Gateshead Metropolitan Borough Council v Mills [1995] UKEAT 610_92_2305

EAT
Gateshead Metropolitan Borough Council v Mills
[1995] UKEAT 610_92_2305 · 1995-05-23
MR JUSTICE MUMMERY (PRESIDENT): This is an appeal by the Gateshead Metropolitan Borough Council from the decision of the Industrial Tribunal held at Newcastle-upon-Tyne between 15th and 17th July 1991. Through no fault of the parties this case has taken too long to come on for a full hearing.It first came before the Employment Appeal Tribunal on 22nd July 1992, when it was dealt with as a preliminary hearing. Direction was given. It was ordered that the time be extended for filing a Notice of Appeal.The Industrial Tribunal decided that, among the five applicants, Mr Mills and Mr Poole were entitled to redundancy payments. There are some mis-prints in the decision, in that Mr Mills is mistakenly referred to Mr Gillis. We shall ignore what are quite obviously clerical errors.Mr Poole has not taken any active part in responding to this appeal. We propose in those circumstances to deal with his case in the same way as we deal with Mr Mills's case.On the hearing of the appeal, brought to this Tribunal by a Notice of Appeal served on 10th January 1992. Mr Giffin has appeared for the Council and Mr Aston has appeared for Mr Mills.The appeal raises a question of law: whether the Tribunal made an error of law in reaching their decision that Mr Mills and Mr Poole were "dismissed" by the Council. It is only if they were dismissed within the meaning of the Employment Protection (Consolidation) Act 1978 that they are entitled to redundancy payments. In the full reasons notified to the parties on 18th November 1991 the Tribunal held that both Mr Mills and Mr Poole were dismissed. Mr Giffin has argued ably on behalf of the Council that, as a matter of law, that is an erroneous conclusion, and that the only proper conclusion from applying correct legal principles to the facts of this case is that Mr Mills and Mr Poole left the employment of the Council by agreement. If that is correct, they cannot have been dismissed. That is a brief statement of the point of the appeal. The background to the facts can be briefly stated. They are not dispute.In 1989 the Council decided upon a re-organisation of further education. Mr Mills and Mr Poole were employed at the Gateshead Technical College. The re-organisation involved closing down Gateshead Technical College and giving Mr Mills and Mr Poole the opportunity to apply for new jobs at a new institution, Gateshead College. The changes were to take effect from 1st September 1990. Mr Poole and Mr Mills received notices of dismissal dated 31st October 1989, and effective on 1st November 1989. This has been described as a "protective notice" given to staff at the old college generally at a time when it was not known which of them would be offered jobs at the new college. The Council's letter stated that it would hope to offer existing permanent staff a position as part of the re-organisation, so that it might not be necessary to act upon the notice. The notice period was one year, although the letter contemplated that, in the absence of re-employment in some other position, the recipients' employment would terminate on 31st August 1990, with a payment being made in lieu of the balance of the notice period. (We will refer in a moment to the letter in more detail.) Mr Mills applied for three posts at the new college. He was unsuccessful in all three applications. He accepted early retirement under the Council's early retirement scheme. Mr Poole applied for a post at the new college. He was unsuccessful. He also accepted early retirement.The only documents that need to be looked at in detail are the notice of dismissal dated 31st October 1989 and the documents passing between the parties relating to the early retirement election.The letter sent to Mr Poole and Mr Mills stated this:
"As part of its review of education provision for the 11-19 age range within the Borough, the Council has decided to establish a tertiary college in the buildings of the present Technical College with effect from 1st September 1990. The reorganisation involves the closure of the existing Technical College on 31st August 1990 and consequently all current contracts of employment of teaching and non-teaching staff employed at the Gateshead Technical College will be terminated on that date."
The next paragraph refers to consultation with recognised Trade Unions. The following paragraph reads:
"I am writing to you at this time as the Authority is obliged in the accordance with the National Joint Council of Lecturers in Further Education in England and Wales Scheme of Salaries and Conditions of service (i.e. the `Silver Book') to give formal notice of one year of the termination of your employment for any possible redundancies that may arise as a result of the reorganisation. This letter should be regarded as complying with the requirement to give formal notice and the date from which it applies is 1st November, 1989.
If your employment is terminated by reason of redundancy on 31st August, 1990 and you are re-employed by the Authority with effect from 1st September, 1990, you will be paid compensation in lieu of the pay you would otherwise have been entitled to for the unexpired portion of your notice i.e. from 1st September, 1990 to 31st October, 1990.

[ The last paragraph said: ]

Finally, may I add that although the Authority has been obliged to issue this notice in order to comply with the requirements of the `Silver Book', subject to the outcome of consultations and decisions of the Temporary Governing Body concerning the tertiary college's establishment, it may not be necessary to act upon this notice."Mr Giffin rightly accepted that the fact that at notice states that it may not be necessary to act upon it does not make it any the less a valid notice of termination.The other relevant documents concern the application for early retirement, which resulted in an agreement that Mr Poole and Mr Mills could take the benefit of the scheme.On 9th April 1990 Mr Mills filled in an application form for early retirement and stated as the proposed early retirement date August 1990. On the 19th April 1990, the Council wrote to him saying:
"Further to your application for early retirement at 31 August 1990, I have now obtained details of your service at 31 March 1989 from the Department of Education and Science. Service for the period 1 April 1989 to 31 August 1990 must of course be added in calculating your anticipated benefit."
On 21st May 1990, the Council wrote another letter about Mr Mills's application for early retirement. That letter contained an assessment of his likely entitlement to superannuation benefits in the event of the application being approved by the Council, depending upon the amount of enhancement, if any, which they are prepared to offer. The letter sets out the details and goes on:
"I should be grateful if you would let me know as quickly as possible by completing and returning the attached pro forma, whether or not, in the light of this information, you wish me to proceed with your application and to make the necessary submission to the appropriate committee of the Council."
Mr Mills wrote saying that he wished to proceed with the application for Early Retirement on 31st August 1990. The only remark he included in the form was that it was to be subject to 100% enhancement.On 31st May 1990, the Council informed Mr Mills that his application had been approved with the 100% enhancement, subject to formal ratification by the Council on 5th July 1990, and added:
"I would ask you to confirm by return of post that you wish to accept the offer."
He wrote on 5th June 1990 saying:
"I have been informed of the approximate benefits which will accrue to me under the Early Retirement Scheme, as set out above, and I understand that the exact figures can only be provided by the Department of Education and Science. Having considered this information I now formally accept the Council's offer of early retirement."
The offer of early retirement was under a scheme. The introduction states the objectives of the scheme as follows:
"The objectives of the scheme are to enable the Authority to offer early retirement to superannuated employees of the Council either by reason of redundancy or in the interests of the Authority's efficient exercise of its functions."
There are general conditions.

(c) states:

"(c)Nothing in this scheme overrides in any way the rights or obligations of the Council and its employees contained in the Employment Protection Consolidation Act 1978 (as amended) or the contractual rights of the individual employee."
The benefits payable are listed.

(b) :

" Redundancy Payments, where applicable

The employee's statutory entitlement under the redundancy payments scheme where such benefits are applicable."Those were the facts on which the Tribunal found in favour of Mr Mills and Mr Poole. They heard evidence. We have the Chairman's notes of evidence. Although they run to some 45 pages, we have only been referred to four lines on page 59 of the bundle, which contain notes of Mr Mills's evidence in chief. He says:
"After the short-list came out I asked if the severance scheme would be re-opened in view of new structure. Mr Nesbit said he would see if redundancy pay or anything else was available in addition to enhancement. Mr Nesbit later said there would be no additional offer of redundancy."
The conclusion of the Tribunal contained in paragraph 15, after the Tribunal had set out the facts and the rival contentions, was in these terms:
"15 In order to establish their claims the applicants have to show that they were dismissed. [ That was referring to claims for redundancy payment ] They received letters giving them one year's notice of dismissal. These notices were never withdrawn. When they were offered early retirement the applicants had little choice. They could not choose between early retirement and their former jobs as those jobs no longer existed. Their choice was between early retirement and the prospect, which at the time seemed unlikely, of obtaining employment at the new college. We accordingly find that they were dismissed."
They deal with the circumstances on the dismissal. On this appeal it is not necessary to examine those details. We are only concerned the question, whether the Tribunal erred in law in finding that there was a dismissal.We refer to the final paragraph:
"19 We find that the agreement to accept early retirement with effect from 31 August 1991 (0) meant that the applicants had agreed the date of termination of their employment should be brought forward from 1 November to that date. They would accordingly not be entitled to payment of any salary after that date."
The question is `Was there a dismissal?' Mr Giffin argued that the Tribunal erred in law in holding there was. He made a opening submission of four legal propositions.First, there cannot be a dismissal unless employment is terminated by the unilateral act of one of the parties. An agreement that employment will terminate is accordingly not a dismissal. For the proposition he referred to a decision of the Court of Appeal Birch v Liverpool University [1985] ICR 470 . There are three separate judgments in the case. It is unnecessary to refer to them in detail. Mr Aston on behalf of Mr Mills did not dispute the legal correctness of this proposition. The proposition is neatly stated in the judgment of Slade LJ where he said in relation to the question of dismissal and termination of employment:
"In a case where it [ that is employment ] has been terminated by such mutual agreement, it may properly be said that the contract has been terminated by both the employer and the employee jointly, but it cannot, in my view, be said that it has been terminated by the employer alone."
In that case, which concerned an agreement to take early retirement under a scheme, it was held by the Employment Appeal Tribunal and the Court of Appeal that there was no dismissal. That was not a case in which the employer had at any time served a notice terminating the employment. It was simply an agreement breached by the parties. It was held in those circumstances there was no dismissal.Mr Giffin's second proposition was that, if the parties reach agreement, that is "termination by agreement" notwithstanding that a party has given notice. For that proposition he relied on the decision of the Employment Appeal Tribunal in case of Scott v Coalite Fuels & Chemicals Ltd [1988] ICR 355. That was a case where the Industrial Tribunal decided that there was no dismissal. The decision was upheld by the Employment Appeal Tribunal. The facts were that written notices of redundancy were sent to the employees. There then followed negotiations. In the negotiations the employees were given a number of options, which included redundancy with a redundancy payment and a pension frozen until the age of 65, or redundancy with a redundancy payment and a pension transferred to a new fund, or early retirement as an alternative to redundancy. The employees requested early retirement. On their applications for redundancy payments, their claims were dismissed on the ground that the written redundancy notices had been superseded by the subsequent negotiations and agreement for voluntary retirement; they had terminated their own employment by choosing to retire voluntarily. They were not dismissed within the meaning of the Act. Mr Giffin rightly regarded this as his best case. He drew our attention to the facts and to the passage of the decision in the Industrial Tribunal approved by the Employment Appeal Tribunal. What was said by the Industrial Tribunal appears on page 358 and 359. The conclusion, on the evidence that the Industrial Tribunal had heard, was that the notices of termination, which had been served, had been waived by the applicants and impliedly withdrawn by virtue of what had happened afterwards. He drew our attention to this sentence:
"As those negotiations took place before 22 April, and after the initial notice for redundancy, they must be regarded as having supervened the original notice."
That case formed an important part of Mr Giffin's argument that in this case the notice of termination had been impliedly withdrawn on the conclusion of an agreement between the Council and Mr Mills and Mr Poole under which they agreed to take early retirement.The third proposition was that, in deciding whether there was termination by agreement or by unilateral act, in deciding the cause of termination, the correct legal test is what really happened. It is not a question of attaching labels. The question is: did the employees agree to go? If they agreed to go, the agreement was the effective cause of the termination. They could not that they were dismissed.Fourthly, he submitted that, if the Industrial Tribunal has asked the correct question, the answer is unappealable on appeal to this Tribunal, unless it can shown that it is perverse: that is, that a decision that no reasonable Tribunal correctly, appreciating the facts and understanding the law, could have reached. But if the Tribunal had not asked the correct question, then there is an error law and the correct course to take in this case would be to allow the appeal and to dismiss the applications. He said that they have not asked the correct question in relation to the dismissal. That is the error. The appeal should succeed.We add to that list of helpful propositions, a fifth proposition, which we regard as important in the resolution of this case; that is that, once either an employer or employee has given notice of termination, that notice cannot be withdrawn or revoked without the consent of the recipient. The authorities for this proposition are first a notable case in constitutional law, decided by Diplock J. in 1959, Riordan v The War Office [1959] All E.R. 552:
"... that the giving of a notice terminating the employment, whether by employee or employer, is the exercise of the right under contract of employment to bring the contract to an end, either immediately or in the future. It is a unilateral act, requiring no acceptance by the other party, and like a notice to quit a tenancy, once given it cannot in my view be withdrawn save by mutual consent."
There is a decision to a similar effect in the Employment Appeal Tribunal presided over by Sir Hugh Griffiths in Harris and Russell Ltd v Slingsby [1973] ICR 454 . The general statement of relevance to this case is on page 455:
" Although it appears that there is no direct authority on the point in the case of a master and servant relationship, the court is satisfied that where one party to the contract gives a notice determining that contract he cannot thereafter unilaterally withdraw the notice. It will, of course, always be open to the other party to agree to his withdrawing the notice, but in the absence of agreement the notice must stand and the contract will be terminated upon the effluxion of the period of notice."
They referred to an analogous situation under the general law of contract in Decro-Wall International S.A. v Practitioners in Marketing Ltd [1971 1 W.L.R. 361 . A passage is cited from Buckley LJ's judgment drawing a distinction between repudiation of a contract and determination of a contract. He said:
"A repudiation and a notice of determination are clearly different things. A repudiation may be withdrawn at any time before acceptance: a notice of determination validly given cannot thereafter be withdrawn without agreement."
Sir Hugh Griffiths said:
" The same principle applied to a contract of employment. Once notice is given by either side it cannot be withdrawn, save by agreement."
In this case, Mr Giffin accepts that nothing is said in any of the contemporary documents which can constitute an express withdrawal of the notice terminating the employment of Mr Mills and Mr Poole given on 31st October 1989. His argument is that such a withdrawal should be implied from this fact that the agreement made to take the benefits of early retirement on 31st August 1990 is inconsistent with the continuance in force of the notice of termination. In those circumstances, there cannot be a dismissal because the agreement supersedes the giving of the notice. The operative cause of Mr Poole and Mr Mills ceasing to be employed is the agreement, not the notice. The notice cannot be an operative cause of termination if it been impliedly withdrawn and superseded by an agreement of termination.Mr Giffin applied this analysis to the facts of the case, and used it as a basis for criticising the decision of the Tribunal.The argument was developed in this way:
"The Tribunal gave two reasons for finding that Mr Mills and Mr Poole had been dismissed: (i) They had received letters giving one year's notice of dismissal, which were never withdrawn;
(ii) When offered early retirement, Mr Mills and Mr Poole had little choice but to accept it, because their former jobs had ceasing to exist, and it seemed unlikely that they would obtain employment at the new college."Mr Giffin submitted that this analysis was incorrect in law. There can only have been a dismissal if the contract of employment was terminated by the Council. In this case the employment had not been terminated by the Council. It had been terminated by mutual agreement.The Tribunal, he said, had never asked itself the correct question: whether the contracts of employment of Mr Mills and Mr Poole had been terminated by the unilateral act of the Council, or whether they had been terminated by agreement between the parties.If they had asked the correct question, there was only one possible answer. That was that the employment had not been terminated by the Council's unilateral act. The employment was terminated because Mr Mill and Mr Poole applied for early retirement. Their applications were approved, and they then confirmed that they wished to proceed with early retirement. This, on no possible view, could be described as a "unilateral act by the Council."He says, in criticism of the Tribunal's reasoning, that:
"The Tribunal appears to have regarded the fact that the employees were under notice as precluding a finding that the termination of the employment was by reason of mutual agreement. However, the whole point of the agreement to take early retirement was that it prevented the notice of taking effect and thereby secured for the employees certain benefits which they would not have had if they had simply been dismissed by notice."
The reasoning of the Tribunal was inconsistent with the decision of Scott v Coalite Fuels Ltd . He emphasised the similarity between the two cases. Scott was a case where there was no dismissal, yet notices had been given and subsequent negotiations had lead to an election for early retirement. That was held to constitute a supervening agreement which impliedly operated to withdraw the notices of termination.He criticised the reasoning of the Tribunal that the applicants had "little choice" but to apply for an accept early retirement. He said that it was:
"... unclear why the Tribunal considered that this was legally relevant." It appeared that the Tribunal meant no more than as a matter of fact, to seek and accept early retirement represented a sensible course for Mr Mills and Mr Poole in the factual situation that had arisen. That may be so, but it is legally irrelevant. It does not alter the fact that Mr Mills and Mr Poole made a genuine choice and a genuine agreement with the Council, which agreement had genuinely different results from those which would have occurred had there merely been a dismissal in accordance with the notice."
He submitted that:
"... Mr Mills and Mr Poole had a very real choice. On the one hand, they could take early retirement, with an immediate lump sum and pension but no redundancy payment. On the other hand, they could continue to wait and see whether they obtained posts at the new college: if they succeeded, they would have jobs at a protected salary; if they failed, they would receive redundancy payments, but not the same terms as to immediate pension. They chose the former rather than the latter course. Mr Poole in fact negotiated the early retirement terms up from 50% to 100% enhancement, whilst Mr Mills explicitly stated when electing to proceed with his application for early retirement that it was subject to there being 100% enhancement."
They had both made their choice. They had both received and retained the benefits associated with that choice. They cannot now say that:

"... they are entitled to the benefit of a redundancy payment as well."

He submitted:
"At the time when they accepted early retirement, there clearly did remain some chance of Mr Mills and Mr Poole obtaining jobs at the new college. There is nothing in the evidence which would support a contrary conclusion."
In conclusion he said:"... Mr Mills and Mr Poole were willing for their employment to terminate by agreement because early retirement terms had emerged which were satisfactory to them, and so there was no room for a finding of dismissal."[ with was reached by the Tribunal. ]Mr Giffin presented a potent, clear argument. We are indebted to him for making the position clear by reference to authority. He has answered our questions in a helpful manner. Nevertheless, we are unpersuaded by his arguments that there was any error of law in the decision of this Tribunal. We agree with the reasoning of the Tribunal. The essential point can in fact be correctly summed in a few words indeed.Notices of dismissal were given. They were operative to terminate the contracts. The notices could not be withdrawn without the agreement or the consent of the recipients. No express agreement or consent was given by either of the recipients. The only argument that can be for withdrawal of the notice is therefore by reason of implication of consent. The argument that withdrawal of notices can be implied from an inconsistent agreement, does not work. In our view, the agreement to take early retirement is not necessarily inconsistent with a dismissal for redundancy. A redundancy payment is due to a person who is dismissed by reason of redundancy. Early retirement confers benefits on those who agree with their employer to retire earlier than their normal retirement age. It would be possible, as part of the package of early retirement for the Council, to have put before these employees a form which they signed saying, "We agree to the withdrawal of the Notices of Termination. We agree to abandon or waive any entitlement we have to redundancy payments." They were not asked to sign any such agreement. In our view, they did not, by entering into the agreement with relation to early retirement, surrender any benefits that they were entitled to by reason of being made redundant. In our view, the agreement reached with the Council was not inconsistent with the existence of the notices for redundancy. It was not inconsistent with there being a dismissal. They were, in our view, dismissed by reason of the notices given and never withdrawn, expressly or by implication.The Council take the consequences of having served a Notice of Termination and not having secured an express agreement by the parties to their withdrawal. In those circumstances, the decision of the Industrial Tribunal was correct. We dismiss the appeal.