Wall v British Compressed Air Society

Can an employee who holds a unique position within an undertaking have a normal retiring age within the meaning of s109(1)(a)(i) of the Employment Rights Act 1996? That is the single critical question for determination on this appeal. It is an employer’s appeal from the decision of the Employment Appeal Tribunal (“EAT”) dated 7 February 2001.

Let me at once set out the two statutory provision in play. Section 109, so far as material, provides:

The word “position” in s109(1)(a)(i) is defined by s235(1) of the Act as follows:

In Age Concern Scotland -v- Hines [1983] IRLR 477 the Scottish EAT (presided over by Lord McDonald) answered “No” to the question posed in paragraph 1 above. I need cite only paragraph 12 of their determination:

That case was followed by the London EAT (presided over by Judge Clark) in Dormers Wells Infant School -v- Gill (16 July 1999, unreported) in the mistaken belief that a similar approach to that taken in Hines had subsequently been taken by the Court of Appeal in Patel -v- Nagesan [1995] ICR 988.

In the present case, however, the EAT (presided over by Rimer J) came to the opposite view. I should immediately note that in the case of a unique employee (as for convenience I shall call an employee whose “position” is not comparable to that of any other employee within the undertaking) the only candidate for a “normal retiring age” is, assuming his contract of employment provides for it, his contractual retiring age. Mr Wall, the respondent to the present appeal, had a contractual retiring age of 70. The EAT concluded at paragraph 26:

Recognising that they were departing from two earlier decisions and that the point is one “of some importance” the EAT themselves gave permission to appeal. Thus it is that the issue is now before us.

With that short introduction let me next briefly set out the factual context in which this narrow point arises. Few details are necessary. The respondent, Mr Wall, is the former Director-General of the appellants, British Compressed Air Society (“BCAS”). He was employed by BCAS in June 1985 until his dismissal on 26 February 2001. At the date of his dismissal he was 67 years of age. It has always been his contention that he had a contractual retiring age of 70, ie an agreement with BCAS that he would be employed until 17 April 2003. His complaint of unfair dismissal was presented on 14 May 2001. BCAS disputed it both on the merits and pursuant to s109 of the 1996 Act. It is their contention that Mr Wall had no normal retiring age and, having attained the age of 65 by the date of his dismissal was that he was disentitled from claiming under s94. It was agreed that the Employment Tribunal at a preliminary hearing would decide two questions:

Before the Tribunal both parties agreed through counsel that the Tribunal should answer only the second of those questions and that it would do so on the basis of two agreed assumptions: first, that Mr Wall had a contractual retirement age of 70, and, second, that in his office of Director-General he held a “unique” position. On that basis the Tribunal concluded that they were bound by the EAT’s decision in Dormers Wells Infant School -v- Gill to decide the question in favour of BCAS. Mr Wall then appealed to the EAT which also proceeded on the basis of the two agreed factual assumptions. Having, as already indicated, allowed Mr Wall’s appeal, the EAT remitted his complaint of unfair dismissal to the Employment Tribunal for a hearing on the merits. There matters stand.

Against that undisputed factual background I turn now to the law. Again I can take it comparatively briefly: few of the authorities put before us seem to me, on analysis, to afford any real assistance on the particular issue now arising. None save the earlier EAT decisions and, in a different context, Patel -v- Nagesan, touch on the position of a unique employee. All the other cases concern what, for convenience, have been called groups of employees.

The leading case on what is meant in this (and similar predecessor) legislation by “normal retiring age” is the decision of the House of Lords in Waite -v- Government Communications Headquarters [1983] 2 AC 714. Colonel Waite had obtained employment with the civil service in 1967 under the Civil Service Code’s relevant terms and conditions which provided for a retirement age of 60. Although the employers could defer retirement under these terms and conditions until 65, employees had no right to stay on after 60. Colonel Waite was compulsorily retired in his 61^st year and brought a claim for unfair dismissal. The question was whether his claim was barred as being brought after his “normal retiring age”. Lord Fraser of Tullybelton gave the only reasoned speech. In the course of it he described the Court of Appeal’s decision in Nothman -v- Barnet London Borough County Council [1978] 1 WLR 220 as “authority for the proposition that the normal retiring age for an employee is to be found by looking exclusively at the conditions of employment applicable to the group of employees holding his position” and continued at p723:

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 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, that the real question 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 there to have been saying essentially this: if in fact employees in a group, say with a contractual retiring age of 65, are in practice regularly being 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 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 Mr Blake 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”.

Lord Salmon in Nothman -v- Barnet London Borough Council [1979] 1 WLR 67, 72 said this:

True it is, as Lord Fraser later noted in Waite at p722, that Nothman in the House of Lords “was decided on another point” (ie not by reference to the Court of Appeal’s view that the normal retiring age was to be found by looking exclusively at the terms of contract), and that Lord Salmon alone, as Lord Fraser commented, “appears to have assumed that it [the contractual retirement date] was conclusive”. To my mind, however, there can be no gainsaying the good sense and justice of Lord Salmon’s remarks and I do not understand Lord Fraser to have been suggesting otherwise; his quarrel was solely with Lord Salmon’s assumption that the contractual retiring age (rather than perhaps “some definite higher age”) would always be conclusive.

All of this, of course, as already made plain, was said in the context of there being a group of employees holding the same position. None of it, therefore, bears directly on the issue presently before us. Nor, as it happens, does the next case to which I now come, Patel -v- Nagesan [1995] ICR 988 which, although it did concern a unique employee, decided no more than that where such an employee does not have a contractual retiring age, necessarily he (or, as there, she) must fall back onto the statutory alternative (already by that date 65 for both men and women). In that case, as will appear, the employee was advantaged by being able to invoke the statutory alternative: it was higher than the normal retiring age for which her employers were contending. Sometimes, of course, it is in the employee’s interests to establish a normal retiring age (whether by reference to a contractual retiring age or otherwise), other times not: all depends on whether it would be higher or lower than the alternative statutory age (now 65 for all but, in earlier times, 60 for women).

Mrs Nagesan was employed as a care manager. Her contract specified no retirement age. She attained 60 years of age, was dismissed shortly afterwards, and applied to an industrial tribunal claiming unfair dismissal. The employers disputed the tribunal’s jurisdiction, relying on a letter they had written to all employees, including Mrs Nagesan, a few months before her dismissal. The letter had purported to change the terms of employment of all employees and to introduce a new retiring age of 60 for all of them, although Mrs Nagesan had refused to accept the new terms and had maintained that no specific retirement age applied to her. The employers claimed that a new contract of employment was in force with Mrs Nagesan which did incorporate this new retirement age. The industrial tribunal rejected this contention, finding that “there was no retirement age of 60 in Mrs Nagesan’s case”, and the EAT dismissed the employers’ appeal. The leading judgment in the Court of Appeal was given by McCowan LJ who at p997 said this:

Age Concern Scotland -v- Hines had been cited to the Court of Appeal and true it is that McCowan LJ there recorded without adverse comment counsel’s submission that “you cannot talk of a group expectation when her position is unique. A concept of a normal retiring age simply does not apply”. As Mr Blake recognises, however, Patel -v- Nagesan cannot be regarded as having decided the point presently before us and Harvey on Industrial Relations and Employment Law goes too far in stating at paragraph D1/63 that it supports the approach adopted in Hines:

In short, the EAT in the present case were correct to say, as they did, of the Nagesan case:

Although, in his admirably clear and careful judgment, Rimer J below discussed a number of other authorities too, I for my part think it unnecessary to do so. They really do not help. Rather it is necessary at last to confront the central question arising: does the word “normal” in s109(1)(a)(i) necessarily require the existence of one or more comparators? If, of course, it does, then any unique employee will never be able to rely upon his contractual retiring age to establish a “normal retiring age”. As to this, Rimer J pointed out the unfairness of such a conclusion:

The discrimination would, of course, be in favour of the unique employee had a contractual retiring age of less than 65, say 60: he would then be able to assert that, despite having no reasonable expectation or understanding of being able to work beyond 60 he was nevertheless entitled to claim for unfair dismissal if in the event his contract was terminated at any time before he was 65.

In common with the EAT below, I can see no good reason, still less any sound policy consideration, for reaching such a conclusion. Does the word “normal” in the legislation nevertheless compel it? In my judgment it does not: one can as well ask of a unique employee as of a group of employees what, by reference to their contractual terms, is the age at which they can reasonably expect to be compelled to retire, the ultimate touchstone for determining their normal retiring age as Lord Fraser explained in Waite. If one asks: whose “normal retiring age” has to be decided for the purpose of applying s109(1)(a)(i), the answer clearly is: an employee holding the position held by the employee”. Plainly the dismissed employee himself held that position.

Assume that only two employees hold the same position within an undertaking, each with a contractual retiring age of 70. The first is dismissed at the age of 69 whilst the other, still aged only 66 remains at work. It could hardly be suggested that the one who is dismissed has no normal retiring age (presumed to be the contractual retiring age of 70) although, of course, no one would yet have retired at 70. Assume then that the second employee were himself later dismissed, say at the age of 68. Surely he too would have had a normal retiring age of 70; it cannot matter that no-one in the event ever came to be employed that long. Why, therefore, should it matter that there was only one such employee? For him the expectation would be that he would remain in his employment until his contractual retirement age. That for him would represent the norm. It is, surely, normal not to be compulsorily retired until one has reached one’s contractual retirement age, ie the age stipulated for automatic retiral, alternatively the minimum age at which one can be obliged to retire.

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. Age Concern Scotland -v- Hines and, in turn, Dormers Wells Infant School -v- Gill were, I conclude, wrongly decided. The EAT below were right not to have followed them. I would dismiss this appeal.

By way of footnote I add just this. In the course of argument - in response to a question from the court as to why it greatly matters whether a claim lies here for unfair dismissal given that on the facts assumed Mr Wall appears to have an unanswerable common law claim for wrongful dismissal - Mr Blake appeared to suggest that the employment contract was in fact subject to a three months’ notice term on either side. If indeed this is so - and in the absence of the contractual documents we have been unable to check this - then I cannot see how in any meaningful sense the contractual retirement age here could be said to be 70: certainly Mr Wall could have had no reasonable expectation of not being compulsorily retired before that age. It may be, given that matters hitherto have proceeded merely on the assumption that Mr Wall had a contractual retirement age of 70, that that question (the first of the two questions originally to have been the subject of preliminary decision by the Employment Tribunal - see paragraph 8 above) will now fall for determination as part of the merits hearing still to be held. Certainly it cannot affect the outcome of this appeal.

I have had the advantage of reading in draft the judgments of Simon Brown L.J and Evans Lombe J. I agree with Simon Brown L.J that the appeal should be dismissed and I agree with his reasons for reaching that conclusion. For convenience I use the same abbreviations and expressions.

If a unique employee cannot have a normal retiring age within the meaning of s.109(1)(a)(i) he is immediately placed in a different situation from other employees within the same organisation. In particular, his contractual retiring age will never prevail against the fall back age of 65 in s.109(1)(b). This may work to his advantage or disadvantage. It is to be noted, however, that a great many people these days retire before they reach the age of 65. Suppose that instead of 70 Mr Wall’s contractual retiring age had been 60 but he continued in employment thereafter until unfairly dismissed aged 61. Could it really be said that because he was under 65 the s.109 exemption did not apply?

As Simon Brown L.J points out, the only candidate a unique employee has for a normal retiring age, assuming his contract of employment provides for it, is his contractual retiring age. I cannot accept that the true meaning of s.109(1) is that a unique employee cannot have a normal retiring age despite what is agreed in his contract of employment and that his retiring age is deemed to be 65.

In the present case the focus is on the normal retiring age for a person holding Mr Wall’s position. I am unpersuaded that it is necessary to look for comparators where there are none. The question is what is his normal retiring age. Lord Fraser of Tullybelton in Waite -v- Government Communications Headquarters [1983] 2AC 714, 723 thought the court of appeal had gone too far in Nothman in holding that normal retiring age for an employee would be found exclusively in the terms of employment, but nevertheless concluded that:

Once the critical significance of the terms of employment is accepted, it seems to me clear that a unique employee is as capable of having a normal retiring age as one of a group. It is not necessary to look elsewhere for a comparator. The word normal is really introduced into the subsection to ensure equality of treatment for employees within the same group.

The fact that Mr Wall’s position was unique does not seem to me to detract in any way from Lord Fraser’s approach. Suppose there was a notice displayed by the appellant company saying the normal retiring age for all employees of the company is 65 except for the Director–General who retires at 70 and that reflected the terms of their employment. I cannot believe that the reasonable bystander, if asked in these circumstances what Mr Wall’s normal retirement age was would give any answer other than 70.

The fact that an employee in the shoes of Mr Wall may have an unassailable claim for damages for breach of contract if dismissed before his contractual retirement age is not, in my judgment, a reason for treating him differently from one of a group of employees in a similar situation. In respectful disagreement with Evans Lombe J I cannot believe that the legislature had this in mind when enacting s.109. Unfair dismissal and wrongful dismissal are not one and the same thing.

The conclusion reached by the EAT is the one that I myself would have reached in the absence of authority. Does authority prevent such a conclusion? As Simon Brown L.J has pointed out, the cases have mostly been concerned with groups of employees. Whilst it is true that Patel -v- Nageson [1995] 1CR 988 was concerned with a unique employee, she had no contractual retiring age with the result that the fall back age of 65 applied. That case is therefore plainly distinguishable.

There is no authority that prevents or dissuades me from concluding that the EAT was correct. An employee who holds a unique position within an undertaking can have a normal retiring age within the meaning of s.109(1)(a)(i). Such a conclusion seems to me entirely in keeping with the purpose of the legislation.

In this appeal I have had the advantage of reading in draft the judgments of my Lords Lord Justice Simon Brown and Lord Justice Scott Baker dismissing the appeal. I have the misfortune to disagree with them, but since Lord Justice Scott Baker agrees that the appeal must be dismissed and that in consequence that will be the court’s order I will express my dissent briefly. I will adopt the abbreviations used by Lord Justice Simon Brown and his description of the background facts. As he points out the short question in the appeal is whether an employee who holds a unique position within an undertaking has a normal retiring age within the meaning of s109(1)(a)(i) of the Employment Rights Act 1996.

The section so far as material provides:-

In summary, my conclusion is, that because of the presence of the word “normal” in s109(1)(a)(i) that sub-section does not have the effect of conferring on such a unique employee as Mr Wall, who has the benefit of an employment contract containing provisions allowing him to delay his retirement after the age of 65, the right to proceed to recover compensation in the Employment Tribunal in respect of his unlawful dismissal on a date after he has achieved the age of 65 but before 70. As my Lord has pointed out, an employee having the benefit of such a contractual retirement date, (as we are invited to assume that Mr Wall has), will have, in those circumstances, an unanswerable claim for damages for breach of contract. It is for this reason that I take the view that when the legislature enacted s109(1) of the 1996 Act it did not have in view such “unique” employees.

It seems to me that this conclusion is consistent with a passage in the extract from the speech of Lord Fraser of Tullybelton quoted by my Lord starting at page 723 where he defines “the social policy which seems to underlie the Act” as that “of securing fair treatment as regards compulsorily retirement as between different employees holding the same position… .” To which I would add “that employees being employed in circumstances where there is a pattern of retirement age amongst their peers should be entitled to assume that the same pattern applied to them”.

In my judgment a “unique” employee cannot have a “normal retiring age” within sub-section (i) because:-

Apart from the decision of the EAT in this case and the decisions of that court in Age Concern Scotland -v- Hines [1983] IRLR p 477 and Dormers Wells Infants School -v- Gill (unreported 16^th July 1999) which took a contrary view, there are no reported cases, and in particular, none of the higher courts, where the point has been directly decided. As one would expect all the cases cited to us apart from those two and the decision of the Court of Appeal in Patel -v- Nagesan [1995] ICR p988 concern the retiring date of groups of employees in a similar position to which the sub-section unquestionably applies. The woman spoken of in the quoted extract from Lord Salmon’s speech in Nothman -v- Barnet London Borough Council [1979] 1WLR p67 at page 72 had with her fellow teachers, a contractual right to be retired no earlier than 65 save upon just cause. It was, as a result her reasonable anticipation that she would not be retired before reaching age 65.

I accept that though Patel -v- Nagesan did concern a unique employee who was held, for that reason, not to have a “normal retiring age”, it is not binding authority upon which I am entitled to rely, because the facts were substantially different from those in the present case, in particular, Mrs Nagesan was held not to have a contractual retiring date. Nonetheless it does seem to me that the passage in the judgment at page 997 where Lord Justice McCowan refers, without criticism, to Mrs Nagesan’s counsel’s submission that “you cannot talk of a group expectation when her [Mrs Nagesan’s] position is unique. A concept of a normal retiring age simply does not apply” – is indicative of the approach of Lord Justice McCowan to the problem with which he had to deal. Thus, it seems to me, the editors of Harvey on Industrial Relations and Employment Law were entitled to say that the approach of the court in the Patel case was similar to that in the passage in paragraph D1/63 of that book, which reads:-

I would allow the appeal.