Bratko v Beloit Walmsley Ltd [1995] UKEAT 798_94_1109

EAT
Bratko v Beloit Walmsley Ltd
[1995] UKEAT 798_94_1109 · 1995-09-11

JUDGE HICKS Q.C. :

The appellant, Mr Bratko, was employed as a furnaceman by the respondents, Beloit Walmsley Limited, since June 1985. The Industrial Tribunal in dealing with the matter and giving the reasons which are attacked by the present appeal, stated the relevant facts and their conclusions as follows:
"3. The issue before the Tribunal was whether it had jurisdiction to hear the applicant's complaint by reason of the provisions of Section 64(1(b)(i), of the Employment Protection (Consolidation) Act 1978, namely whether he had attained, on or before the effective date of termination of his employment, the normal retiring age.
4. It was common ground that the effective date of termination of the applicant's employment was 16 April 1993. The applicant's date of birth was 2 March 1929 and accordingly at the effective date of termination, the applicant had attained his 64th birthday.5. It was conceded on behalf of the respondents that, prior to 31 March 1992, both the contractual age and the normal age of retirement for all the respondents' employees was 65. During the latter part of 1991 the respondents had been negotiating with the employees' trade union representatives with a view to reducing by agreement the normal retirement age. Those negotiations did not result in any agreement.6. By written notice dated 7 October 1991 the respondents notified all employees as follows:-
"7.5 With effect from 31st March 1992 the retirement age for all employee of the company is reduced from 65 years to 64 years.
7.6 All employees will be given formal notice (which is longer than necessary under the Employment Protection Act) of the change in the terms and conditions of employment stated in 7.5."7. Further negotiations took place between the respondents and the trade union representatives thereafter but still no agreement was reached.8. On 9 December 1991 a letter was sent to all employees which was headed "Change to retirement date". The letter repeated the contents of the notice dated 7 October 1991, namely that it intended to reduce the retirement age for all employees from 65 to 64 with effect from 31 March 1992. The concluding paragraph of the letter reads as follows:-

"This letter gives you individual notice of the change"

9. The Tribunal was referred to various authorities in the course of submission on behalf of the parties from which the Tribunal drew the unanimous conclusion that the test of what was the normal retiring age required the Tribunal to ascertain what would be the reasonable expectation of employees at the relevant time and referred to the age at which employees of all age groups could reasonably expect to retire.10. In addition to the documentation before the Tribunal referred to above, the Tribunal were impressed by the evidence of Mr Crausby given on behalf of the applicant. He stated that, although he felt that the respondents had not exhausted all procedures which he felt should have been utilised, the workforce was, or should have been, under no illusion but that, at the latest by 5 March 1993 (when the company rejected further arguments advanced by Union representatives), the normal retiring age was 64.11. The Tribunal is accordingly of the unanimous view that the applicant, on or before the effective date of termination of his employment, expected or ought reasonably to have expected that 64 was the normal retiring age.12. Accordingly, the Tribunal does not have jurisdiction to hear the applicant's complaint."Although it is the employee who appeals, it is crucial to his success to defend the Industrial Tribunals' assumption that the contractual age of retirement for all the respondent's employees was 65, because it is conceded on his behalf by Mr Carr, in our view rightly, that if a normal retirement age of 65 had prevailed only on a non-contractual basis, the employers would have been entitled to reduce it unilaterally, and that the communications which they made were effective for that purpose. That is the significance of a cross-appeal of the respondent employers against the statement in paragraph 5 of the Industrial Tribunal's reasons, that:
"5. It was conceded on behalf of the respondents that, prior to 31 March 1992, ... the contractual age ... of retirement for all the respondents' employees was 65."
the ground for that cross-appeal being that no such concession was made.That cross-appeal, however, is not advanced independently and in any event, but only as an alternative to the respondent's primary case, that even if there was a contractual age of retirement the Industrial Tribunal was right in law in holding, in effect, that the normal retirement age could be reduced by the employers unilaterally without termination of the contract. The applicant's principal ground of appeal is, in substance, the denial of that proposition.We propose to deal with the appeal first, and then, if the point arises, with the cross- appeal.Section 64(1)(b) of the Employment Protection (Consolidation) Act 1978 reads:
"(1) ... section 54 [ which gives a right not to be unfairly dismissed ] does not apply to the dismissal of an employee from any employment if the employee-
...(b) attained the following age on or before the effective date of termination, that is to say- (i) if in the undertaking in which he was employed there was a normal retiring age for an employee holding the position which he held and the age was the same whether the employee holding that position was a man or a woman, that normal retiring age; and

(ii) in any other case, that age of sixty-five."

On that face of it the normal retirement age, under that section, raises quite a separate question from the contractual retirement age, if any, which is not mentioned. However, by Section 153(1) of the Act, which is the interpretation section:

"(1) In this Act, except so far as the context requires-

...
"position", in relation to an employee, means the following matters taken as a whole, that is to say, his status as an employee, the nature of his work and his terms and conditions of employment; ..."
It may well be that it is because of that definition, incorporating the reference to "terms and conditions of employment", that the reported decisions establish a link between the contractual retirement age, if any, and the normal reinterment age for the purposes of the statute. It is not in dispute that the nature of that link was authoritatively stated by the House of Lords in the case of Waite v GCHQ [1983] ICR 653 . At page 662 D Lord Fraser of Tullybelton said as follows:
" I therefore reject the view [ and this I say in passing is what had been the subject of the previous passage in his speech and had been one of the submissions made in the House of Lords ] that the contractual retiring age conclusively fixes the normal retiring age. [ The emphasis clearly being on the word `conclusively'. And he continues: ] I accept that where there is a contractual retiring age, applicable to all, or nearly all, the employees holding the position which the appellant employee held, there is a presumption that the contractual retiring age is the normal retiring age for the group. But it is a presumption which, in my opinion, can be rebutted by evidence that there is in practice some higher age at which employees holding the position are regularly retired, and which they have reasonably come to regard as their normal retiring age. Having regard to the social policy which seems to underlie the Act - namely the policy of securing fair treatment, as regards compulsory retirement, as between different employees holding the same position -the expression "normal retiring age" conveys the idea of an age at which employees in the group can reasonably expect to be compelled to retire, unless there is some special reason in a particular case for a different age to apply. "Normal" in this context is not a mere synonym for "usual." The word "usual" suggests a purely statistical approach by ascertaining the age at which the majority of employees actually retire, without regard to whether some of them may have been retained in office until a higher age for special reasons - such as a temporary shortage of employees with a particular skill, or a temporary glut of work, or personal consideration for an employee who has not sufficient reckonable service to qualify for a full pension. The proper test is in my view not merely statistical. It is to ascertain what would be the reasonable expectation or understanding of the employees holding that position at the relevant time. The contractual retirement age will prima facie be the normal, but it may be displaced by evidence that it is regularly departed from in practice. The evidence may show that the contractual retirement age has been superseded by some definite higher age, and if so, that will have become the normal retiring age. Or the evidence may show merely that the contractual retiring age has been abandoned and that employees retire at a variety of higher ages. In that case there will no normal retiring age and the statutory alternatives of 65 for a man and 60 for a woman will apply."
(I add that the differentiation between men and women had, of course, been abolished by the date of the amendment of the Act from which I read the current provision.)The appellant employee here submits that that contemplates only the possibility of a normal retirement age higher than the contractual retirement age, and not one lower. The employer submits that the change can be in either direction. Each party relies principally on one of two decisions of the Court of Appeal both reported in 1992 Industrial Cases Reports.The appellant's Court of Appeal case is Brooks and Others v British Telecommunications PLC [1992] ICR 414. The point at issue there was whether the reasonable expectation to be considered was that of all the employees in the relevant category, as the Court of Appeal held to be the case, or only that of those approaching retirement age at the relevant time, and that is the issue to which the judgment of Balcombe, J. is addressed, but those of the other two members of the Court of Appeal contained passages on the point in dispute before us. Butler-Sloss, LJ. referred to the case of Hughes v DHSS , relied on by the appellants in Brooks and after summarising its facts, continued at page 430F of the report:
"... As I understand the issue in Hughes , it was not affected by a decision whether the normal retiring age for the relevant group was in fact, 60 or 61.
That, however, is the heart of the present appeal. It is agreed in the present case that the contractual retiring age of all the applicants was 60, and consequently the normal retiring age would be 60, unless rebutted by evidence. There was no staging of retirement as in Hughes. It is open to an employer to change his policy for the normal retiring age, and so long as it does not breach the contractual retiring age such a policy can change overnight. It requires, of course, properly to be communicated to the employees affected before it can have effect, but once communicated, I see no reason why the effect should not be immediate. When it takes effect, it consequently alters the previous expectation that the group had of being retained in employment until a higher age. ..."Then Butler-Sloss, LJ. goes on to deal implicitly with exceptions where the change is a sham or not a genuine intention of the employers.Sir Christopher Slade said at page 432 G:
" A "normal retiring age" is an aspect of an employer's employment policy: see Hughes [1984] I.C.R. 557, 581 per Sir John Donaldson M.R. Provided only that such a course involves no breach of his employees' contractual rights under their contracts of employment, it is fully open to an employer to introduce, by a change in administrative policy, a new specific age which is thenceforth to constitute the "normal retiring age" for his employees or a group of them for the purpose of section 64(1)(b) of the Employment Protection (Consolidation) Act 1978. Provided that any such change is properly communicated to the employees affected, it is capable of having immediate effect, even if it destroys their previous expectation of being retained in employment until a higher age. The passage cited by Balcombe L.J. from the speech of Lord Diplock in Hughes [1985] I.C.R. 419, 430, makes it clear."
The respondent's case is that of Barber v Thames Television PLC [1992] ICR 661 . The passages relied upon by Mr Rigby were as follows. First of all at page 665D:

"... In Mr Barber's case his contractual retirement age was 65. ..."

At page 666E:
"... Thames say the normal retirement age for Mr Barber at the time his employment was terminated was 64 by virtue of the letter of 26 October 1987."
(That being a letter which the employers had written to a group of supervisors including the appellant Mr Barber.)A little later at letter F:
"...

(b) "

(I interpose that the question what group the appellant belonged to was one of the central issues in that appeal, following the terminology used by Lord Fraser in Waites , where the statutory word "position" is effectively to finding a group of persons in the same position.)Then at page 669F Mr Rigby relied on this passage:
" We have, therefore, as I see it, the position that terms as to retirement naturally fall within the phrase "terms and conditions of employment." One then has to look at the interrelation of terms and conditions which are contractual and terms and conditions which are taken into account in arriving at the normal retirement age which is the expectation of the person concerned and not necessarily the same as the contractual expectation. That was dealt with by Lord Fraser of Tullybelton in giving the leading speech in the House of Lords in Waite v. Government Communications Headquarters [1983] I.C.R. 653, to which I have already referred, and I do not need to read at length from his speech. He shows that where there is for all the employees concerned a contractual retirement age which is regularly applied, that is likely to give the normal retirement age. But it may be the case that because the contractual retirement age has not been applied generally, a different expectation has arisen and on the fact it will appear that some other age, greater or lesser, will be the normal retirement age."
I interpose that in that summary of Waite Dillon, LJ. from whose judgment I am reading, in using the words "greater or lesser" seems to be interpreting rather than directly summarising the speech, because Lord Fraser refers directly only to the raising of the retirement age.At page 671D Dillon, LJ. said:
"... It is not in doubt that if Thames had wanted to do so they could by the 1978 letter simply have brought down the normal retirement age for all employees, from whatever it had been before, to 60, be they male or female."
And at page 673, in the judgment of Staughton, LJ. at letter E, Mr Rigby relied on this passage:
"... They [ that is the employers ] might have in 1987 have reduced the retiring age for them to 60 forthwith. [ The "them" being a reference to Mr Barber and other senior supervisors ]. I say nothing as to whether that would have been a breach of contract, for we are not concerned with any contractual remedy. If the employers had taken that course, there would have been no question of Mr Barber of having any remedy under section 54 of the Act. The normal retiring age for everybody in the company would have been 60. ..."
Now each party says that the passage relied upon by the other obiter dicta it being implicit, as is clearly the case, that the passages which I have read take, on the face of it, opposing views as to the consequences of the decision of the House of Lords in Waites , namely, as to whether it contemplates only a raising of the contractual retirement age or one that either raises or reduces it or as expressed more accurately in the passages from Brooks , one which is or is not a breach of contract. As I have said, each party says that the passages relied on by the other are obiter dicta , and we accept that that is so, in Brooks because it was held that the changes made by the employers were effective, so provisos as to circumstances in which they would not have been effective were not necessary to the decision, in Barber because it is clear from passages to which Mr Carr referred us (and which I need not quote) that the appellant did not in fact rely on his contract, which being one with a retirement age of 65 would have defeated his claim, but on the absence of any common contractual retirement age which would have established the normal retirement age for the relevant group of employees, so that, on his submission, there was no normal retirement age, and the provisions of Section 64(1)(b)(ii) would have applied to produce an age of 65.(I should record that the case of Brooks was argued on 15th-17th October 1991 and judgment was delivered, plainly as reserved judgments, on 27th November 1991. It was reported in the Industrial Relations Law Reports in February 1992, but was not apparently referred to in argument or in the judgments in the case of Barber , which was heard on 28th and 29th April 1992, judgment being delivered on the latter date.)In those circumstances, as we understand it, neither Brooks nor Barber binds us, and we have to decide which conclusion we follow. In our view, the reasoning in Brooks is to be preferred. First, it being established by Waite that the contractual retirement age for employees in the relevant position, establishes a presumption as to the normal retirement age, it would be surprising in principle if the employer could change the normal retirement age to the disadvantage of the employee without taking the steps necessary to obtain a change in the contractual retirement age, typically by either a consentual variation or by terminating the contracts by lawful notice and offering fresh ones. Secondly, we do not believe it to be coincidental or unadvised that Lord Fraser four times uses the word "higher" in the passage from his speech which I have quoted. It is true, as Mr Rigby points out, that in Waite it was an increase which was in question, but Lord Fraser, in our understanding, is not dealing merely with the facts of Waites , but with the policy of the Act. In our view, that informs the way in which he expresses the possibility of a departure from the contractual retirement age. Mr Rigby also submits, on the level of principle, that a raising of the contractual retirement age may be as unwelcome to employees as a reduction. It is true that in the abstract any attempted unilateral change of the terms of a contract may be a breach. It is also true that an attempted upward change in pensionable age may, quite clearly, be disadvantageous to employees and resisted by them for that reason, and Mr Rigby accepted that that was the situation which he had in mind. But pension rights must be distinguished from retirement age, although as a matter of law and fact they are of course often very closely related. Whatever the precise effect of a contractual provision for retirement age, and leaving aside the separate case of a fixed-term contract, it seems clear to us that in industrial reality a rise in the retirement age is for the benefit of the employee alone, since it postpones the date on which the employer is entitled to use age as a sufficient contractual justification for termination, while leaving the employee free, as always, to leave at any time on due notice. We repeat that this does not affect the question, not dealt with by the evidence in this case, as to whether an attempted rise in pensionable age would be a breach.While therefore the Court of Appeal in Brooks , on the facts and argument before it, put a legitimate change perhaps more carefully and accurately in terms of the absence of a breach of contract, it is perfectly understandable that in Waites Lord Fraser put it in terms, straightforwardly, of a rise in retirement age and that in the present case it is the attempted reduction to which the unions in terms of negotiation, and the appellant himself in terms of this application, objected.In our view therefore the Industrial Tribunal erred in law in finding that the action of the employers, without reducing the contractual retirement age by agreement or in any other lawful and effective way, to purport to reduce the normal retirement age below the contractual retirement age was effective for that purpose.It is therefore necessary to turn to the cross-appeal. Mr Carr does not, as we understand it, submit that there was the concession by the respondents which the Industrial Tribunal supposed, and we certainly find that there was not. That being so, both parties agree that on the basis of our conclusion as to the effect of the result of the appeal the application must be remitted, unless Mr Carr succeeds in his submission that this is one of the cases where we can ourselves reach a finding of fact that there was a contractual retirement age of 65 on the basis that no Industrial Tribunal could on the evidence have reached any other conclusion. We need say only that we do not consider that we are in a position to reach that conclusion, the test required to be met being a very high one.We therefore allow the appeal and remit the application to the Industrial Tribunal for a re-hearing. There are a number of considerations to be considered on each side as to whether that remission should be to the same Industrial Tribunal or to a differently constituted one. We need say only that we have carefully considered the submissions of the parties on that point and conclude that in the circumstances of the present case the better course would be to have a newly constituted Tribunal.We add one comment, without in any way wishing to interfere with the exercise by the Industrial Tribunal or its officers of their responsibilities in listing the re-hearing. It occurs to us that one possibility that they may wish to consider is to have a single appointment for the re-hearing of the jurisdiction point and, if it is decided in favour of the applicant, the hearing of the substantive application.