirety. Thus he found that it is a perfectly proper use of language to describe an employee who is dismissed as someone who retires from service at the request of the employer. While the word “request” could be limited by its context to a case where the employee has a choice whether or not to comply, it could also refer to the case where the employee had no option: he gave the example of a “request stop”. He agreed that in two places in rule 13 “retires” includes dismissal, viz in rule 13(b) and rule 13(c)(i).

[41]As for anomalies, he saw the presence of dismissal for misconduct within para (iii) as a real enough anomaly, but as the only difficulty at all in the employees’ case. He left open the point whether dismissal arising from the misconduct of an employee could be excluded by implication, but concluded in any event that the anomaly arose from oversight and was not such as would deter him from the construction he preferred. He mentioned the 50/60 anomaly, but does not appear to have recognised it as militating against the employees’ case. As for a purposive rationale, he regarded the practical difficulties of the employer’s position as cutting against its construction and agreed with the employees that rule 25(a) could give the employer as much flexibility as it could wish: therefore there was little if anything left for para (iii) to achieve, if it was limited to resignations.

[42]In two respects, at least, the argument has developed since that judgment. It is now clear, which it was not to the judge, that the so-called 50/60 anomaly militates against the employees’ construction, and thus needs explanation or mitigation, as in the case of the misconduct anomaly. Secondly, the judge thought that Mr Warren was submitting that para (iii) could not allow for any degree of pressure or coercion. On that basis, the judge saw a real difficulty for the employer’s construction in that, if ex hypothesi every case under para (iii) was voluntary resignation, then it should have been dealt with under para (ii). Mr Warren has made it clear, however, that he does allow a degree of coercion or pressure, even something amounting to constructive dismissal, to fall within para (iii), as long as it does not amount in form to a dismissal and remains a resignation. It might also be said that if the judge had taken the 50/60 anomaly fully to heart, he would have appreciated in any event that para (iii) could operate in every case of an employee under 60.

Authorities

[43]On matters of construction, authority is unlikely to be decisive and may even prove deceptive, but Mr Warren was able to cite to the judge some decisions close to home, deriving from pension scheme litigation. Thus in Young v. Associated Newspapers (1971) 11 Knight Industrial Report 413, the plaintiffs were three journalists who were dismissed on notice in circumstances where the redundancy provisions of their contract applied. Those provisions stated that the journalists should receive inter alia “any entitlement under the pension scheme”. That scheme provided that “A member having at least 10 years of pensionable service and retiring with the consent of the company…shall be entitled to a deferred pension…”. The issue was whether the journalists had so retired “with the consent of the company”. After discussing some earlier authority, Brightman J said this (at 422/3):

“This case, again, was decided on the basis of its own particular pension rules. I am, however, left with the impression that both cases proceeded on the basis that, according to the ordinary use of language, an employee who is dismissed is not, prima facie, an employee who is retiring with the consent of those who dismiss him.”

[44]The main difference between that case and this is between retiring “with the consent” and “at the request” of the employer. Brightman J considered that both the concepts of retirement and consent pushed against the submission that retirement included dismissal. In certain respects the arguments used before him are familiar in the present setting. Thus the major submission for the journalists was that ““retiring” merely means “leaving the service of the company”” and could include dismissal (at 420). A supporting argument for this broader construction was identical to that used in the present case in relation to rule 13(c)(i) and the problem of the employee who works beyond retirement age and is then dismissed by the employer (there the corresponding rule was rule C1(ii)). Brightman J reasoned, however, (at 423) as follows:

“Ought this prima facie meaning to be displaced in the present case by reference to the wording of other rules? First, there is the supposed anomaly of the post-pension age employee who stays on at the company’s request and is (perhaps accidentally) deprived of his pension when ultimately the company gives notice to terminate his employment. Then there is the reference to the ex-Western Morning News journalist, who is “dismissed” without becoming entitled to a pension under the early retirement clause. Do these provisions provide a sufficient justification for departing, in the early retirement clause, from the prima facie meaning of the word “retiring”? “After weighing, as best I can, the arguments advanced on both sides, I feel reluctantly compelled to decide against the plaintiffs’ claim. My reasons are as follows: (1) It would, in my judgment, be a misuse of language to describe a journalist who is given notice by the company as “retiring with the consent of the company”

. The expression “a member retiring” had it appeared on its own, would in my view, have prima facie excluded a case where the employee is dismissed. This is all the more so where it is coupled with the words “with the consent of the company”, because a person cannot, in any meaningful sense be said to consent to his own act; he can only consent to the act of another. (2) It would be natural for the company, when establishing a non-contributory pension fund, to exclude a dismissed employee from a deferred pension…If the plaintiffs’ argument is correct, the most delinquent employee would be entitled to the same reward in terms of a deferred pension as the most loyal employee…(3) I do not think that the plain meaning of the early retirement clause can be displaced by reference to the supposed anomaly under paragraph (ii) of rule C1 (the post-pension age employee). It may be that there is an anomaly under that provision which the company may wish to remedy under its power to alter the rules…”

[45]In Dorrell v. May & Baker Ltd

(1991) PLR 31

Mr Julian Jeffs QC sitting as a deputy judge of the High Court had to decide a case concerning early retirement due to incapacity. The employee was dismissed. The question was whether he was entitled to a pension under the incapacity clause (rule 6A(3)) which spoke of a member who “retires…on account of incapacity”, in which case he got an immediate pension, or under the general provision applicable to members whose service terminated early “without retirement benefits becoming payable” (rule 11), in which case he was entitled to a deferred pension. He held that there was no incapacity within the meaning of the rule, since the employee could continue service in some different capacity with the employer. Most of the judgment was then devoted to the separate issue whether a dismissed employee could be said to have retired. Mr Jeffs cited Young in extenso. He concluded that rule 6A, which was headed “Pension on Retirement”, and dealt with normal retirement, early retirement on account of incapacity, early retirement not on account of incapacity, and late retirement, in each case was concerned with a concept whose meaning was – “beyond doubt. It means the act of an employee choosing to retire from work. In contradistinction to that, Rule 11 is headed “Termination of Service”…No distinction is drawn in it between the various ways in which a member’s service may be terminated.”

[46]Mr Jeffs considered that an employer who took advantage of those rules to deprive a totally incapacitated employee of an immediate pension by dismissing him would be acting unjustly, but the rules had to be construed as they were, not as perhaps they ought to be. He was not of course concerned with a totally incapacitated employee. If he had been, and if such an employee had been refused an immediate pension in such circumstances, it may be that the submission would have been made that such an employee’s service ended through frustration and not by dismissal and that such a situation could be called retirement. I will return to this below.

[47]In Dorrell Mr Jeffs said that he derived assistance from an unreported case in this court, Brooks v. National Westminster Bank Ltd (8 November 1983), which also concerned an employee who was dismissed because of incapacity. The rule in question (para 22) provided:

“Upon retirement…due to incapacity arising from ill-health…”

Para 21 had also been premised “Upon retirement”, viz at, after or within ten years of the normal retirement date. Other rules, however, did not speak of retirement but provided for a member who “leaves…service…or…is dismissed…honourably…and through no fault of his own or if his services are dispensed with owing to a reduction in or alteration of staff” (para 25), and who “leaves…service…of his own free will or is dismissed for fraud or misconduct” (para 26). The essential issue was whether “Upon retirement” referred to retiring in its intransitive sense, or retired in its transitive sense, or both. Lawton LJ, with whose judgment Fox LJ and Kerr LJ agreed, drew a distinction between the circumstances dealt with in the rules dealing with retirement and those dealt with in the rules which spoke in different terms of leaving service or being dismissed etc. He regarded the use of “retirement” in para 21 as having its intransitive meaning, and considered that that should therefore apply to para 22 as well. He continued: “…his submission amounts to this, that the words “upon retirement” in paragraph 22 have the same meaning as the words “leaves the service of the Institution” as used in para 25. It would again be very odd drafting if “upon retirement” in one paragraph had the same meaning as “leaves the service of the Institution” in another paragraph.

[48]The decisions in those cases, however, have to be contrasted with Harris v. Shuttleworth

(1994) PLR 47

, where the employee was dismissed on notice. The employee applied to the trustees to be recognised as entitled to an immediate pension as having been permanently incapacitated, but her application was turned down, both on the ground that she could obtain other employment and also on the ground that dismissal was different from retirement. The relevant rule (rule 19) allowed an immediate pension “If the Trustees are satisfied that the retirement from the service of a member…has occurred by reason of incapacity”. The immediately preceding rule, rule 18, was concerned with members “leaving the service” in certain circumstances. Glidewell LJ pointed out that rule 18 used the expression “leaving the service” and not dismissal: the rule could therefore cover an employee leaving of his own volition, an employee dismissed on notice, and an employee dismissed for misconduct. As for rule 19, he construed that as dealing with permanent incapacity, so that an employee seeking benefit under it would have to show that on the balance of probability his incapacity was likely to last until the normal retirement date. In that respect, therefore, the approach of the trustees was found to be correct. The next question, however, was whether retirement by reason of permanent incapacity under that rule was compatible with dismissal. In that connection Glidewell LJ said this (at para 75): “Unaffected by authority, I would conclude that if an employee before reaching normal pension age is incapacitated from following her employment by a physical or mental disability or ill health which renders it improbable that she will be able to follow her present or similar employment during any part of the period until she reaches normal pension age, and if as a result her employment with the Society comes to an end, it matters not how her employment is terminated. In my judgment, whether she gives notice of her intention to leave or the Society gives notice dismissing her, the termination can still properly be described as “retirement from the Service by reason of incapacity”.

[49]Glidewell LJ went on to say that the rules in Brooks were different, and did not preempt the issue. At the request of counsel, the general question of construction under rule 19 was promoted above the issue on the facts of the case, which was whether the trustees had come to a perverse conclusion as to the nature of the disability. Although Glidewell LJ considered that the trustees had erred in adopting too restricted a meaning of “retirement”, he found that they had been right to construe rule 19 as requiring permanent incapacity. In the circumstances Brooks is rather like Dorrell: it concerned an employee who, because his incapacity was not permanent, could not bring himself within the rule in question. Again, the question of whether permanent incapacity amounts to a frustration of the contract of employment was not expressly considered. If, however, the contract is frustrated, then it must indeed be true that it cannot have been intended to make any critical difference whether the employee’s departure is initiated by him or the employer or, indeed, by either party’s medical advisers. It seems to me that at the end of the day all this court was saying in that case was that the word “retirement” in context covered all circumstances in which an employee left service by reason of permanent incapacity, making no distinction between the concepts of leaving service and retirement in rules 18 and 19. As Glidewell LJ said (in the final para 80):

“I would therefore answer the second question by saying that, if a member of the Pension Fund scheme leaves the Society’s service by reason of incapacity, in circumstances in which it is the Society which has dismissed her rather than her giving notice that she is leaving, this can nevertheless constitute “retirement from the service by reason of incapacity”.”

[50]I will revert to these authorities below. The judge considered that they did not assist (paras 19 and 26/29) other than to indicate that the word “retires” can have a wide or narrow meaning, “ie that it can include or may not include dismissal, depending on its context” (at para 26).

Discussion

[51]I would seek to pull these various considerations together in the following way.

[52]I begin with the language of the rules, and in particular of rule 13(c)(iii). Rule 13 speaks of retirement and of a member who “retires”. It is common ground that “retires” is used intransitively. Mr Furness says it means “gives up work” and therefore includes giving up work also in the case of dismissal; and that rule 13(b) and rule 13(c)(i) must include cases of dismissal. Mr Warren in effect submits that it means “resigns”. The judge agreed with Mr Furness. It has to be said that a case can be made for a broad meaning along the following lines: “retirement” at the “normal retirement date” refers to giving up work at the expiration of employment by effluxion of time (rule 13(a)); retirement or retiring after the normal retirement date refers to any process by which such retirement may occur, which can include both resignation and dismissal (rule 13(b)); similarly a member may retire before the normal retirement date on account of incapacity in circumstances of resignation or dismissal (rule 13(c)(i)); the case of a member who retires “of his own free will” might in one sense be said always to involve resignation and not dismissal, but, where voluntary redundancy involves no pressure of any kind, may also be said even to involve dismissal (rule 13(c)(ii)); thus it should come as no surprise that the case of a member who retires “at the request of the Employer” can also involve dismissal as well as resignation. Therefore, a broader meaning is feasible, is required by rule 13(b) and rule 13(c)(i), and should be adopted.

[53]This is a powerful argument, but I do not find it compelling. The kernel of the whole of rule 13 is the concept of retirement at the normal retirement date (viz 65, or 60 in the case of the Staff Scheme), entitling a member to a normal retirement pension. It seems to me that in that context “retirement” is being used in its archetypal sense of ceasing work after a working lifetime in order to enjoy, in as much leisure as one wishes, hence “retirement”, the fruits, in terms of a pension, of that working lifetime. It is true that such a retirement operates by effluxion of time rather than by active resignation, and that there is no right, in the absence of agreement with the employer, to continue in service. Nevertheless, that is the kernel of retirement. It might be regretted when it comes, but in employment terms it is an entirely consensual event, the event of retirement, and it comes about by effluxion of time and the expiry of the contract of employment. It seems to me that the concept of dismissal by the employer is very far from that kernel of meaning. That is rule 13(a).

[54]However, if “by agreement” the member remains in service and does not retire at the normal retirement date, he will earn an augmented pension when he does finally retire (rule 13(b)). Agreement is necessary, because the old contract of employment has expired. It is suggested that such latter-day retirement must include dismissal, otherwise the member dismissed from his post normal retirement date employment will be entitled to no pension of any kind under any rule of the Scheme. Not even rule 23 can be prayed in his aid, since that only applies to the case of leaving service prior to the normal retirement date. This argument did not, however, convince Brightman J in Young, and in my judgment it is either flawed, or, as Brightman J thought, too weak to affect the overall structure of the rules. It is, I think, flawed because, on the precise wording of rule 13(b), there has to be agreement with the employer not only on the employee remaining in service but also on his subsequent retirement: this is because of the syntax of the relevant wording – “If by agreement with the Employers a Member remains in service and retires after the Normal Retirement Date…” It is clear that the phrase “by agreement” qualifies both verbs.

[55]The problem of a post normal retirement date dismissal remains – but it is not solved on the wording of rule 13(b). The problem is, however, likely to be an unusual one, and easily overlooked by a draftsman. I am not sure what the rights of a post normal retirement date employee are, but they are likely to be short term, and thus the most likely outcome of such employment will be a consensual termination, whether that answers the convenience of employee, employer or both. It is theoretically possible to think of a post normal retirement date employee, whom the employer has agreed to keep on, suddenly behaving in such a way as to merit summary dismissal, but it is also somewhat fanciful or at any rate highly unusual. A perfectly possible solution to this problem, however, is to imply a term protecting the employee: for the essence of the situation is that a normal retirement pension would have been earned at retirement at the normal retirement date and the augmentation does not relate to any further pension rights, but only to the value of the deferral of the pension. It is also possible for such a case to be dealt with fairly under rule 26, but since such a solution would depend on the goodwill of the employer, I am inclined to prefer the implied term route. Nonetheless another possibility, and possibly less fanciful in the case of a member of the Staff Scheme, is of the trusted employee who by agreement stays on after normal retirement date, and is then dismissed because of some long term conduct (such as dishonesty) which predates the normal retirement date but only emerges subsequently. Such a case indicates that summary dismissal for misconduct, whether before or after normal retirement date, raises exceptional problems which perhaps one should not expect to find solved otherwise than within those rules which permit discretion, such as rule 23(a) where the issue arises prior to the normal retirement date and rule 26 where the issue arises after the normal retirement date. None of this to my mind, however, suggests the need or indeed the possibility of giving to the word “retires” in rule 13(b) a meaning broad enough to encompass dismissal.

[56]Similarly, I do not agree with the judge’s conclusion that rule 13(c)(i) must include cases of dismissal on account of incapacity. Para (i) makes it clear that it is speaking about permanent incapacity. Such a case is in truth one of frustration. It is therefore a real case of retirement from work, albeit an accelerated one, and one that depends in reality on neither resignation nor dismissal. Neither Dorrell nor Harris was in fact concerned with an employee who was permanently incapacitated, and it is not altogether surprising therefore that the concept of frustration was not there considered. In a case of non-permanent incapacity, or disputed permanent incapacity, there may very well be issues as to whether the employee resigned or was dismissed, and what his legal rights are. Once, however, rule 13(c)(i) is seen to apply (“medical evidence in support of such incapacity having been obtained”), resignation or dismissal becomes strictly irrelevant, although there may well be elements of more or less concession in the arrangements surrounding the termination of employment. I do not therefore derive much in the way of assistance from those earlier cases as to this particular problem.

[57]Rule 13(c)(ii) is prima facie concerned with a pure case of voluntary, unpressured, resignation. Prima facie, such a case is again incompatible with dismissal. Mr Furness’s submissions before the court and the judge’s reasoning contemplate, however, that voluntary redundancy could in theory fall under not only para (iii) but under para (ii) as well. That raises the problem of how a termination of employment which ex hypothesi is purely voluntary, but which is formally carried out by a (voluntarily accepted) dismissal, should be regarded for the purpose of these pension provisions. An analogous problem arises with cases of constructive dismissal, which are formally resignations, but can also be analysed in terms of dismissal. I shall revert below to these particular problems of terminations which partake of elements of both resignation and dismissal.

[58]One arrives therefore at rule 13(c)(iii). There is nothing in rule 13 up to this point to require or naturally to suggest that the words “retirement” or “retires” are to be given a broad meaning able to encompass an enforced case of dismissal such as is to be found in compulsory redundancy. In para (iii) the phrase is “retires…at the request of the Employer”. If “retires”, plainly there an intransitive verb, is to have a meaning broad enough to be capable of including retiring by reason of enforced dismissal, this will be the first occasion in rule 13 on which it does so. Mr Furness’s thesis is that “retires” does not mean “leaves by reason of dismissal”, but is a broad and neutral word which takes its ultimate meaning in any particular setting entirely from its context. The burden is therefore on the phrase “at the request of the Employers”. In my judgment, it is requiring too much of this phrase to suppose that it is intended to include cases where the employer not merely requests but successfully enforces retirement. The natural meaning of “request” suggests that the employee can choose whether or not to comply with the request. Such choice is of course entirely compatible with at any rate some element of pressure or coercion. There is hardly any choice in life that is entirely free from pressures of one kind or other. It cannot be the mere existence of some element of pressure or coercion which prevents a request from being a request and turns it into something even more than a demand – for even demands can be turned down. This after all is the truth behind the grim joke about making someone “an offer he could not refuse”. One can refuse an offer, even though some are harder to refuse than others. But an execution is not an offer. Similarly, one can refuse a request, although some are harder to refuse than others. But, subject to the peculiar case of a dismissal following an agreement to accept voluntary redundancy, one cannot refuse, indeed one is given no real opportunity to refuse, an out and out dismissal. This it seems to me remains the case even though in theory, albeit this remains a problematic and controversial area of the law (see Chitty on Contracts, 28th ed, 1999, at para 39-172), an uncontractual dismissal may not there and then bring an employment contract to an end. Even so, and even if in case of wrongful dismissal the employee does have a real option whether or not to accept the repudiation of the contract, it just is not natural to speak of such a repudiatory dismissal as something happening at the request of an employer, let alone as a case of retirement at the request of the employer. The case of voluntary redundancy, however, to which I will revert below, is peculiar for the very reason that in its nature it is a matter of choice, even if in its formal execution it takes the form of a dismissal.

[59]It is in my judgment for these reasons that there is the contrast between para (iii)’s employer’s “request” and para (ii)’s employee’s “own free will”. I see no need to reformulate the meaning of “own free will” to Mr Warren’s “own initiative”. The contrast is between that which is done entirely because the employee wants it, and that which is done, whether or not the employee is acting voluntarily, at the request of the employer. Nevertheless, it is of course possible, at any rate in theory, to be requested to do something one wants to do and also feels under no pressure of any kind to do. Where therefore an employee resigns of his own free will but also at the request of an employer, a question may arise as to the appropriate paragraph to apply to that situation.

[60]That question raises the significance of the opening words of para (iii). Mr Furness submits that they show that in a situation of overlap para (ii) takes precedence over para (iii), and he complains that the employer’s construction reverses that order of precedence, and in effect makes any case of request take precedence over any case of free will. I am not however impressed by that argument. There is something odd about these opening words. Para (ii) opens with similar wording (“If a Member to whom paragraph (i) above shall not apply retires…”), but in truth an employee properly within para(i) can never fall within para (ii), for his retirement is as result of incapacity and the frustration of his contract of employment, and not of his own free will. In my judgment these opening words underline the fact that in any case of apparent overlap, a choice has to be made as to whether the case falls within the one paragraph or the other. Does para (i) apply or para (ii)? Does para

(ii) apply or para (iii)? Is it a case of retirement of one’s own free will or a case of retirement at the request of the employer?

[61]Although the judge set out to ask himself the question whether the voluntary redundancies in question were of the employees’ own free will, ultimately he decided that question not on the individual facts (a difficult and inconvenient test) but in effect by determining that cases of voluntary redundancy were to be thought of as cases of dismissal rather than resignation: see para 54 of his judgment cited at para 24 above. It seems to me that that is the right approach to the choice between the separate paragraphs of rule 13(c). Is this a case of retirement by reason of incapacity or a case of retirement of one’s own free will, or really a case of retirement at the employer’s request? Such a question will not require an intricate investigation of an employee’s individual motivations, but a much simpler approach, and I consider that such an approach is more realistic and likely to be in accord with the draftsman’s intentions. If, as Mr Furness submits, that renders the opening words of para (iii) (and of para (ii)) redundant, that is not an unusual situation. I would prefer to say that the words are not entirely redundant, for they emphasise that any case should be allocated to its proper paragraph. If it is truly a case of incapacity, then it should be so regarded, even it might also arguably be approached as a case of resignation or even as a response to a request from the employer to resign. If it is truly a case of voluntary resignation, then it should be dealt with as such. But a case of voluntary resignation is something different from a response to an employer’s request. The words are contrasted. The case has to be put in the one category or the other.

[62]In sum therefore, as a matter of language, the words “retirement” and “retires” as found in rule 13 naturally cover situations distinct from dismissal. Dismissal does not naturally fall within the sense of those words. In particular, the rule 13(c)(iii) context of retirement “at the request of the Employer” does not naturally embrace dismissal. Rule 23, on the other hand, with its broader and different language “leaves Service”, appears designed for situations going beyond that of rule 13’s retirement. If “retires” in rule 13 means simply “gives up work” and otherwise takes its meaning entirely from its context, then it seems to me that there is no need for a separate expression relating to “retirement”. Mr Furness suggests that “retirement” is a special word simply used for situations of various kinds where an employee is entitled to an immediate, as distinct from a deferred pension, and that those situations are all identified in rule 13. It is true that rule 13 is dealing with cases of immediate payment of a pension, but there is no reason why, if those cases might arise in any situation (within the stated parameters) where an employee leaves service, rule 13 could not itself have been written in terms of “leaves Service”. The fact remains that the basic rule is that an employee is entitled to a normal retirement pension at the normal retirement date and that the basic rule is that if he leaves service early then he is still entitled to that pension at that time. One comes back, therefore, to the fact that a normal retirement pension is measured against retirement in the ordinary way at the retirement age.

[63]It seems to me that the authorities of Young, Dorrell and Brooks all support that view of the matter, and I do not consider Harris as throwing that into doubt. This court there regarded the rule in question in that case as differing from the rules discussed in Brooks. It seems to me however that the rules in the earlier three cases, as there discussed, have more in common with those in this case. In Harris, on the other hand, it was concluded that “retirement” as a noun reflected the same range of circumstances as was covered by the verbal phrase “leaves service” and thus could possibly, albeit speaking only in the limited case of permanent incapacity, be given a meaning embracing circumstances of dismissal. Although Harris gives some support to Mr Furness, it seems to me that it stands rather on its own, and that in any event, although admittedly this was not how the argument there proceeded, a case of leaving service by reason of permanent incapacity is a real case of retirement, however that retirement, in truth a case of frustration, may have appeared to have been initiated. I would therefore respectfully differ from the views of Neuberger J, who appears to have regarded the authorities as of little assistance, but also to have considered that such assistance as they gave supported the employees’ primary contention of the possibility of a wider meaning for the word “retires” (see para 49 above).

[64]The question then arises whether the structure and purpose of the rules, or what might be described as their logic, support or undermine such a view of what their language naturally seems to provide. It may be that if their logic pushes strongly enough in a different direction, then it will be necessary to think again before concluding finally as to their true construction.

[65]It seems to me to be reasonably plain that para (iii) is intended to enable the employer to offer early retirement on preferential terms to employees over 50. I emphasise the word “offer”, for the terms are only available when retirement is “at the request” of the employer. The preferential terms are available as the quid pro quo for the employee’s agreement to retire. On Mr Furness’s case, however, the hypothesis is that such preferential terms are available even in the case of dismissal. Let me consider the logic of that hypothesis. Dismissal may come in a number of forms. There is summary dismissal for misconduct owing to the employee’s repudiatory breach; there is wrongful dismissal, where the employer has himself repudiated the contract without cause; and there is dismissal on notice, which can occur in a number of situations, including redundancy. It is not at all obvious why any preferential terms should be available as a matter of entitlement where the employer dismisses on the ground of the employee’s breach, nor where the employer is himself in breach. The judge was inclined to accept the force of the first point, where the employee is in breach, while being prepared to digest this, if necessary, as an anomaly for the sake of his overall conclusion. The existence of such an anomaly, nevertheless, is a pointer away from dismissals being generally within para (iii). As for dismissals which are repudiatory breaches by the employer, the employee has his remedies in damages for breach of contract and for unfair dismissal. It seems to me that there is no need for preferential terms in such a case. I do not see why a pension scheme should, subject to express language, be thought of as providing in advance for preferential terms for early retirement in any case of repudiation of the contract of employment. The law will provide its own remedies. If that is so, there seems to me to be less reason to think of para (iii) as being aimed at cases of dismissal by way of compulsory redundancy. I distinguish voluntary redundancy because, although that is formally completed by means of a dismissal, it occurs as a result of prior consent to such a dismissal.

[66]There is also the factor of the so-called 50/60 anomaly. Why should the employee between 50 and 60 do better under para (iii), when an employee has to wait until he is 60 to claim the lesser benefit of a reduced immediate pension under para (ii) if he retires of his own free will? On the employer’s construction, it is understandable because, where the employee is reacting to the employer’s request, it makes sense that he should receive a benefit which reflects the assumed advantage to the employer of his retirement. On the employees’ construction, however, an employee over 60 who retires of his own free will, albeit at the employer’s request, does less well than an employee over 50 but under 60 and otherwise in an identical position. That makes no sense at all. It seems to me that these considerations support the view expressed above that the better way of regarding the opening words of paras (ii) and (iii) is to see them as emphasising the need to distinguish between the three categories. I cannot agree that a solution is to be found, as Mr Furness proposes, by an implication that employees of between 50 and 60 who retire both of their own free will and at the request of their employer fall exclusively within para (ii).

[67]What then of the two cases which seem to lie uneasily across the distinctions between resignation and dismissal, namely voluntary redundancy and constructive dismissal? It is possible to view voluntary dismissal, a form of oxymoron, as falling either in the camp of dismissal, the formal equivalent of compulsory redundancy, or in the camp of a retirement “at the request of the Employer”. Where does it better fit?

[68]In my judgment, this question has to be answered by looking at the substance and realities of the situation, rather than at the form. It is therefore made the more difficult by reason of the fact that the realities of voluntary redundancy may differ (see under paras 6/11 above). At one extreme, an employer may make it plain that he will make no compulsory redundancies, but will rely on natural depletion of the payroll and voluntary redundancies alone. At the other extreme, an employer may demand compulsory redundancies of all or so large a proportion of his payroll that his offer to accept voluntary redundancies instead may effectively give his employees no real option. In general, however, and on the evidence in this case, I have no reason to think that the voluntary redundancies of which I have read are not fairly and properly called by that name. Indeed, seeing that every case of statutory redundancy is in form a dismissal, the very language of voluntary redundancy, which I have described as an oxymoron, emphasises that in its essence it is a consensual process.

[69]I would therefore conclude that, save for the possibility of exceptional cases where the use of the expression is in truth a misuse of language, the case of voluntary redundancy fits better in the latter camp of a retirement at the request of the employer. Despite the theoretical existence of an element of pressure or coercion from the possibility that compulsory redundancies may have to take place in the absence of sufficient volunteers, and despite the fact that in the end a volunteer has to be accepted by the employer as a candidate for dismissal, it seems to me that the reality of the situation of voluntary redundancy is that it is a consensual dismissal. It is perfectly well described as a retirement at the request of the employer. I would so find. I would therefore agree with the employees’ submission that the line between consensual termination and voluntary redundancy (at any rate as found in this case) is sufficiently narrow to make it odd that the form of dismissal should triumph over the substance of consent. Voluntary redundancy is a standard form of retirement.

[70]On the other hand, the employees’ and the judge’s argument that para (iii) lacks sufficient real content if it is confined to entirely consensual terminations in the absence of statutory redundancy, and their further arguments that the employer would always be trying to negotiate for consensual termination without actually making any “request”, or that a pension rule which commits the employer as soon as he makes a request for retirement is inconvenient for the employer, or that rule 25 could provide an adequate alternative route for the employer who merely seeks consensual termination, become in my view weak points to the extent that they are relied upon as supporting the moregeneral submission for a wide construction of para (iii) embracing all formsof dismissal and in particular compulsory redundancy. They seem to me to be consistent with, or even to lend support to, my view that rule (iii) covers voluntary redundancy, but for that very reason to be without any force for extending the reach of para (iii) retirement to the case of compulsory redundancy. The practicalities are thatif an employer wants to have a programme of early retirement, whether entirely consensual or through the medium of voluntary redundancy, then he has to take the first step and issue his invitation or make his request.

[71]In reaching this conclusion, I have had in mind a possible argument that it would be anomalous for an employee over 50 who opted for voluntary redundancy to secure for himself a better pension arrangement than his similarly aged colleague who did not so opt and then suffered the misfortune of compulsory dismissal. However, I do not think that the argument is cogent. It is often possible to secure by agreement an arrangement that is more advantageous than the consequence of waiting for all options to be foreclosed. There is no reason why an employer, and a good employer, should not be willing to fund at a special price an arrangement which secures his needs by consensual means, and enables him to avoid compulsory redundancies, or to achieve the lowest possible number of compulsory redundancies; and there is no reason why a pension scheme should not reflect such considerations.

[72]As for constructive dismissal, this is plainly not within para (ii). Is it within para (iii)? The question does not have to be resolved, for it is not formally raised on appeal, but I ask it, for its consideration may test the conclusions to be derived on the issues which are for determination. It seems to me that constructive dismissals may take at any rate two forms. In one, the employer really wants the employee to go, or at any rate objectively appears to do so, but is not prepared to take the formal step of dismissal. It is arguable that such a case is a retirement “at the request of the Employer”, although I am sceptical and it will in any event fall outside the concept if it amounts to a repudiation of the contract. Even if it were within para (iii), however, I see no reason why it would cause any problems to my preferred analysis and construction. In the other scenario, the employer may in truth be in repudiation of his contract, for instance because he seeks materially to change the circumstances of the employment, but he is nevertheless genuinely anxious to retain the services of his employee, and says so. In such a case, it could not be said that the employee, if he resigns, does so “at the request of” the employer. I consider such a case as causing further difficulties for the employees’ thesis that all cases of dismissal, except perhaps summary dismissal for cause, are within para (iii).

[73]In sum, I consider that a consideration of the logic of the rules supports the prima facie construction of rule 13 and in particular rule 13(c)(iii) that I would derive from their language. However, contrary to the submissions of Mr Warren, and for reasons somewhat different from that of the judge, I consider that voluntary redundancy at any rate as experienced in this case falls within para (iii).

Conclusion

[74]I would therefore conclude that, subject to any other relevant requirement of rule 13(c)(iii), a member who is over 50 retires from service at the request of the employer and is entitled to an immediate unreduced normal retirement pension, if his or her contract of employment is terminated for redundancy in circumstances where he or she has volunteered and been accepted for redundancy at the invitation of the employer. However, compulsory redundancies and all other cases of dismissal (other perhaps than some cases of constructive dismissal) are outside the scope of rule 13(c)(iii) as not amounting to cases where the member retires from service at the request of the employer.

[75]I gratefully take the facts and issues from the judgment of Lord Justice Rix. I respectfully agree with him that voluntary acceptance of dismissal for redundancy is, for the purposes of the Scheme, retirement at the employer’s request.

[76]But it seems to me that the class of persons who retire “at the request of the employer” must by parity or extension of reasoning include those who are made redundant against their will. This may not be an obvious reading of the word “retire”, but on examination I think it is an ineluctable one.

[77]The Scheme is quite remarkable for its omission to spell out what is to happen to the pension rights of employees who are dismissed for redundancy. As every member of the court accepts, they cannot for that reason alone be treated as excluded. The task is to see whether the Scheme differentiates among them. To do this one needs to stand back and look at the composition of Rule 13.

[78]Rule 13(a) makes the basic provision for payment of a pension upon age-related retirement. It is highly relevant that all such retirements are enforced, not voluntary: on reaching 65 the employee goes, whether on legal analysis he does so by dismissal or by effluxion of time, whether he likes it or not. Rule 13(b) allows an extension past retirement age at the sole discretion of the employer, so that again the employee will go when the employer wants him to. Rule 13(c) then sets out the pension entitlements of three remaining categories of employee.

[79]The first is the employee who retires through incapacity. For such an employee “retirement” is a euphemism. His contract of employment has come to an end by frustration. But he is treated as retiring so that he may go with dignity and take a pension.

[80]The second is the employee who retires of his own free will. Again, voluntary retirement is a misnomer for what is in law unilateral termination by the employee; but again, it gives him the dignity of withdrawal and a proportionate pension.

[81]The third category is the employee who retires “at the request of the employer”. Apart from the imaginary case of a trusted old hand, not yet 65, who has become a burden but whom the employer wants to let down lightly, Mr Warren QC was not able to suggest whom this category was meant in practice to include. There seem to me to be only two feasible meanings here. One is Mr Warren’s. The other is that “at the request of the employer” means at the employer’s instance or behest. This meaning would make Rule 13(c) comprehensive, as one would expect it to be, for it would then cover all three broad reasons for an employee’s leaving: being compelled by infirmity to go, wanting to go, and being required to go.

[82]The last of these reasons, of course, will include dismissal not for redundancy but for misconduct. I respectfully differ from the view that dismissal for cause is dealt with in rule 23, though no doubt that rule will afford a final pension to those not otherwise catered for. For much misconduct – skylarking or persistent lateness for example – one would not expect any pension rights to be forfeited. This kind of dismissal, correspondingly, would be expected to be on notice, not summary, and so within Rule 13(c)(iii). There is, with the greatest respect to the view of Lord Justice Aldous, nothing ridiculous about this. It places no premium on misconduct: it simply protects pension entitlements on dismissal for cause. For serious misconduct – in law, repudiatory breach – it may be that the employer’s acceptance of it by instant dismissal puts an end even to pension rights. But we do not have to decide this. It is enough that a scheme of this kind can accommodate all these forms of termination without losing the comprehensive shape I have suggested.

[83]Such a reading seems to me by far the most coherent that can be given to this opaque scheme. It means that employees dismissed for redundancy rank for an immediate pension under Rule 13(c)(iii) whether they go voluntarily or not. It is hard to think that whoever composed the Scheme meant anything different to happen to people who through no fault of their own lost their pensionable jobs with this once large and dependable employer.

[84]For these reasons I think Mr Justice Neuberger came to a correct conclusion. I would dismiss the appeal in its entirety.

[85]Lord Justice Rix has set out the factual background, submissions of the parties and analysed the difficulties to which they lead. I agree with his judgment. I had concerns as to the way that he dealt with voluntary and compulsory redundancy, but am persuaded that his view, based on the substance and realities of the situation, is correct. I add a few words to illustrate my personal approach.

[86]The task of the court is to ascertain the intention of the draughtsman when he drafted the rules. I believe that that can be done from rule 13 without meticulously analysing every word. The start must be to look at the rule as a whole. When doing so, I believe that the important issue is to decide what meaning to give to the word “retires”. In particular does it cover dismissal.

[87]I can find nothing in rule 13 which suggests that the draughtsman intended to differentiate between kinds of dismissal, e.g. dismissal for cause. That being so, construction of the word “retires” in rule 13(c) so as to include dismissal for cause would have the ridiculous effect of providing a benefit to an employee who had been dismissed for cause over those employees who had carried out their duties properly. The draughtsman could not have intended that rule 13 would provide an inducement to employees to break their contracts of service. It would be ridiculous to induce an employee, who wished to retire early, to break his terms of contract to obtain dismissal and hence an enhanced pension.

[88]Rule 13 is concerned with “retirement pensions”. Rule 13(a) deals with a member who serves until the normal retirement date (NRD). Rule 13(b) is concerned with a case where a member stays on after his NRD. Rule 13(c) is concerned with those that retire before the NRD. Rule 13(c)(i) relates to those who retire because of incapacity; (c)(ii) with those that leave service early at their own free will; and (c)(iii) with those that leave, not dismissed, at the request of the employer. The words “if a member, to whom paragraphs (i) and (ii) shall not apply” in rule (c)(iii) do not, when sensibly read, provide any difficulty. No doubt a person who retires at the request of the employer leaves of his own free will, but there is nothing odd with dealing with those that decide to take early retirement separately from those that are encouraged by the employer to take early requirement.

[89]In my view members who are dismissed for cause are dealt with in rule 23.

[1]Paragraphs 1 and 2 of the Order of Mr Justice Neuberger herein dated 20 December 2002 be set aside and replaced by the declarations made in paragraphs 4-7 below.

[2]The costs of the parties other than the Claimant of and incidental to the Appeal be paid by the Trustees from the assets of the workers Scheme on the indemnity basis, to be assessed if not agreed with the Trustee.

[3]The Second and Third Defendant’s application for permission to appeal to the House of Lords is refused.

IT IS DECLARDED THAT: -

[4]On the true construction of rule 13 (c) (iii) of the rules (“the 1987 Works Rule”) forming part of the Definitive Trust deed and Rules dated 5 January 1987 relating to the retirement benefits scheme known as the Massey Fergoson Works Pension Scheme (“the Works Scheme”) a member who is over the age of 50 does not qualify for an unreduced Normal Retirement Pension if : - (i). the member’s contract of employment is terminated by his or her employer for redundancy, other than in the circumstance referred to in paragraph 5 of this Order; or (ii). the member’s contract of employment is terminated by his or her employer for any reason other than redundancy.

[5]On the true construction of Rule 13(c) (iii) of the 1897 Works Rules a member who is over the age of 50 does qualify for an unreduced Normal Retirement Pension if the member’s contract of employment is terminated by his or her employer for redundancy, in and been accepted for redundancy at the invitation of the employer.

[6]On the true construction of rule 14(c) (iii) of the rules (“the 1987 Staff Rules”) forming part of the Definitive Trust Deed and Rules dated 10 August 1987 relating to the retirement benefits scheme known as the Massey Ferguson Staff Pension Scheme (“the Staff Scheme”) a member who is over the age of 50 does not qualify for an unreduced Normal Retirement Pension if: (i). the member’s contract of employment is terminated by his or her employer for redundancy, other than the circumstances referred to in paragraph 7 of this Order; or (ii). the member’s contract of employment is terminated by his or her employer for any reason other than redundancy.

[7]On the true construction of Rule 14(c) (iii) of the 1987 Staff Rules a member who is over the age of 50 does qualify for an unreduced Normal Retirement pension if the member’s contract of employment is terminated by his or her employer for redundancy, in circumstances in which the member has volunteered and been accepted for redundancy at the invitation of the employer. (Order not part of approved judgment)

Cited in 1 later judgment

Downe v Universities Superannaution Scheme (USS) & Anor 2019