MRS J NASH v GOVERNORS OF BINSTEAD PRIMARY SCHOOL [2003] UKEAT 0120_03_1410

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2003] UKEAT 0120_03_1410

Case No Appeal No. UKEAT/0120/03

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

MRS J NASHAPPELLANT

GOVERNORS OF BINSTEAD PRIMARY SCHOOLRESPONDENT

Before

His Honour Judge Richardson Dr Mohanty

Date 14 October 2003

[1]APPEARANCES For the Appellant MR DAVID CRAIG (of Counsel) Instructed by: Association of Teachers & Lecturers Legal Services Dept 7 Northumberland Street London WC2N 5DA For the Respondent MR GARY SELF (of Counsel) Instructed by: Isle of Wight Council County Hall Newport Isle of Wight PO30 1UD HIS HONOUR JUDGE RICHARDSON This is an appeal against a Decision of an Employment Tribunal sitting in Southampton for which Extended Reasons were promulgated on 5 November 2002. The Employment Tribunal rejected the Appellant's claim for unfair dismissal, holding that she was dismissed for redundancy, or if not redundancy for some other substantial reason, and that the dismissal was fair in all the circumstances.

[2]The Appellant contends that the Employment Tribunal erred in law in concluding that her dismissal was for redundancy or any other substantial reason, alternatively, the Appellant contends that the Employment Tribunal erred in law in concluding that the dismissal was fair in all the circumstances.

[3]At the outset of the hearing it was established that it is now common ground that the Employment Tribunal erred in law in concluding that the dismissal was for redundancy. It remains in issue between the parties whether the Employment Tribunal erred in any other respects and whether the matter should be concluded by upholding the Employment Tribunal's Decision, reversing it, or remitting it. The facts

[4]Binstead Primary School is near Ryde, on the Isle of Wight. It is funded by the Local Authority, the Isle of Wight Council. Its funding depends to a significant extent on the number of pupils on the school roll. Its budget is set in April each year and depends on the school roll in January. The Appellant was appointed to teach at Binstead Primary School, commencing on 1 September 2000. At the time when she was appointed, the Respondent already knew that the roll was falling. There was likely to be a reduction in school classes from ten to nine. The Appellant was offered and accepted a one-year contract, expressed to be temporary. The Employment Tribunal expressly found that the Appellant was made aware of this from the outset of her interview meeting; her appointment was confirmed by letter dated 27 June 2000 and subsequently by the Isle of Wight Council in a letter dated 17 July 2000, expressly stating that the appointment was temporary.

[5]In April 2001 the time came to consider the budget for the following school year. It was agreed to budget on the basis of 9.6 teachers. This involved losing some teaching capacity. It was then anticipated that a Mrs Harrison would be leaving. The following is minuted on 23 April 2001:

"It was agreed that the current teaching staff was very experienced and it would be appropriate to advertise for a newly qualified teacher, or recently qualified teacher."

Later in the same minute it is recorded:

"The existing temporary post would not be renewed and Mrs Nash was looking for another appointment."

The Head Teacher, Mrs Flynn informed the Appellant that it was unlikely that her post would be renewed. The Appellant began to look for other jobs with the full support of Mrs Flynn.

[6]On 2 July 2001, the Appellant was formally told her appointment would not be renewed. On 15 July 2001 she wrote asking for reasons. On 17 July Mrs Flynn replied:

"Firstly it was a temporary one year contract and I am told by governors that the temporary nature of it was made clear when you were offered the position. Secondly, for financial reasons and for strategic reasons whereby we are aware of a falling role situation, we had one vacancy for next year and needed to appoint a newly or recently qualified teacher, which is what we advertised for."

Precisely what occurred at the end of term is not recorded in the Employment Tribunal's Decision. We had been told that a Mrs Warren reduced the extent of her working week and that Mrs Harrison also reduced the extent of her working week without leaving. The Appellant's contract was not renewed. A permanent newly qualified teacher was recruited by way of replacement. The Employment Tribunal's Decision

[7]The Originating Application asserted unfair dismissal. It referred to Mrs Flynn's letter. It alleged that the Appellant had never been told the reasons for being on a temporary contract. The Employment Tribunal, as we have seen, preferred the evidence given on behalf of the Respondent on this point. The Notice of Appearance does not put a label on the reason for dismissal, but we are told that the Respondent's advocate submitted that the reason was "some other substantial reason". The Employment Tribunal raised the question of redundancy; the Respondent's advocate did not change position.

[8]The Employment Tribunal's conclusions begin at paragraph 13 of its Extended Reasons. The Employment Tribunal said:

"By reason of our findings in this matter we are satisfied that that reason was that that reason was that the Respondent no longer required the services of a full time teacher to continue being employed by them."

The Employment Tribunal rejected the suggestion that the reason for dismissal was purely and simply the expiry of a fixed-term contract. The Employment Tribunal in paragraph 14 concluded that the reason amounted to redundancy. In paragraph 15 they said that had they been in any doubt as to the set of facts relied on by the Respondent not constituting a proper redundancy, they would have no difficulty in concluding by way of alternative that "the same facts" would constitute some other substantial reason. The finding of redundancy

[9]It is now conceded that the Employment Tribunal erred in law in concluding that the reason was redundancy. It is however worth stating briefly why that was. It is clear law that there are two essential aspects to considering whether a dismissal is for redundancy.

[10]The first question relates to the requirements of the business. The employer must show that the requirements of the business for employees to carry out work of a particular kind in the place where the employee was employed have ceased or diminished or were expected to cease or diminish. Here, the school roll was falling, the school was cutting down from ten classes to nine, and cutting down its total complement of teachers. The requirement for teachers was expected to diminish. But it does not necessarily follow from that finding that the requirements of the business were the reason for dismissal. For example, natural wastage may lead to an anticipated reduction of staff in any event. So the employer must also secondly show that the dismissal was wholly or mainly attributable to the diminishing requirements.

[11]Here the position was that if the Appellant had been retained and no one else recruited, the school would have had its complement of teachers. She was a full time teacher, she was replaced by a full time teacher. In those circumstances it is not all obvious why the Employment Tribunal should have considered that the diminishing requirements were the reason for the dismissal of the Appellant, especially since the Respondent was not arguing that the reason it gave came within the rubric of redundancy. It is particularly difficult to understand how the Employment Tribunal came to say, in paragraph 13, that the reason for termination was that the Respondent no longer required the services of a full time teacher to continue being employed by them. This was simply wrong. It follows from that that when the Employment Tribunal said, in paragraph 14 of its Decision, that the reason amounted to redundancy, it fell into error. Redundancy was not the proper labelling of the set of facts or reasons in the mind of the Respondent which prompted them to dismiss the Appellant, contrary to what is said at the end of paragraph 14.

[12]Moreover the error in paragraph 13 carried through to paragraph 15, for the Employment Tribunal said that "the same facts" would constitute some other substantial reason. Therefore there is a significant flaw in the reasoning of the Employment Tribunal throughout paragraphs 13 to 15. Some other substantial reason

[13]The real question, the one which has exercised us most in this case, is whether the Employment Tribunal's conclusions in paragraph 16 are sufficient to enable its decision to be upheld on the one hand, or whether one can clearly see on the other hand, that there cannot have been a substantial reason and that the claim for unfair dismissal must be allowed. In paragraph 16 the Employment Tribunal, under the rubric of considering the reasonableness of the decision of the Respondent, said:

"It was not in dispute between the parties that the rationale behind the offering of a fixed term contract was for a genuine purpose namely to fill the gap for an academic year for the need of a full time teacher before the anticipated drop in pupil roll and the attendant reduction of the number of classes. It is further accepted that the purpose for the offering of a fixed term contract was known to the employee prior to her acceptance. ……Loss in the school roll, reduction in the number of classes and the attendant reduction in funding had arisen, and changes needed to be made. Given the need and the entitlement for a governing body to arrange its affairs in order to keep within budget, they were entitled to conclude as we find that they did, that continuing with the Applicant's employment on her higher Grade Scale was not the best utilisation of their resources, and that employing a newly qualified teacher, together with a reduction in the hours of an existing teacher (Mrs Harrison) would meet reasonably the needs and requirements of the Respondent."

This paragraph of the Decision, although set out under the rubric of reasonableness, in fact contains a finding of fact which is different from, indeed inconsistent with, the finding of fact in paragraph 13. We think this finding of fact is very much closer to what follows from its earlier findings in paragraph 6 of the Decision. However, Mr Self, for the Respondent, has explained to us that the finding is not quite correct in the way it deals with the reasoning of the Respondent so far as, in particular, Mrs Harrison is concerned.

[14]On behalf of the Appellant Mr Craig submits that a reading of the Employment Tribunal's Decision as a whole, including paragraph 16, demonstrates that there was no substantial reason in accordance with law. He relies particularly on North Yorkshire County Council - Fay

[1986] ICR 133

[15]It is convenient, however, first to go to Terry -v- East Sussex County Council

[1976] ICR 536

. There the employee, a lecturer, was employed under a fixed term contract of one year which expired on 31 August 1975 and was not renewed. It was held that the expiry and non-renewal of a contract of employment for a fixed term might, but did not necessarily, constitute some other substantial reason. The Industrial Tribunal had in that case given insufficient reasons for its conclusions. Phillips J. said, at pages 541 to 542:

"We think it would be useful to add some observations about the considerations proper to be taken into account in such a case as the present ….. when considering whether "some other substantial reason" has been shown.. We think that some guidance can be obtained from the kind of requirement which is laid down in section 33 and section 51 of the Employment Protection Act 1975, though we should deprecate those sections being used as though they formed part of the Act of 1974, or a habit growing up of those sections being taken as laying down a specific requirement applicable to all case. What an industrial tribunal must do is to ensure that the case is a genuine one where an employee has to his own knowledge been employed for a particular period, or a particular job, on a temporary basis. We accept Mr Gibson's suggestion that there may be a wide scale in what can ordinarily be described as "temporary" jobs. At one end is the plain case where a person, for example, a school teacher, is employed to fill a gap where somebody is absent, and it is made plain at the moment of engagement that he is only being employed during the period of the absence of the person he is temporarily replacing. At the other end is the case of the employee who is engaged on a short fixed-term contract, perhaps described as "temporary" in an employment where as a general rule the employees are engaged on a weekly basis and where there is no particular end served by the employment being arranged in the manner in which it has been. In between, there will be every possible variety of case. We would not wish the actual words which we have used in this judgment, for the purpose of indicating the matters which we have in mind, to be taken in other cases as a touchstone, as though they were to be found in an Act of Parliament laying down the test. They are merely indications of the sort of points which an industrial tribunal should have in mind. The great thing is to make sure that the case is a genuine one, and for industrial tribunals to hold the balance. On the one hand, employers who have a genuine need for a fixed-term employment, which can be seen from the outset not to be ongoing, need to be protected. On the other hand, employees have to be protected against being deprived of their rights through ordinary employments being dressed up in the form of temporary fixed-term contracts. What we are saying in this judgment is that there is no magic about fixed-term contracts; that they are not, except where otherwise provided, excluded from the provisions of the Act, and that the rights of those employed under them are to be judged by the good sense of industrial tribunals, applying the tests prescribed by paragraph 6 of the Act of 1974"

[16]In Fay -v- North Yorkshire County Council

[1986] ICR 133

, the employee was employed as a teacher under a series of temporary short-term fixed contracts from September 1981 to 31 August 1983. Her last contact was not renewed. A teacher from another school was re-allocated to her school. The Industrial Tribunal held there had been neither a redundancy nor, as the employee's dismissal had been for some other substantial reason, an unfair dismissal.

[17]The Court of Appeal upheld the Industrial Tribunal's decision. Lord Justice Ackner, at page 141, quoted with approval the passage we have read from the judgment of Mr Justice Phillips. Lord Justice Browne-Wilkinson at page 143 said:

"…… merely to say that this was a fixed term contract does not by itself establish that there was a substantial reason for dismissal within section 57(1) [as it then was]. But in my judgment, if it is shown that the fixed term contract was adopted for a genuine purpose, and that fact was known to the employee, and it is also known that the specific purpose for which the fixed term contract was adopted has ceased to be applicable, then for the purpose of section 57, those facts are capable of constituting some other substantial reason"

[18]Mr Craig submits that, insofar as there was a need to "lose" a teacher, that had already been achieved. The need to lose a teacher by dismissing the Appellant no longer existed. The purpose for which the Appellant was appointed, that is to say, teaching, remained. This is evident, he says, from the fact that the Respondent intended at the time it dismissed her to appoint another full time teacher. While he accepts that the appointment was temporary, he says that the purpose of the temporary appointment still remained; the need to lose a teacher no longer existed, therefore, he says, he comes squarely within the words of Lord Justice Browne-Wilkinson. He submits that it is not shown in this case that the specific purpose for which the fixed term contract was adopted has ceased to be applicable.

[19]We consider that this is a case in which it is open to a properly directed Employment Tribunal to find that there is some other substantial reason within the meaning of the 1996 Act. The Employment Tribunal's precise findings on this issue are set out within paragraph 6. At paragraph 6(b) they record that the Respondent determined that they would advertise for a teacher who would be engaged on a fixed-term contract for a year in order to meet the immediate need for a replacement, but to have regard to the school's needs and financial resources for the following year. They found that she was made aware from the outset of the meeting that the proposed post was for a fixed-term of one year and that she was informed as to the reason, namely the anticipated reduction in the school roll and its effect upon the financial resources available to the school, and the likelihood that the school classes would be reduced from ten to nine.

[20]Mr Craig's submission is that the purpose of the Appellant's appointment automatically disappeared at the moment when there was no need to lose a teacher. But the Employment Tribunal drew the purpose of the appointment more widely in paragraph 6(b) and in paragraph 16. In our judgment an Employment Tribunal properly directing itself is entitled to conclude that the Respondent had some other substantial reason for dismissal. We are fortified in this conclusion for the following reason: suppose the Appellant's employment had not been temporary; suppose that they had dismissed her because there were compelling budgetary reasons for employing someone at a lower salary. Mr Craig, correctly in our judgment, concedes that even this potentially could be some other substantial reason . It is therefore open to the Employment Tribunal in this case to find that there was some other substantial reason.

[21]The next question is whether the Employment Tribunal has approached the question correctly in paragraphs 15 to 18. We have reached the conclusion in this case that we simply cannot safely tell how the plain error in paragraph 13 has carried through to the reasoning of the Tribunal in paragraphs 16 to 18. It seems to have carried through certainly as far as paragraph 15, where the Employment Tribunal has found that "the same facts" would constitute some other substantial reason. Paragraph 16 contains, as we have already said, a different formulation of the Respondent's reason which is, in our judgment, very much closer to the reality, but it is not possible to tell with certainty how the Employment Tribunal, having gone wrong in paragraph 13, has approached the matter in paragraph 16. We have the lurking suspicion that in paragraph 16 it may still have been wholly or partly under the influence of the errors that were made in the earlier paragraphs.

[22]We have reached the conclusion that the only safe course is to remit the matter to a fresh Employment Tribunal. It will not be open to the Employment Tribunal to conclude that this was a dismissal for redundancy. It will be open to the Employment Tribunal to consider whether there was some other substantial reason, and if so whether that reason is such that section 98(4) can be applied and the dismissal found to be fair. These will be matters for the fresh Employment Tribunal to consider. We heard submissions from Mr Craig on behalf of the Appellant on the issue of fairness, each of which was answered on behalf of the Respondent by Mr Self. If the Employment Tribunal concludes that there was a substantial reason for dismissal it will, under section 98(4), have to consider whether the decision of the Respondent was a reasonable one in all the circumstances, having regard to equity and the substantial merits of the case. It will no doubt take into account the purpose of the Appellant's appointment, its temporary nature, and the circumstances during that summer term. It will have regard to the issues of warning, consultation and selection on which we heard submissions on behalf of each side.

[23]The matter will be entirely at large for the Employment Tribunal and we should not be taken as indicating one way or the other our view as to whether the unfair dismissal application should succeed. It is sufficient for us to say that there is an error of law in the current Decision that we cannot with certainty say how that error of law carries through into its reasoning in paragraphs 16 to 18, and the matter must be remitted to a fresh Tribunal for its decision.