ROYAL AND SUN ALLIANCE INSURANCE GROUP PLC v MR.B.T.PAYNE [2005] UKEAT 0122_05_0108

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2005] UKEAT 0122_05_0108Case No Appeal No UKEAT/0122/05Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
ROYAL AND SUN ALLIANCE INSURANCE GROUP PLCAPPELLANTMR.B.T.PAYNERESPONDENT
Before
Mr Justice Silber MrsLord Davies of CoityDate 1 August 2005
[1]APPEARANCES For The Appellants MR NIGEL J GRUNDY (of Counsel) Instructed by: Addleshaw Goddard Solicitors 100 Babirolli Square Manchester M2 3AB For The Respondent MS JOANNE DUNLOP (of Counsel) Instructed by: Merseyside Law 32-36, Hanover Street Liverpool L1 4LN SUMMARY Employee dismissed on day before 62 nd birthday. He claims that he was wrongfully dismissed because his contractual retirement age ("CRA") was 65. The Employment Tribunal found in employee's favour and rejected employer's contention that his CRA had been reduced to 62. Issues on appeal were whether employee's CRA was 62 because(a) it was an implied term that the CRA would be determined in the light of the employer's pension policy and(b) the employee's employment contract was varied so as to reduce his contractual retirement age to 62, and in particular whether the employee accepted by conduct the employers' attempt to reduce the employee's contractual retirement age to 62. Employment Appeal Tribunal decided unanimously to dismiss the appeal, as the employee's contractual retirement age was 65. Employee also claims that he was unfairly dismissed contending that his "normal retiring age" was 65 while his employers argued that his normal retiring age was 62 so that he was precluded by section 109 of the Employment Protection Act 1996 from claiming that he was unfairly dismissed. The Employment Tribunal found in the employee's favour on the unfair dismissal claim. The issues on appeal were (a) whether there can be a normal retiring age lower than contractual retirement age; and (b) what was the normal retiring age for the employee. The Employment Appeal Tribunal decided unanimously first that there cannot be a normal retiring age of a group lower than contractual retirement age and second to dismiss the appeal, as the employee's normal retirement age was 65. THE HONOURABLE MR JUSTICE SILBER Introduction Mr. Brian Payne ("the Respondent") was employed by Royal Insurance ("the Royal") and then by Royal and Sun Insurance Group Plc ("the Appellants") from 4 March 1974 until 7 April 2004. The respondent commenced proceedings in the Employment Tribunal claiming that he had been wrongfully dismissed, that he had been unfairly dismissed and that he had been the subject of unlawful indirect sex discrimination.[2]In its decision issued on 18 February 2005, the Employment Tribunal found that(a) the appellants had acted in breach of the respondent's contact of employment;(b) the appellants had unfairly dismissed the respondent; and(c) the respondent's claim for unlawful sex discrimination failed and had to be dismissed. The appellants appeal against decisions (a) and (b) while the respondent does not challenge decision (c) and we need say no more about it. The Issues[3]The basis of the respondent's claim (a) (which was that he had been wrongfully dismissed), is that there was a term of his contract of employment latterly with the appellants that his contractual retirement age ("CRA") was 65 years of age and that the respondents had acted in breach of this contract by dismissing the respondent with effect from 7 April 2004, which was the day before his 62 nd birthday. The Employment Tribunal accepted this contention but the appellants now challenge it on the basis that the CRA for the respondent was the day before his 62 nd birthday or his 62nd birthday so that the appellants were entitled to terminate his contract of employment when they did. Nothing turns on whether the respondent's CRA was his 62nd birthday or the day before and so we will regard the appellant's case as being that the respondent had to retire on his CRA, which was his 62nd birthday.[4]The claim for unfair dismissal was based on the contention that the respondent was dismissed and that the appellants could not establish a fair reason for the dismissal of the respondent. The Employment Tribunal considered that this contention was correct and so upheld the claim for unfair dismissal. The appellants submit that the claim for unfair dismissal should have been dismissed because first that 62 years of age was the appropriate normal retiring age ("the NRA") for the respondent and second that the respondent was therefore precluded from making a claim for unfair dismissal because of the provisions of section 109 of the Employment Rights Act 1996 ("the ERA"). The appellants originally also contended that even if that submission is incorrect and that the respondent could bring a claim for unfair dismissal, it must fail because it had proved a fair reason for the dismissal, namely "some other substantial reason" as specified in section 98 (2) of the ERA. During the appeal, this contention was abandoned.[5]So the issues raised on this appeal are: -(i) Was the respondent wrongly dismissed before his CRA? (Issue A)(ii) Was the respondent unfairly dismissed before his NRA? (Issue B)[6]Before dealing with the issues, it would be appropriate if we set out some of the important facts found by the Employment Tribunal so that the submissions of counsel can then be understood. The Facts found by the Employment Tribunal[7]The respondent was employed firstly by the Royal and then by the appellants from 4 March 1974 until 7 April 2004 as a semi-skilled employee in building maintenance.[8]The Royal had a pension scheme for its employees and when the respondent began work for the Royal in 1974, the Pension Deed governing pension entitlement was a deed dated 1 October 1969, which provided at clause 8 (a) that retirement would be on the attainment of 65 years for a man and 60 years for a woman. This provision was repeated in clause 1 of the Trust Deed dated 6 November 1972, which was a supplementary trust deed.[9]In October 1978, a circular was issued by the Royal, which dealt with a review of pension entitlement. Male members of staff could then elect to choose a retirement date of up to the age of 65. The earliest date on which a male member of staff could retire would be 62 years of age. The respondent elected to retire at 65. The Employment Tribunal noted that in its amended Grounds of Resistance, the appellants accepted that the introduction of a retirement age of 62 in October 1995 amounted to a variation of the respondent's contract of employment but on appeal this interpretation has been challenged.[10]On 1 September 1980, the trust deed was changed again so as to reduce the retirement age for men joining the Royal after 1 April 1978 to 62 years of age but the Employment Tribunal noted the additional words."but in the case of members in the service prior to the prescribed date [1 April 1978] shall mean such other ages as have been agreed between them and the employer". Women continued to be required to retire at 60.[11]On 17 May 1990 the European Court of Justice ("the ECJ") held amongst other things, in Barber v Guardian Royal Exchange [1990] 1CR 616 that a pension paid under a contracted-out private occupational scheme fell within the scope of Article 141 (then Article 119) of the Treaty of Rome and thus equalisation of private pension schemes was required because Article 141 had a direct effect on private as well as public parties. The Employment Tribunal acknowledged that the Royal like so many other employers in the UK and Europe had then to equalise its pension schemes as between men and women. As a result of the Barber decision, the Royal altered its pension scheme on 25 October 1995 so as to make the age at which all of its employees of both sexes became eligible to a pension 62 years of age. So women who had previously retired at 60 years of age were given the option to retire at 62 and this right was also extended to male employees. There was no evidence of consultation about this change or any attempt to obtain employees individual agreement to the change.[12]The respondent wanted to work beyond the age of 62. He spoke to his supervisor in 1995 and he explained that he objected to the change. He was told that nothing could be done because it was a European Directive. His trade union representative was similarly discouraging. The respondent said nothing to his employers about his objections, preferring not to "rock the boat"[13]This change of retirement dates was notified to staff by a Circular dated 27 September 1995. An earlier note dated 20 September 1995 stated that it was not possible to "red circle" past arrangements and so equalisation would take place with effect from 1 October 1995. The note did, however, state that the pension scheme provided for late retirement after the normal pension date with the agreement of the member and of the Royal. Employees were told that the guidelines would be issued on the situations in which the Royal would allow retirement no later than 62.[14]The Employment Tribunal was referred to documents, which were headed "Retirement Policy" and the Tribunal was told that this had been in practice since 1995 although there was no documentation to support that practice. The Tribunal noted that the "policy" was revised in February 2004. The criteria that had to be met before applications to postpone retirement would be granted were: - "A minimum of 6 months notice in writing must be given to your manager to request working beyond the Normal Retirement Age (Members of the SAL (Sun Alliance) Pension Scheme should refer to the rules of their scheme for the extended notice required to retain eligibility for the special terms applicable under the scheme) The amended retirement date should be stated. Your manager will discuss the issue with their HR Business Partner Requests will be made using the following guidelines: There must be a strong business rationale for retaining the individual. There must be budget provision. The employee must be consistently performing to the standards required.# The employee's attendance record must be good. There should be no long-term health problems. The job must not be a key development role. The employee must be demonstratably the strongest candidate for the role. If all criteria are met, the request can be granted with the written approval of the HR Business Partner Directive".[15]In 1996, the Royal merged with the Sun Alliance Insurance Group (" Sun Alliance") and they together formed the appellants. The Sun Alliance and the Royal retained their respective pension scheme provisions. Under the Sun Alliance Pension Scheme, employees could opt to retire at any time between 60 and 65 years of age, although the new retiring age for new employees was 62. In January 1998, the respondent was sent an employment schedule containing details of his employment with the appellants, which was to be read in conjunction with booklets entitled "Key Features" and "Further Details of Looking to the Future". The Employment Tribunal noted a provision allowing for variation of the terms by collective agreement with the recognised trade union, but there was no evidence before the Tribunal that the respondent's previous terms and conditions had contained such a provision or that this Schedule had retrospective effect.[16]In March 2003 the respondent sent a letter to his manager, Mr Pace, stating: "My retirement date is 8.4.2004. If possible I would like to carry on working for RSA [Royal & Sun Alliance] after this date. I did sign to retire at 65, but due to an EC directive this was lowered to 62".[17]So the Employment Tribunal noted that the respondent gave over 12 month's notice of his wish to continue working beyond his 62nd birthday. The Tribunal found that the appellant's retirement policy contained a flow chart, which set out the process for staying beyond the NRA. The employee was required to give a minimum of six month's notice by making a request in writing to his manager to work beyond "the normal retirement (sic) age". The Manager was then required to respond within one calendar month.[18]The respondent made his request on 18 March 2003, and there was an acknowledgment on 24 March 2003 but the appellants did not give a decision to the respondent in writing until 10 March 2004. The Tribunal also noted that a letter from the appellants' Human Resources Department ("HR") on 25 February 2004 makes no mention of the respondent. The appellants did nothing until 18 February 2004 when Mr Pace, who was the respondent's manager, Mrs Crowley and Ms Reynolds of HR all met to discuss the respondent's request. No notes of the meeting were taken, but they rejected the respondent's request on the basis that there were no business requirements to support the application.[19]At this time, the appellants were considering "out sourcing" their building maintenance work which eventually took place in June 2004. Mrs Crowley's evidence was that because the respondent's retirement date was likely to fall before the transfer of the building maintenance work, there was no strong business rationale for retaining the respondent. This was confirmed to the respondent by letter dated 10 March 2004. Mr Pace had, however, previously told the respondent verbally that his request had been refused.[20]The respondent said that all that he was told was that there was no business requirement. Mrs Crowley said that Mr Pace had told her that he had explained the rationale in detail to the respondent. The Employment Tribunal preferred the evidence of the respondent, which was first-hand but Mrs Crowley was not present at the meeting between the respondent and Mr Pace and so she could only give second-hand information.[21]After the respondent received notification of that decision, he consulted ACAS and he was told that there was no such European Directive as otherwise everyone would be retiring at 62. The respondent than telephoned the DTI in London, but they were unable to help. The respondent later telephoned a solicitor, but he was then asked for information, which he did not then have. In any event, because the respondent was on a fixed income, he was not sure whether he could afford a solicitor and so he did not continue to seek advice.[22]The respondent's employment was compulsorily terminated on 7 April 2004, which was the day before his 62nd birthday. The respondent said in evidence that three women in the catering section and one male security guard had been retained beyond the age of 62. Ms Reynolds confirmed that one catering assistant had been retained beyond 62, because her qualifications and experience could not easily be replaced. After the catering assistant had retired, the catering work was sub-contracted. The respondent told the tribunal that the security guard worked only for a few months beyond his 62nd birthday until he became ill and he then retired.[23]The appellants produced statistics, which showed that of 1634 Royal Insurance employees, who had retired since 1995, 24 had worked after their 62nd birthday. Of these, 19 were men and 5 were women. The respondent produced estimate and projected statistics of the National Labour Force, which showed that in 1995 of the total workforce still in work between the ages of 60 and 64, 65% were men and 35% were women. The relevant figures for 2004 were 60% for men and 40%for women. Issue A. Was the respondent wrongly dismissed before his CRA? The Issues and the Submissions[24]As we have explained, the issue between the parties is whether the CRA was the respondent's 62nd birthday as contended for by the appellants or his 65th birthday as submitted by the respondent in which case the claim for wrongful dismissal would succeed. We have already set out the facts found by the Employment Tribunal in Section III above and the Employment Tribunal's conclusion first that the CRA of the respondent was 65 years of age and second that the attempts by the appellants to reduce his CRA to 62 years of age in and after October 1995 were ineffective.[25]It is common ground between the parties that prior to October 1995, the CRA for the respondent was 65 years of age. Mr. Nigel Grundy, counsel for the appellants, contends that it was later reduced to 62 years of age because either:(i) there was an implied term of the respondent's contract of employment that his CRA would be governed by the appropriate dates of his pension scheme or(ii) the respondent's contract of employment was varied as he had by his conduct accepted the proposition that his CRA would be reduced to 62 years of age.[26]Both of these contentions are disputed by counsel for the respondent, Miss Joanne Dunlop, who submits that the respondent's CRA was still 65 when his contract was terminated in April 2004. We must therefore consider each of these grounds. Was there an Implied Term in the Respondent's Contact of Employment relating to his CRA?[27]The basis of the implied term claim is that it was the common intention of the parties that the CRA of the respondent would be governed by the terms of the pension scheme. Chitty on Contracts ... 29th Edition Volume 1 paragraph 13-007) points out with our emphasis added that "the court will only imply a term if it is one which must necessarily have been intended by them".[28]We do not consider that the appellants can show that the term can be implied bearing in mind first that neither the respondent nor any authorised representative of his was a party to the Pension Deed and second it is also noteworthy that on one occasion, the Pension Deed applicable to the respondent said that "normal pension dates means the date upon which a member attains the age of 62 in the case of a member but in the case of members in the service prior to the prescribed date shall mean such other ages as have been agreed between them and the employer". Third, the respondent made it clear to his supervisor in 1995 that he objected to his retirement age being varied to the date stated in the pension scheme and so it was not his intention that the pension scheme would specify his CRA. Fourth and very significantly, Mr Grundy has not given any good reason why the pension scheme should contain and define the respondent's CRA nor has he referred to any supporting authority.[29]It therefore follows that the respondent would not "necessarily" have intended that his CRA would be governed by the pension scheme. So the term sought to be implied by the appellants does not satisfy the threshold that it was in the words of Chitty " necessarily have been intended by [the parties to the contract of employment]" and particularly by the respondent. Did the Respondent by his conduct accept a CRA of 62?[30]Mr Grundy submitted that the respondent accepted or impliedly consented to his CRA being reduced to 62 years of age. It is worthwhile bearing in mind that:(1) (1)"An acceptance is a final and unqualified expression of assent to the terms of an offer" Chitty on Contracts (supra) Volume 1 paragraph 2.025);(2) "The general rule is that there can be no acceptance by silence does not mean that an acceptance always has to be given in so many words"( Chitty on Contracts (supra) Volume 1 paragraph 2.074);(3) " An offer can be accepted by conduct"(ibid);(4) When an employer seeks to impose a new contractual term on an existing employee, then "in our views, to imply an agreement to vary or to raise an estoppel against the employee on the grounds that he has not objected to a false record by the employers of the terms actually agreed is a course, which should be adopted with great caution. If the variation relates to a matter which has immediate practical application (e.g. the rate of pay) and the employee continues to work without objection after effect has been given to the variation (e.g. his pay packet has been reduced) then obviously he may well be taken to have impliedly agreed. But where, as in the present case, the variation has no immediate practical effect the position is not the same. It is the view of both the members of this tribunal with experience in industrial relations (with which the Chairman, without such experience, agrees) that it is asking too much of the ordinary employee to require him either to object to an erroneous statement of his terms of employment having no immediate practical impact on him or to be taken to have assented to the variation".(5) (per Browne- Wilkinson J (as he then was) in Jones v Associated Tunnelling [1981] IRLR 477 , 481[22]) The submission of Mr Grundy is that the respondent accepted by his conduct that his CRA had become 62 years of age first by his letter of 18 March 2003 to which we referred to in paragraph 15 above and second by electing to proceed on the process of making an application to the appellants to allow him to work beyond 62 years.[31]The Employment Tribunal dealt with the argument that the respondent had impliedly accepted the variations to his CRA so that it was reduced to 62 years of age by saying that:"20. The Tribunal does not agree. It notes from the Jones case (supra) that Tribunals should be wary of implying consent to a change in terms and conditions, particularly with regard to terms that are not to take immediate effect. This was exactly the position with regard to the claimant. It would be at least nine years before his variation would take effect. The Tribunal finds that the claimant made his objections known to his supervisor and to his trade union official, but was erroneously informed that nothing could be done, because it was a EU directive. By 1995 the claimant has been employed by the respondent for 21 years and the Tribunal finds it understandable that he did not want to jeopardise his employment.21. In 2003 the claimant gave the maximum possible notice to the respondent that he wanted to continue working until he was 65. He tried to use the procedure available to him. In his letter of 18 March 2003, he sought an extension, but the Tribunal notes that he brought to the respondent's attention that he _elected to work to 65, but this had been lowered to 62, because of an EU directive. The Tribunal finds that this is further evidence that the claimant had not accepted the variation. The Tribunal notes that the respondent made no attempt to correct the misleading impression that the EU had required employers to lower their retiring ages. The Tribunal is satisfied that the claimant, who was inexperienced in a difficult area of law and without access to legal advice and the support of his trade union, still believed that he was entitled under his contract of employment to retire at 65. The Tribunal again considers it understandable that at that stage the claimant did not want to prejudice his opportunity of carrying on work to 65 within the respondent's existing procedures. After he was informed of the decision not to grant him an extension, the claimant sought advice, from ACAS , the DTI and a solicitor, none of which indicates that he had accepted the variation. The Tribunal therefore finds that the claimant did not consent to the variation".[32]We find this reasoning compelling and convincing. The reasoning in Jones set out in paragraph 29(4) above also leads us to the conclusion that the respondent did not accept by his conduct any attempt to vary his CRA to 62 especially as not only had he done nothing to show any form of agreement to the purported lowering of his CRA but he had also complained to his supervisor about it.[33]If we had been in any doubt on this point, we would have reached the same conclusion because it is clear from the terms of the letter of 18 March 2003, that when the respondent wrote it, he believed that the EU Directive gave him no choice in the sense that his CRA had to be reduced and that it had actually been reduced to 62 by that EU Directive against his will. In other words, the respondent was not agreeing to any change of his CRA about which he believed that he had no choice. It follows that the respondent had not given in the words of Chitty, which we have already quoted " a final and unqualified expression of assent to the terms of an offer", namely that his CRA would be reduced to 62.[34]Thus, we conclude that the CRA of the respondent remained at 65 until his contract of employment was terminated with the result that the Employment Tribunal was correct to find that the respondent had been wrongfully dismissed when the appellants terminated his contract of employment. Issue B. Was the Respondent Unfairly Dismissed before his NRA? The Issues and the Statutory Background[35]The respondent contends that the Employment Tribunal was correct to find that the NRA for employees in his position was 65 years of age while the appellants contend that his NRA was 62 years of age. If the appellants are correct, the respondent cannot pursue his claim for unfair dismissal because section 109 (1) (a) of the ERA provides that: "(1) Section 94 does not apply to the dismissal of an employee if on or before the effective date of termination he has attained- (a) in a case where- (i) in the undertaking in which the employee was employed there was a normal retiring age for an employee holding the position held by the employee, and (ii) the age was the same whether the employee holding that position was a man or a woman, that normal retiring age, and (b) in any other case, the age of sixty-five".[36]Section 235 of the ERA stipulates that: "Position", in relation to an employee, means the following matters taken as a whole-(a) his status as an employee,(b) the nature of his work, and(c) his terms and conditions of employment,[37]It is common ground between the parties that the effect of a whole raft of judgments by the appellate courts on the correct judicial approach to NRA was correctly summarised by Peter Gibson LJ when he delivered the leading judgment in Barclays Bank plc v O'Brien [1994] ICR 865, when he explained (at page 871 A-H) that: - "1. The social policy underlying section 64(1) of the Act of 1978 is to secure fair treatment as regards compulsory retirement as between employees holding the same or a similar "position"(in the statutory sense): see Waite v Government Communications Headquarters [1983] ICR 653,662. Such employees can conveniently be referred to collectively as the "group:
" see Hughes v Department of Health and Social Security [1985] ICR 653, 662. 2. Where there is a contractual retirement age applicable to all or nearly all the employees in the group, there is a presumption that the contractual retirement age is the normal retiring age for the group: see Waite [1983] ICR 653, 662. 3. The presumption can be rebutted by evidence that there is in practice some a higher age at which employees in the group are regularly retired and which they have reasonably come to regard as their normal retiring age. 4. "
Normal" in this context is not a synonym for "usual" and is not to be determined by a purely statistical approach: see Waite [1983] ICR 653. 662 The question to be asked by the Industrial Tribunal is: what, at the effective date of termination of the applicant's employment and on the basis of the facts then known, was the age which employees of all ages in the group could reasonably regard as their normal retiring age? see Brooks v British Telecommunications Plc [1992] ICR 414, 434. That some employees could reasonably expect to retire at different ages for special reasons does not entail that they and their group do not have a normal retiring age: see Waite [1983] ICR 653, 662. The "position" of an applicant does not include the previous history of his employment (see Hughes v Department of Health and Social Security [1985] ICR 419, 429) nor his age (see Brooks v British Telecommunications Plc [1992] ICR 414) but the fact that employees have different retiring ages as terms of their contracts of employment may be taken into account in determining whether the employees are in the same "position": see Barber v Thames Television Plc [1992] ICR 661. The test of reasonable expectation is an objective one, not dependant on what the applicant or any other individual in the group actually thought: see Hughes v. Department of Health and Social Security . [1984] ICR 557, 581. A normal retiring age is an aspect of an employers employment policy which, once promulgated to the employees concurred, will take effect as their normal retiring age unless it is a sham or has been abandoned (see Hughes [1984] ICR 557, 581) or is never implemented: see Brooks v British Telecommunications Plc [1992] ICR 414,433. 10. If the contractual retiring age has been abandoned and employees retire at a variety of higher ages, there will be no normal retiring age and the statutory alternative of 65 will apply: see Waite v Government Communications Headquarters [1983] ICR 653, 663". The Approach of the Employment Tribunal in this Case.[38]Counsel are correctly in our view agreed that the Employment Tribunal was obliged to make a express finding identifying what Peter Gibson LJ described as " the group" to which the respondent belonged for the purpose of calculating his NRA but it did not do so and we will have to return to consider the effect of this important omission. Instead the Employment Tribunal reached its conclusion on the NRA of the respondent by stating that:
"15. The Employment Appeal Tribunal held in Bratko v Beloit Walmsley Ltd [1995] IRLR 629 that as the CRA established a presumption as to the NRA, it would be surprising if the employer could change the NRA to the disadvantage of the employee, without taking the steps necessary to reduce the CRA by agreement or some other lawful and effective means. The EAT added that the House of Lords in Waite [supra] had accepted that the CRA could be rebutted by evidence of a higher age NRA , but had not envisaged the possibility of an NRA that was lower than the CRA. The EAT said that if employers wished to do this, the correct way was by consensual variation or by terminating the employee's contract of employment and offering a new contract containing the revised provisions on retirement. The House of Lords in Waite [supra] held that there is a presumption that the CRA is the NRA unless that presumption is rebutted by evidence of a higher NRA than the CRA. 23. The Tribunal cannot accept that a unilateral variation of a contract of employment can be validated by mere communication to the employee. The Employment Tribunal therefore finds that the respondent's CRA was 65. The presumption therefore applied that the NRA was 65"
. The Submissions of the Parties[39]Mr.Grundy contends that this reasoning of the Employment Tribunal was incorrect as Bratko was wrongly decided as although the NRA is presumed to be the same as the CRA, this presumption could be and should be rebutted by evidence which could show that the NRA was not only a higher age but also – and this is crucial for the present appeal-a lower age than the CRA.. He contends that if this Tribunal finds that the Employment Tribunal was wrong to find that Bratko precluded the imposition of a NRA, which is lower than the CRA, then this Tribunal should then decide that the NRA for the respondent was 62 with the result that he could not claim that he was unfairly dismissed.[40]Miss Dunlop submits that Bratko was correctly decided and that it should lead to the NRA being 65 years of age so that this appeal should be dismissed. She contends that if, contrary to her submissions, we were to hold that Bratko should not be followed; we should then remit this matter to the Employment Tribunal for further consideration. So the main issue, which we have to determine, is, subject to the issue to which we refer in the next paragraph, whether Bratko is correct so that the NRA of the respondent cannot be lower than the CRA, and that means that it must be 65 years of age.[41]After the issue of the correctness of the decision in Bratko is resolved, there still remains an additional issue, which has to be resolved irrespective of whether we follow or decide not to follow that case. This additional issue is to determine the attributes of what was described by Peter Gibson LJ as "the group" to which the respondent belonged for the purpose of ascertaining his NRA. Mr. Grundy considered that that group consisted of employees doing the same sort of work as the respondent while Miss Dunlop submitted that the group should consist of employees with the same unvaried contractual retiring date of the respondent, which was 65 years. We will return to consider this point in our conclusions The Decision in Bratko[42]The Employment Appeal Tribunal in that case held that once established, the CRA raises a presumption, which can only be rebutted by evidence that there was a higher age(but not a lower ) NRA. In that case, it was conceded that the CRA was 65 and the Employment Tribunal held that 64 years of age was the NRA. The Employment Appeal Tribunal explained that the CRA establishes a presumption as to the NRA, which cannot be changed to the disadvantage of the employee without first lawfully changing the CRA . The decision of the Employment Appeal Tribunal was that as the CRA was 65 years of age, then NRA had to be 65 years of age.[43]Judge Hicks QC explained the basis of the decision at page 83 of the judgment in this way:- "In those circumstances, as we understand it, neither Brooks nor Barber bind 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 v Government Communications Headquarters [1983] ICR 653 that the contractual 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 consensual 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 used 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 Waite , but with the policy of the Act of 1978. In our view, that informs the way in which he expresses the possibility of a departure from the contractual retirement age". Is Bratko Consistent with the Authorities?[44]Counsel agree correctly in our view that Bratko does not bind us and so it becomes necessary to discover if the Employment Appeal Tribunal was correct to decide Bratko , in the way in which it did. It is now appropriate to consider the authorities in chronological order. The starting point is agreed by counsel to be the seminal speech in Waite v Government Communications Headquarters [1983] ICR 655 of Lord Fraser, with which the other member of the Appellate Committee agreed, in which he said with our emphasis added that:
"I therefore reject the view that the contractual retiring age conclusively fixes the normal retiring age. 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 a 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 an idea of an age at which employees in the group can reasonably expect to be compelled to retire, unless there is some 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 a regard to whether some of them may have been retained in office until a higher age for special reasons- such as 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 retiring 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 the employees retire at a variety of higher ages. In that case there will be no normal retiring age and the statutory alternatives of 65 for a man and 60 for a woman will apply"[45]In Waite , the issue between the parties was the extent to which the assessment of the NRA was affected by the CRA and in particular whether and when the NRA could be a higher age than the CRA. The Appellate Committee was not concerned with the question with which we are concerned in this appeal of whether the CRA could be a higher age t han the NRA and so that issue, with which this appeal is concerned, was not surprisingly not the subject of counsel's submissions in Waite . In Bratko , as we have explained, Judge Hicks attaches almost crucial significance to the use by Lord Fraser of the word "higher" on four occasions in his speech. We will return to consider if this feature of Lord Fraser's speech assists in the determination of this appeal[46]In Highlands and Islands Development Board v MacGillevray [1986] IRLR 210, the Inner House of the Court of Session had to consider how to determine the relevant "group" to which a particular employee belonged. In so far as the court considered that within the group, there could be employees who did have a higher CRA than the NRA for the group, the submissions of counsel did not require a decision by that court on the issue of whether the NRA could as a matter of principle be lower than the CRA.[47]In Brooks and Others v British Telecommunications Plc [1992] ICR 414, the Court of Appeal had to decide whether the reasonable expectation which had to be considered for the purpose of fixing the NRA was that of all the employees in the relevant category, as the Court of Appeal actually held to be the case, or only that of those approaching retirement age at the relevant time. Balcombe LJ focussed solely on that issue but the two other members of the court made comments, which are relevant to the present appeal although these comments were dicta as they were not relevant for resolution of that particular appeal. Butler Sloss LJ (as she then was) said, with emphasis, added that:- "As I understood the issues 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 the entire applicant's staff 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" Sir Christopher Slade said at page 432:
"A normal retiring age" is an aspect of an employer's employment policy: see Hughes [1984] ICR 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 thence forth 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 LJ from the speech of Lord Diplock in Hughes [1985] ICR 419, 430 makes it clear"
[48]Miss Dunlop relies on these comments, which are dicta in support of her submission that the NRA cannot be lower than the CRA. In response, Mr Grundy attaches importance to Barber v Thames Television Plc [1992] ICR 661 in which the Court of Appeal held that while the CRA of the employee was 65, his NRA was held to be 64 years of age. Dillon LJ said of Lord Fraser's speech in Waite with emphasis added at page 671:
"He shows that where there is for all 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 facts it will appear that some other age, greater or lesser, will be the normal retirement age"
[49]We are unable to understand the basis upon which Dillon LJ regarded Lord Fraser's speech or some other factor as justifying the fixing of the NRA at a "lesser" age than the CRA because, as we have explained, Lord Fraser specifically and solely referred to the age of the NRA being "higher" than the CRA. Staughton LJ said at page 673:
"[The employers] might in 1987 have reduced the retiring age for them to 60 forthwith"- "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 having any remedy under section 54 of the Act. The normal retiring age for everyone in the company would have been 60."[50]It seems that in Barber , the employees were not contending that the NRA could not be a lower age than the CRA. Thus the Court of Appeal was not dealing with the same issue with which we are now concerned. In any event, the attention of the Court of Appeal in Barber was not drawn to the important dicta in Brooks , which we quoted in paragraph 47 above.[51]In Wall v British Compression Air Society [2004] ICR 408 , the Court of Appeal had to decide "whether an employee who holds a unique position within an undertaking [could] have a NRA" (page 409H). The Court of Appeal by a majority answered this question in the affirmative.[52]In giving a judgment with which Scott Baker LJ agreed, Simon Brown LJ said of the passage in Lord Fraser's speech in Waite , which we quoted in paragraph 44 above that:
"It is clear from that passage in Lord Fraser's speech, first, that where there is a group of employees with a contractual retiring age "a presumption" arises that that is their normal retiring age: "the contractual retiring age will prima facie be the normal [retiring age]…. Secondly, that presumption can, however, be rebutted by evidence that in practice employees in the group are regularly retired at some " higher age" (an expression used no fewer than four times in the passage) if at a "definite higher age" then that will have become the group's normal retiring age; if not, the contractual retiring age may simply have to be regarded as abandoned. Thirdly, the real reason to be asked in all these cases is: what would be "the reasonable expectation or understanding of the employees" in the group? At what age could they "reasonably expect to be compelled to retire"? The fact that some might for special reasons (three such being instanced) have been kept on in employment beyond their contractual retirement age would not necessarily affect the reasonable expectation or understanding of the group"
. As for "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", this observation needs to be understood in the context in which it was made. I understand Lord Fraser to have been saying essentially this: if in fact employees in a group retired at "some definite higher age", then the rest of the group can reasonably expect not to be compelled to retire before that higher age. Such an approach to the legislation would of course accord with "the policy of securing fair treatment as regards compulsory retirement as between different employees holding the same position". None of this, however, suggests to my mind that Lord Fraser was contemplating that employees with a contractual retiring age could ever (unless of course their contractual terms were varied) come to have a normal retiring age lower than that of their contractual retiring age. How, one wonders, could it ever be said that of such employees that, at this younger age, they would "reasonably expect to be compelled to retire"? Nor does it seem to me conceivable (as at one stage in the argument I understood [counsel for the employer to submit) that Lord Fraser contemplated in certain circumstances setting aside the contractual retiring age in favour of some lower normal retiring age on the basis that the contractual retiring age itself had been agreed upon "for special reasons".[53]In the light of Simon Brown LJ's comment that the question of "whether an employee who holds a unique position within an undertaking [could] have a NRA" is "the single critical question for determination on this appeal" (ibid pages 409h-410 a), Miss Dunlop accepts correctly in our view that these comments of Simon Brown LJ were dicta and not the ratio of Wall's case with the result that we are not bound by it. Bratko was apparently not cited in argument in Wall nor is it referred to in the judgments. Furthermore it is noteworthy that Barber was neither cited in argument or not in the judgments, although O'Brien's case was cited and Peter Gibson LJ's judgment in that case refers to Barber as we have explained in paragraph 37 above.[54]In Cross and others v British Airways plc [2005] IRLR 423 , Burton J, President of the Employment Appeal Tribunal said in paragraph 10 of the judgment with our emphasis added, that: - "It is in the circumstances, common ground that NRA is thus a different concept from CRA. What the CRA is may well be at least the starting point, if not the best evidence, of what the NRA is, but it is not at all decisive of it The question of what the NRA is depends upon an objective assessment of the norm at the relevant time. The NRA may be a higher than the CRA (as for example in Hughes ) or may be lower than the CRA (as for example in Barber ). It is common ground that paragraph 3 of Peter Gibson L J's summary should be read as being a reference to "some lower age" as well as to "some a higher age" and that Bratko. was wrongly decided".[55]It is very significant that the issue of whether the NRA can be lower than the CRA was resolved by agreement. We should add that the Employment Appeal Tribunal in Cross were not referred to and so did not refer to the earlier decision of the Court of Appeal in Wall . . We will have to return to consider the significance of these comments of Burton J, President of the Employment Appeal Tribunal.[56]The position, which emerges, is that each side has one decision to support its stance. Barber supports the submissions of the appellants that the NRA can be lower than the CRA as in that case the CRA was 65 but the NRA was 64, although it seems that the issue of whether the NRA cannot be lower than the CRA was not the subject of specific submissions. . On the other hand, Bratko is a decision, which supports the respondent's case but is not binding on us. There are, as we have explained conflicting dicta in other cases, with those in Barber assisting the appellants' case while those in Brooks and in Wall are supportive of the respondent's case. Nevertheless, the point with which we are concerned on this appeal was not specifically argued or necessary for the decisions of the courts in these other cases. Thus we must consider this issue in the light of the principles explained in other cases and in particular in the speech of Lord Fraser in Waite on which both counsel rely. That is the issue to which we now turn. Should the NRA not be lower than the CRA?[57]Miss Dunlop submits that the answer to the dispute on the correctness of Bratko is to be found in the statement of Simon Brown LJ (as he then was) in Wall's case [2004] ICR at 417B), which we have quoted that: - "It is surely normal not to be compulsorily retired until one has reached one's contractual retirement age i.e. the age stipulated for automatic retirement, alternatively the minimum age at which one can be obliged to retire"[58]Mr. Grundy contends that this statement is inconsistent with principle and with authority. He points out correctly that Bratko was not referred to in Wall . His submission is that the Bratko should not be followed principally for the reasons put forward by Burton P sitting in the Employment Appeal Tribunal in Cross (supra) and which we quoted in paragraph 55 above.[59]As we are not bound by any decided authority on whether the NRA can be lower than the CRA, we have considered whether we can obtain assistance from any general principles concerning the meaning and purpose of the NRA. Our starting point is the seminal speech of Lord Fraser in Waite , the relevant parts of which we have already set out in paragraph 44 above. We are prepared to assume at this stage that Mr. Grundy is correct when he submits that the fact that in his speech Lord Fraser refers to the NRA as being on occasions a higher age than the CRA does not necessarily means that he concluded that the NRA could not be a lower age than the CRA because neither the issue in dispute in Waite nor counsel's submissions in that case required him to consider whether the NRA could be a lower age than the CRA.[60]In our view, Lord Fraser's speech in Waite shows clearly in two respects how the NRA is to be determined and, in particular, that it should not interfere with an employee's contractual rights. First, Lord Fraser said with emphasis added of the NRA that: - "The proper test is not statistical. It is to ascertain what would be the reasonable expectation of or understanding of employees holding that position at the relevant time"[61]We consider that "the relevant expectation of or understanding" of an employee holding that position is, in Simon Brown LJ's words in Wall which we have just quoted in paragraph 53, that "It is surely normal not to be compulsorily retired until one has reached one's contractual retirement age". In other words, any employee with a CRA of say 65 would have the reasonable expectation that his employment would continue until he could be compulsorily retired, which in the example we have given would be his 65 th birthday and so his NRA would be at least 65 years of age.[62]Second, in the passage, which we quoted in paragraph 44 above, Lord Fraser explained with emphasis added that: "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".[63]The words "compelled to retire" indicates that an employee in that group cannot be required to retire before their CRA as until then employees in his group are contractually entitled to remain in employment. Thus, the earliest NRA of the employee in that group would be his CRA.[64]A third reason why we have reached our conclusion that the NRA cannot be earlier than the CRA is because of first the very persuasive comments of Simon Brown LJ (with whom Scott Baker LJ agreed) to which we referred in paragraph 53 above and second Simon Brown LJ 's approval of "the good sense and justice" ( Wall ) (supra) paragraph 16 at page 41) of Lord Salmon's statement in Northman v Barnet London Borough Council [1979] ICR 111, 116 in which he said that: " If a woman's conditions of employment provide that her retiring age shall be 65, I can find no sensible or just excuse nor any words in paragraph 10(b)"- the predecessor legislation- "to deprive her of her rights to compensation should she be unfairly dismissed by her employers after she reaches the age of 60 but before she attains the age of 65. Before the unfair dismissal she would probably have planned and arranged her life on the basis that she would continue in her employment until she retired. To be unfairly dismissed before that time, say when she was 61 years old, must surely be a cruel blow. Her plans for her future would be overturned. The chance of finding fresh employment would be minimal and her pension would probably be diminished".[65]Fourth, as we have explained in paragraph 37 above, paragraph 9 of Peter Gibson LJ' s guide on the approach to section 109(1) of the ERA states that: - "The test of reasonable expectation is an objective one, not dependant on what the applicant or any other individual in the group actually thought: see Hughes v. Department of Health and Social Security [1984] ICR 557, 581".[66]In our view a reasonable expectation on an objective basis of the NRA of a group of employees would be that it would not be below the CRA because, if Mr. Grundy's submission is correct and an employee can have a NRA which occurs before his CRA, then such an employee would have strange changes in his status because prior to his NRA, he will have the right to claim both wrongful dismissal and unfair dismissal but between the time when he reaches his NRA and his CRA he will only have the right to claim wrongful dismissal but not to claim unfair dismissal. Thus during that period although the employee has a contractual right to work, this right will have been seriously diluted and undermined by his inability to claim that he has been unfairly dismissed even though his employer had promised to continue to employ him.[67]If, which is not the case, we had been in doubt on whether the NRA could be less than the CRA, we would have reconsidered our assumption that the fact that in his speech Lord Fraser refers to the NRA as being on occasions a higher age than the CRA does not necessarily means that he concluded that the NRA could not be a lower age than the CRA. When we did reconsider the assumption, we concluded that there was a fifth and perhaps less potent reason why we consider that the NRA cannot be below the CRA is that we accept that it is significant that when Lord Fraser explained in Waite that the presumption that the CRA will be the NRA, he stated that this presumption can be rebutted by evidence of some "a higher age", which is an expression that he used no fewer than on four occasions in the passage which we quoted in paragraph 44 above. In our view, he was saying that evidence could only be adduced to increase the NRA above the CRA and not to reduce it below the CRA.[68]In reaching the conclusion that the NRA of a member of a group cannot be lower than the CRA, we have not overlooked two important matters of which the first is that we were very concerned that our conclusion is different from that reached recently by this Appeal Tribunal presided over by its President in Cross . It is very significant that the issue of whether the NRA can be lower than the CRA was resolved by agreement and so this issue was not argued . That probably explains why the very pertinent comments of Simon Brown LJ in Wall were not considered. Furthermore, the Appeal Tribunal in Cross did not have the benefit of the admirable submissions of Miss Dunlop.[69]Second, we appreciated that our decision differs from that of the Court of Appeal in Barber in which the NRA was lower than the CRA but, as we have explained, there was no argument in Barber on whether the NRA could be lower than the CRA as it was assumed by everybody involved in that case that it could be. Furthermore, the judgments of the Court of Appeal in Brooks were not cited in argument or in the judgments in Barber . What is to happen to the appellants' appeal on the unfair dismissal issue?[70]The issue which now arises for consideration is whether in the light of our conclusion that the NRA for the respondent cannot be less than the CRA, we should remit the case to the Employment Tribunal to determine the NRA as the appellants contend or whether, as the respondent contends, we should ourselves decide that the Employment Tribunal was correct in concluding that the NRA of the respondent was 65 years of age in which case we should now dismiss the appeal.[71]The basis of the appellants' submission is that the Employment Tribunal did not make a finding as the "group" to which the respondent belonged or the position which he held, which was what was stated to be the first step in Barclays Bank v O'Brien (supra) Mr. Grundy contends that it is necessary to make such a finding in order to proceed to the second step, which is to determine whether there is a CRA applicable to all or nearly all the employees in the group. He submits that it is only if the answer is in the affirmative that there is a presumption that the CRA is the NRA for the group.[72]Mr. Grundy stresses that that the fact that the respondent's own and individual CRA is 65 does not necessarily and automatically mean that his NRA is also 65 because it is necessary to answer the question raised by the second step referred to in the last paragraph. The cases of Bratko , Barber and Brooks to which we have already referred were, he contends, all cases in which all the employees in the "group" had the same CRA with the consequence that the presumption arose that the CRA was the same as the NRA for the "group" and the next question to be determined is whether the presumption could be displaced by evidence of a lower NRA.[73]The position according to Mr. Grundy is that in this case if the correct "group" following Hughes , Brooks and MacGillivray to which we have already referred comprises the Royal employees, namely those members of the RIGPGS referred to in paragraph 13 above or the "group" of 12 semi-skilled /skilled technicians in which case he contends that "nearly all" the employees in the group would have a CRA of 62 or the employees could have different CRAs so that no presumption applies and the question of the NRA has to be determined by asking question(5) of the Barclays Bank v O'Brien test, which is set out in paragraph 37 above. So Mr. Grundy submits that the matter should be remitted to the Employment Tribunal so that it could determine that "group" to which the respondent belonged and then ascertain his NRA.[74]We are unable to accept this submission because as the respondent has a CRA of 65 and we consider that Bratko (supra) is correct then anybody who did not have a CRA of 65 would not hold the same "position" as the respondent and so could not be and would not be in his group. As Miss Dunlop submits, it is irrelevant if the respondent is a unique employee in a group of his own as Wall (supra) was or if there are other employees in the respondent's group because there can only be one conclusion, which is that the respondent had a NRA of 65 years of age. In other words when the CRA is established, there cannot be an NRA, which is less than the CRA for the reason, which we explained in paragraphs 60 to 69 above.[75]This conclusion is supported by four matters of which the first is the statement of Simon Brown LJ in paragraph 25 of Wall (supra ) that: - "It follows in my judgment that in cases where an employee has a contractual retiring age, there is no need for comparisons to be made with other employees holding the same position before a normal retiring age can be established"[76]Second, the approach advocated by Mr. Grundy is inconsistent with our conclusion for the reasons, which we explained in paragraphs 60 to 69 above that the NRA cannot be less than the CRA. If the NRA cannot be less than the CRA, the Employment Tribunal must inevitably find that the NRA must in this case not be earlier than 65 years of age and any attempt to argue otherwise must be an attempt to achieve by "the back door" what cannot be achieved by "the front door", which is to have a lower age for the NRA than for the CRA.[77]Third, it is settled law first that section 235(1) of the ERA (which is set out in paragraph 36 above) provides that "position" requires consideration of the employees' "terms and conditions of employment", and second that "terms as to retirement naturally fall within the phrase" ( Barber (supra) at page 669F per Dillon LJ). Thus there can be separate "groups" of employees depending on their CRA and so Neill LJ stated that: - "It is permissible to regard those who are subject of a contractual retirement age of 60 as one group, which I will call group A and those who art not subject to the contractual retirement age of 60 as a second group, group B."( Barber (supra) at page 672 G and see similar comment by Dillon LJ at page 672E)[78]Finally, further support for this approach can be derived from the decision of this Appeal Tribunal in Bratko (supra) in which after it was decided that the NRA could not be lower than the CRA, no attempt was made to define a group or to make any significant reference to "the position" of the relevant employee.[79]Thus we conclude that we can determine that the NRA for the respondent is the same as his CRA, namely 65 years of age. Conclusion[80]For the reasons, which we have sought to explain, the appeal must be dismissed. Having received the views of counsel after the draft of this judgment had been circulated, we order that there be no order as to costs and second we accede to the appellants' submission that the appellants have permission to appeal to the Court of Appeal on the issue of whether the normal retiring age of the respondent was 65 years of age or 62 years of age.