ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
EAT/0572/04/TM
Royal Courts of Justice
Strand, London, WC2A 2LL
Before :
THE RIGHT HONOURABLE LORD JUSTICE AULD
THE RIGHT HONOURABLE LORD JUSTICE LAWS
and
THE RIGHT HONOURABLE LORD JUSTICE RICHARDS
Between :
MICHAEL BARTLETT CROSS and CAROLE GIBSON | Appellants |
- and - | |
BRITISH AIRWAYS PLC | Respondent |
Mr Robin Allen QC (instructed by Charles Russell) for the Appellants
Mr Nicholas Underhill QC & Mr Bruce Carr (instructed by Stevens & Bolton LLP) for the Respondent
Hearing dates : 16th and 17th January 2006
Judgment
Lord Justice Auld :
Introduction
These appeals raise two issues of importance, namely:
whether the statutory normal retiring age set by section 109 of the Employment Rights Act 1996 (“the 1996 Act”), excluding the right given by section 94 of the Act not to be unfairly dismissed, is transferable under the Transfer of Undertakings (Protection of Employment) Regulations 1981 (“the TUPE Regulations”); and, if so
the circumstances in which post-transfer conduct by employees with a “transferred” normal retiring age might result in a substitution of a new and different statutory normal retiring age.
The appellants, Michael Bartlett Cross and Carole Gibson challenge a decision of the Employment Appeal Tribunal presided over by Burton J on 23rd March 2005 upholding the dismissal by an Employment Tribunal of their claims against British Airways Plc (“BA”) for unfair dismissal under the 1996 Act.
The appeals arise out of the following facts. Mr Cross and Mrs Gibson were employed as “flying crew”, respectively as a pilot and a cabin services director, by British Caledonian Airways Ltd (“BCal”) until its take-over by BA in 1988. After the take-over they continued to work for BA in those capacities. As flying crew with BCal, they had been entitled to continue in work until aged 60, when they could have retired on full pension. But BA has had for over thirty years a rule requiring its flying crew to retire at the age of 55, unlike its other employees who have generally had a retirement age of 63.
The facts as to the new contractual arrangements on and after transfer were slightly different as between Mr Cross and Mrs Gibson. Mr Cross entered into a new contract of employment with BA on or shortly after transfer, which provided for a compulsory retirement age of 55. BA had informed him when presenting him with the new contract, as it did other pilots of BCal, that if he did not agree its terms it would dismiss him. It subsequently provided him with details of his pension scheme, which provided for a normal retirement date of 55. About a year later, when he moved on promotion from Gatwick to work out of Heathrow, he would, as the Employment Tribunal found at paragraph 26 of its Decision, have been required to accept BA’s policy had he not already done so at the time of transfer.
As to Mrs Gibson, BA also required her to sign a new contract of employment on or shortly after transfer, though it would appear that she did not appreciate from such documentation as BA provided to her at the time that it involved a change in her contractual retirement date from 60 to 55. She learned later about the change. During her employment with BA Mrs Gibson worked for a period on a part-time basis, reverting to full-time work and later, again to part-time work. Towards the end of her period of employment, and before reaching BA’s retirement age of 55, she sought early retirement in response to a general invitation from BA, but later withdrew her application after considering the terms offered.
In due course, many years after the transfer, BA required Mr Cross and Mrs Gibson to retire – effectively dismissed them - at 55 in accordance with its rule. In Mr Cross’s case that occurred in 2002, some 14 years after transfer, and in Mrs Gibson’s case, in 2001, some 13 years. They challenge that requirement in these unfair dismissal proceedings, maintaining that they were entitled to continue working until aged 60, notwithstanding that, on or shortly after accepting employment with BA on the take-over in 1988, they had agreed to the lower retiring age on BA’s agreement to fund a full pension for them at that age. As to the latter, they claim that their acceptance of the new term is negated by the TUPE Regulations. The main question for the Court is whether, at the time of their respective retirements they were protected by those Regulations, read with section 109 of the 1996 Act, from unfair dismissal. No question now arises as to the unfairness of the dismissals if they were not so protected.
There are a further eight other ex-BCal pilots with similar claims whose claims for unfair dismissal have been stayed pending the outcome of these appeals.
The Facts
The undisputed facts in a little more detail were as follows.
Before April 1988 Mr Cross and Mrs Gibson were employed by BCal at its base at Gatwick. Their contracts of employment with BCal provided for retirement at 60. Neither stipulated any age as their respective normal retiring age, though in Mr Cross’s contract there was a general reference to a normal retiring age of 60 for pilots. In January 1988 BA bought the entirety of the shares of BCal. On 14th April 1988 all BCal’s assets and business were transferred into BA. With effect from mid-May the operations of the two airlines were “merged”, though BA’s Heathrow-based and Gatwick-based operations remained distinct.
BA does not now dispute that the transfer by BCal to BA of its undertaking was governed by the TUPE Regulations so that BCal’s workforce was transferred into BA’s employment. But that was not the way in which any of those involved, including the trade unions, approached the matter at the time. Instead, BCal employees were told that their employment with BCal would be terminating and that they would be offered fresh contracts of employment with BA.
Mr Cross and Mrs Gibson accepted the offered BA terms which, as I have said, provided - in contrast to their BCal terms - for retirement on full pension at 55, the standard retirement/pensionable age for flying crew employed by BA. The BCal pension fund had been funded to provide full pensions only at the age of 60, but BA undertook to make good to them on retirement at 55 any funding shortfall in the transferred BCal pension fund. BA drew the changes in the pension/retirement position to the attention of the BCal staff.
BCal had been based at Gatwick, and, after the merger, the ex BCal staff continued to work from there. However, in the course of time, most ex-BCal pilots moved to Heathrow; Mr Cross did so in 1989. Heathrow work was the more sought-after for pilots because it offered better earning opportunities. All pilots not already on standard BA terms were required to accept them, including the compulsory retirement age of 55, on moving to Heathrow. As I have said, Mr Cross would have been required to accept such terms had he not already agreed to do so at the time of the take-over. In short, following the take-over, BA applied its policy of retirement on full pension to ex BCal flight crew, seemingly without protest from them.
The Law
The 1996 Act, in its provisions for unfair dismissal, reproduced the statutory scheme first introduced in the Industrial Relations Act 1971. Section 109 of the Act excludes from the entitlement given to employees by section 94 of the Act to claim for unfair dismissal, those who have reached “normal retiring age” for someone in their positions in their employment, or failing any such “normal” retirement age, 65. It provides as follows:
“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.”
In short, an employee cannot claim for unfair dismissal after he has attained “normal retiring age” for someone in his “position” – with a backstop of 65 if there is no such norm.
The 1996 Act, given the obviously fact-sensitive nature of the concept of a “normal” retiring age in any particular case, unsurprisingly, does not attempt to define it or to provide, say, a list of criteria for identifying it. However, jurisprudence on section 109 and its statutory predecessors has established that it is concerned with what happens in practice. Any contractual retirement age of a particular employee, and/or of all or of the same or similar group of which he is part, is taken as a starting point, but only as prima facie evidence of his normal retiring age. If the evidence taken as a whole shows that he or other employees in the same or similar group normally retire at some different age, then that, or if there was no norm, 65, would be the cut-off age under section 109. So, the normal retiring age for a group of employees in the same employment may be lower than the contractual retiring age for a particular employee or employees in the group. See Waite v Government Communications Headquarters [1983] ICR 653; Hughes v Department of Health and Social Security [1984] ICR 557; and Barclays Bank Plc v O’Brien [1994] ICR 865, in the last of which Peter Gibson LJ, at 870H-871H, summarised the case-law as it then stood. Claims of “unfair retirement” in such cases are often determined by reference to s. 109 rather than to the question whether the dismissal was substantively unfair within section 98 of the 1996 Act.
It is common ground that Mr Cross and Mrs Gibson, like all flight crew in BA’s “mainline operation” – whether ex-BCal or “home-grown” – were in the same “position” within the meaning of that word in section 109. Accordingly, it is also common ground that, but for the TUPE Regulations, they would have had a normal retiring age with BA of 55, namely that required by their contracts of employment with it and in accordance with its policy and invariable practice, thus excluding them from the right to claim for unfair dismissal on reaching that age.
The broad effect of the TUPE Regulations was to preserve in the event of transfer of an undertaking governed by them the terms of contracts of employment between the transferor and its employees transferred to the new undertaking as if they had originally been made with the transferee – a “statutory novation of contact”. The Regulations were made to give effect to EC Council Directive 77/187 of 14th February 1977 on the approximation of laws of the Member States for safeguarding employees’ right on transfers of undertakings. Article 3.1 of the 1977 Directive provides:
“The transferor’s rights and obligations arising from a contract of employment or from an employment relationship existing on the date of transfer … shall, by reason of such transfer, be transferred to the transferee.”
The Council issued a further Directive in 2001, 2001/23/EC, setting out in some particularity further steps to be taken by Member States towards approximation of their laws in this respect. It is common ground that the TUPE Regulations adequately implement the Directives.
Regulation 5 of the TUPE Regulations provides, so far as material:
…(1) …[A] … transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor in the undertaking or part transferred by the transfer but any such contract which would otherwise have been terminated by the transfer shall have effect after the transfer as if originally made between the person so employed and the transferee.
(2) Without prejudice to paragraph (1) above … on the completion of a relevant transfer-
(a) all the transferor’s rights, powers, duties and liabilities under or in connection with any such contract, shall be transferred by virtue of this Regulation to the transferee … .
(b) …”
It should be noted that neither Regulation 5 nor any other provision in the TUPE Regulations says anything about the effect of a transfer, if such is conceptually and legally possible, of a pre-transfer normal retiring age.
Mr Cross and Mrs Gibson maintain, as they maintained below, that their contractual retiring age with BCal was also their normal retiring age there, and, therefore, that the effect of regulation 5 of TUPE was to transfer with them to BA both their original contractual retirement age of 60 and their corresponding normal retiring age. They claim, in short, that the effect of the TUPE transfer was to “freeze” their BCal normal retiring age on and after their transfer to BA.
As to Mr Cross and Mrs Gibson’s acceptance of BA’s contractual retirement age of 55 on or shortly after the transfer, they say that it was ineffective in law by reason of the decision of the European Court of Justice in Daddy’s Dance Hall [1988] ECR 739, recently re-affirmed by the Court in Martin v South Bank University [2004] ICR 1234, at paragraphs 39 and 40. The effect of that rule, articulated by the Court in Daddy’s Dance Hall, in paragraphs 15 – 18, is that an employee may not waive rights conferred on him by the mandatory provisions of Directive 77/187 even if the disadvantages resulting from such purported waiver would be offset by benefits so that, taking the matter as a whole, he is not left in a worse position. However, the Directive does not preclude an agreement with a new employer changing the employment relationship, providing that the transfer is not the reason for the change. The kernel of that part of the rule is to be found in the following passage from paragraph 17 of the Court’s judgment:
““17…[I]n so far as national law allows the employment relationship to be altered in a manner unfavourable to employees in situations other than the transfer of an undertaking, in particular as regards their protection against dismissal, such an alternative is not precluded merely because the undertaking has been transferred in the meantime and the agreement has therefore been made with the new employer. Since by virtue of article 3(1) of the Directive the transferee is subrogated to the transferor’s rights and obligations under the employment relationship, that relationship may be altered with regard to the transferee to the same extent as it could have been with regard to the transferor, provided that the transfer of the undertaking itself may never constitute the reason for that amendment.”
BA now accepts that Mr Cross’s and Mrs Gibson’s and other BCal’s employees’ contracts of employment were transferred to BA by virtue of regulation 5 of TUPE and that, by virtue of the rule in Daddy’s Dance Hall, they retained on transfer, though not eventually, their contractual retiring age of 60. However, it maintains that Mr Cross or Mrs Gibson can still not succeed on their claims to a corresponding transfer of their statutory normal retiring age for either of two reasons -
The statutory normal retiring age, as distinct from a contractual retiring age, is not “transferable” under the TUPE Regulations because, as the Employment Appeal Tribunal held, at paragraphs 18 - 20 of its judgment, section 109 of the 1996 Act is not concerned with contractual rights. It is concerned with the normal retiring age for the relevant group at the relevant time and is, thus, not an individual “right” capable of being transferred under the TUPE Regulations; and
Even if the rule in Daddy’s Dance Hall precluded BA from relying on Mr Cross’s and Mrs Gibson’s acceptance on or shortly after transfer of a contractual retiring age of 55 and, if it follows, from asserting a normal retiring age of 55 at the time of the transfer, post-transfer changes overtook the rule - in Mr Cross’s case, his subsequent voluntary move to Heathrow, and in Mrs Gibson’s case, switches from full-time to part-time employment and back, so that such acceptance was not tainted by any connection with the transfer.
The Decision of the Employment Tribunal
Before the Employment Tribunal, Mr Cross and Mrs Gibson succeeded in their arguments on both issues (and others no longer raised by BA) on the section 109 and TUPE Regulations point, but lost on BA’s fall-back argument under section 98(1)(b) that the dismissals were not in the circumstances unfair, an argument which, as I have indicated, BA no longer maintains.
First, the Tribunal found that the contracts of employment of the BCal employees were transferred under the TUPE Regulations– and accordingly that, by reason of regulation 5 and the rule in Daddy’s Dance Hall, Mr Cross and Mrs Gibson continued to enjoy a contractual retirement age of 60 notwithstanding their acceptance on or after transfer of a new contractual retiring age of 55. However, it held, in paragraph 35 of its Decision, that that combination of regulation and rule did not have effect to transfer their section 109 normal retiring age and hence their statutory right not to be unfairly dismissed until reaching that age. Nevertheless, it concluded, in paragraph 43 of its Decision, that ex-BCal pilots and cabin crew were respectively “in separate groups” and, therefore, not in the same “position” within the meaning of section 109(1)(a) as the remainder of BA’s workforce and, on that account, were not excluded from the right not to be unfairly dismissed. Neither Mr Cross nor Mrs Gibson had put that case to the Tribunal and they did not seek to support its reasoning in this respect before the Employment Appeal Tribunal.
Secondly, the Tribunal held that, even if the rule in Daddy’s Dance Hall had effect so as to transfer the BCal’s normal retiring age of 55 to ex BCal employees taken on by BA, Mr Cross’s and Mrs Gibson’s post-transfer conduct in accepting a contractual retirement age of 55 did not displace that rule and, thus, that it had jurisdiction to entertain their claims for unfair dismissal.
However, as I have indicated, the Employment Tribunal, in the purported exercise of that jurisdiction, held that the dismissals were fair.
The decision of the Employment Appeal Tribunal
The Employment Appeal Tribunal, at paragraph 18 of its judgment, held that the statutory normal retiring age is not a right capable of being transferred under TUPE, and concluded that, by the claimed dates of compulsory retirement/unfair dismissal of Mr Cross and Mrs Gibson, their normal retiring age was 55:
“… The statutory obligation of the employer to comply with unfair dismissal legislation, and of the employee to have the benefit of it, did not lead to transfer as a result of TUPE; it applied both before and after TUPE in any event. … even if it did transfer, the liability or entitlement would be in accordance with what the unfair dismissal legislation would provide at the time: not so as to freeze the entitlement of the employee if the law changed (whether so as to abolish the right to claim unfair dismissal or to limit it or to expand it) or if the … [normal retiring age] changed. The employee would have the rights given to him (or from which he was excluded) by statute according to what the … [normal retiring age] would be at the time, objectively construed. …”
Although the Employment Appeal Tribunal was at one with the Employment Tribunal on the issue of non-transferability of the section 109 normal retiring age, it rejected the Tribunal’s reasoning that they nevertheless were not caught by BA’s contractual and normal retirement age of 55 because they were not in the same section 109 “position” as the rest of the BA workforce.
The Employment Appeal Tribunal considered in some detail, at paragraphs 21 - 29 of its judgment, BA’s claimed entitlement to rely on the application of the rule in Daddy’s Dance Hall as to the post-transfer acceptance by Mr Cross and Mrs Gibson of BA’s retirement at 55 for flight crews. However, it reached no conclusion on the matter because its decision on the main issue was decisive of the appeal before it.
The Issues on this appeal
There are, as I have indicated at the beginning of this judgment, two issues on this appeal, namely whether the Employment Tribunal went wrong in law on the questions:
whether the statutory normal retiring age is transferable under TUPE; and, and only, if so
whether in the circumstances, Mr Cross’s and Mrs Gibson’s post-merger conduct in accepting BA’s retirement age 55 for flight crews negated such transfer by virtue of the rule in Daddy’s Dance Hall.
“Transferability” of normal retiring age?
Submissions
The parties’ respective contentions on this issue as presented on the appeal barely engage. Mr Robin Allen QC, on behalf of Mr Cross and Mrs Gibson, in arguing that the transfer of employment from BCal to BA “froze” the normal retiring age, urged a broad interpretation of the TUPE Regulations so as to govern the section 109 normal retiring age as well as contractual retirement age. More particularly, he submitted that, in order to comply with the Directives and the jurisprudence of the European Court of Justice, our courts should construe regulation 5 of the TUPE Regulations so that pre-transfer contractual retirement age preserves, post-transfer, any pre-transfer normal retiring age. Mr Nicholas Underhill QC, as he then was, for BA, in a closely reasoned analysis of the combined effect of section 109 of the 1996 Act and regulation 5 of the TUPE Regulations, submitted that the latter did not operate to transfer as a contractual or other entitlement any individual employee’s pre-transfer normal retiring age.
Mr Allen put at the heart of his submissions that it was contrary to the TUPE Regulations and the rule in Daddy’s Dance Hall and, therefore, unlawful for BA on or after transfer, to require a change in their contractual retiring ages to 55 and, thereby, to a corresponding normal retiring age. As an example of that notion of “freezing” or permanence of a pre-transfer normal retiring age, he sought to rely on certain dicta of the European Court of Justice in Case C-319/98 Collino v Telecom Italia SpA [2002] ICR 38, at paragraph 52, and of the Employment Appeal Tribunal in Solectron Scotland Ltd v Roper [2004] IRLR 4, at paragraph 42, neither of which, in my view, gives any direct support to the issue of transferability raised in this case. It followed, he said, that the Employment Appeal Tribunal here, in giving so much weight to BA’s unlawful requirement of a change in Mr Cross’s and Mrs Gibson’s contractual retirement age to 55 and to its resultant effect on the perception as to their normal retiring age, permitted BA to benefit from its unlawful requirement. Such an outcome, he submitted was also in breach of the TUPE Regulations, since they should be construed in order to give the protection intended by the Directives prohibiting transfer both of changes in contractual terms to the detriment of employees and indirect effects, in this case as to the normal retiring age, of such purported changes.
It is essential to the success of those submissions that section 109 of the Act and the TUPE Regulations should be construed so as to give Mr Cross and Mrs Gibson a statutory right to protection on and after transfer from unfair dismissal up to both their former BCal contractual retirement age and their corresponding normal retiring age of 60. He submitted that such broad statutory entitlement is a right derived from contract and that, even if harmonization to that effect would be difficult or economically inconvenient, Member States should strive to achieve it. Any other interpretation, he argued, would undermine the protection intended to be provided by the Directives through the medium of national measures and would be contrary to the strong imperative of Union law on our tribunals and courts to interpret national implementing measures in conformity with it, citing the European Court of Justice’s observations in the recent joined cases C-397/01 to C-403/01 Pfeiffer v Deutsches Rotes, Kreuz Kreiserverband Waldshut eV [2005] IRLR 137, at paragraphs 110 – 119. He argued that, in the absence of direct authority on the point, this Court should not treat the matter as acte clair, and should refer it to the European Court
Mr Underhill, while accepting the transferability of a contractual retirement age for the purpose, maintained BA’s challenge to the transferability of the statutory normal retiring age. He prefaced his submissions as to the latter by pointing out the limitations of the former, namely that a contractual retirement age of an employee provides for automatic termination of his employment when he reaches that age, it does not give him a contractual right to remain in employment until reaching that age, only until the expiry of any contractual notice period.
As to the statutory concept of a normal retiring age articulated in and for the purpose of section 109 of the Act, Mr Underhill submitted that, not only is it not a contractual term, it is not a statutory right incidental to any individual contract of employment. It is one of the defining characteristics of his statutory right not to be unfairly dismissed before reaching his normal retiring age, determined by reference to the group to which he, as a claimant for unfair dismissal, belongs at the time of his dismissal. It is not therefore, in the words of regulation 5 of the TUPE Regulations, a “duty [or] liability” of the employer or, correspondingly, any contractual “right or power” of the employee, so as to effect a transfer of any pre-transfer normal retiring age at or post transfer. Put another way, section 109 operates before and after transfer to identify a circumstance or condition determining at the time of dismissal the application of its exclusion of the right to claim for unfair dismissal; it is what happens in practice, not what a contract of employment provides, citing an observation of Staughton LJ in Barber v Thames Television PLC [1990] ICR 661, CA, at 673E.
As to the main thrust of Mr Allen’s submissions on behalf of Mr Cross and Mrs Gibson, that to deny their entitlement not to be unfairly dismissed on account of their age would undermine the protection intended by the Directives to employees affected by a transfer, Mr Underhill submitted that to uphold BA’s case on this issue would not contravene or frustrate the intention of the Directives. No doubt their general policy is to protect the position of an employee in a transfer so far as possible. But the Directives do not provide – nor realistically could they – that every beneficial incident of an employment will be preserved on and after transfer, especially where the benefit in question may depend on external circumstances, such as the characteristics of a group to which an employee happens to belong at a particular time. Not only do the Directives focus on the preservation of employees’ contractual rights, but they leave the limits of those rights, where they are in question, to national law; Wilson v St Helen’s Borough Council [1999] 2 AC 52, per Lord Slynn of Hadley, citing, at 83H-84E, the jurisprudence of the European Court of Justice. Regulation 5 cannot in such circumstances be construed so as to confer on an employee a right to claim unfair dismissal in circumstances where that right is explicitly excluded by the primary legislation in question, namely by s. 109 of the 1996 Act. In the context of this case, he submitted, Mr Cross and Mrs Gibson, as a matter of general law, had before and after transfer a statutory right not to be unfairly dismissed; such right was not itself transferred, but even if it were, it was no more than a right not to be unfairly dismissed until they had reached their normal retiring ages whatever they were at the time of dismissal.
Conclusion
In my view, Mr Allen’s undoubtedly justified submissions on the need to construe regulation 5 of the TUPE Regulations so as effectively to preserve, post-transfer, pre-transfer rights of employees do not meet Mr Underhill’s point that an employee’s contractual rights under his pre-transfer contract of employment cannot define or “freeze” his pre-transfer normal retiring age so as to transfer it along with his pre-transfer contractual rights.
The focus of the Directives and of the TUPE Regulations is on preserving the rights of individual employees enjoyed in their pre-transfer employment, typically contractual as Lord Slynn’s treatment of the matter in Wilson, at paragraphs 79A-81A, demonstrates. The section 109 normal retiring age is conceptually different from a contractual retirement date, notwithstanding that, as the Court of Appeal held in Waite and O’Brien, there is a presumption that a contractual retirement age applicable to all or nearly all the employees in a group is the normal retiring age for the group. However, as the Court’s reasoning in both cases shows, it is different in three related respects: 1) a normal retiring age for the purpose of section 109 falls to be determined by reference to the facts at the time of dismissal, not at the time of contract or transfer; 2) the presumption is, therefore, necessarily rebuttable; and 3) it is objective in the sense that it is identified by reference not only to the facts as they might affect the employee in question, but to all others in the same employ - in the terminology of section 109, in his “position”. In O’Brien Peter Gibson LJ, at 871E-D, put the essential question for a court in this way:
“… 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? …”
For the reasons given by Mr Underhill, the normal retiring age at any given time, though often heavily influenced by the contractual provision for retirement in force at that time, is, like the contractual term itself, subject to change, pre- and post-transfer. It is not something that is capable in terms of our national legislation – section 109 of the Act – of being frozen in perpetuity as at the moment of transfer. It is the normal retiring age for those in the “position” of the employee in question at the time of his dismissal that matters, for it is that which, by section 109 of the Act, determines whether, at that time, he has a right under section 94 of the Act not to be unfairly dismissed. Accordingly, however well disposed our courts should be to preserving pre-transfer contractual rights of employees corresponding, as provided by regulation 5(2)(a), to the “… powers, duties and liabilities” of the transferring employer “under or in connection with any such contract”, if the concept of normal retiring age may vary and, for this purpose is that applicable at the time of dismissal, there is nothing there to transfer or to preserve as at the time of transfer. As Mr Underhill put it, all that is transferred is a general law right not to be unfairly dismissed before reaching normal retirement age, whatever that may be at the time of dismissal.
In my view, the construction of the TUPE Regulations in the context of section 109 of the 1996 Act is plain enough and in its application to the facts of Mr Cross’s and Mrs Gibson’s cases for the English courts to decide the matter without a reference to the European Court of Justice. On the facts of their cases, there can be no doubt that regulation 5, properly construed, did not have effect to “transfer” to their employments with BA their pre-transfer BCal normal retiring age of 60 if that had fallen for consideration under section 109 before transfer. Equally, it is plain that, at the time of their respective dismissals by BA it was that applicable at those times to those in the same position throughout BA, namely 55.
Accordingly, I would reject the ground of appeal of Mr Cross and Mrs Gibson on the main issue, which is enough to dispose of their appeals.
Post-transfer agreement to a higher retirement age than that pre-transfer
Submissions
As I have mentioned, this point - raised in the Respondent’s Notice - did not fall for decision, and was not decided, by the Employment Appeal Tribunal having regard to its decision on the main issue, which I would uphold. It does not, therefore, call for decision by this Court if I am right in upholding the Tribunal’s decision on that issue. Nevertheless, and having regard to counsel’s submissions on the matter, it may be of value for me to express a view on it.
Mr Underhill submitted that, if he was wrong on the first issue in arguing that regulation 5 of the TUPE Regulations did not transfer any individual employee’s right to his pre-transfer normal retiring age, it had, at best for the employee a suspensory, not a freezing effect on that entitlement, so as to render it subject to post-transfer variation of the contract of employment or other change of circumstances unrelated to the transfer. In the circumstances of this case, he submitted that even if Mr Cross’s and Mrs Gibson’s new contractual retirement dates had been transfer-related so as to engage the Daddy’s Dance Hall rule, subsequent events amounting to implied variation independent of the transfer broke the link. In Mr Cross’s case, he maintained that the move to London-Heathrow a year so after the transfer - conditional on his continued acceptance of a contractual retirement age of 55 – was a change in circumstances that destroyed the link with the transfer that had previously vitiated his agreement to that change. The Daddy’s Dance Hall rule, he submitted, should not continue to obstruct the parties’ actual agreement when the policy reason for it doing so had ceased to operate – in Mr Cross’s case some 14 years post-transfer and in Mrs Gibson’s case, 13 years. In so submitting, he relied upon the following remark of Lord Slynn in Wilson at 89D-E:
“…[T]here must, or at least may, come a time when the link with the transfer is broken or can be treated as no longer effective.”
As Mr Underhill acknowledged, Lord Slynn was in that context considering the mere effluxion of time.
The “link” with the transfer in Mr Cross’s case was, Mr Underhill said, broken by the move to Heathrow. If he could have moved to Heathrow without accepting the 55 retirement age he would have been in a better position than any other employee of BA working from that airport, which cannot have been the intention or effect of the TUPE Regulations or the Directive. As to Mrs Gibson, Mr Underhill relied on her moves from part-time to full-time and back to part-time work in the 1990s which, he submitted, plainly showed an acceptance by her of BA terms. He submitted that those variations constituted an acceptance unrelated to the transfer that she had accepted BA terms in full.
Mr Underhill maintained that the only conclusion open to the Employment Tribunal in law on its own primary findings would have been that, as at the date of both Mr Cross’s and Mrs Gibson’s retirements, the rule in Daddy’s Dance Hall no longer operated to invalidate their agreement on or shortly after transfer to a contractual retirement age of 55 and that, since their cases on their normal retiring age depends on the continuance of a contractual retirement age of 55, their contention that s. 109 does not apply must fail.
Mr Allen argued for no, or a highly restricted, suspensory effect of the application of regulation 5 of the TUPE Regulations. He relied upon the Employment Tribunal’s reasoning, in paragraphs 26 - 34 of its Reasons, that Mr Cross and Mrs Gibson, by continuing to work for BA in the circumstances and the way they did, would not have waived their pre-transfer contractual entitlement to a retirement age of 60 so as to deny them, on that account, a right to claim for unfair dismissal beyond the age of 55.
Whilst acknowledging the potential for variation pre and post-transfer of an employee’s normal retiring age, Mr Allen submitted that, unless a post-transfer variation can be shown to be completely independent of the transfer - that is, a new transaction either by an oral or written contract or by conduct over time - it is caught by the rule in Daddy’s Dance Hall. He maintained that, unless conduct and effluxion of time post-transfer demonstrate such independence from transfer as the effective cause, the “freezing” effect of the TUPE Regulations for which he contended continues to apply so as to maintain the “transfer” of the pre-transfer normal retiring age. A fortiori, he maintained, where, as here, a purported variation coincides with a transfer which, but for the TUPE Regulations, would vary it, the TUPE Regulations should prevail.
Conclusion
It is common ground in the appeals that the policy behind the main rule in Daddy’s Dance Hall is one of anti-avoidance, namely to prevent employers and employees contracting out of the requirements of the Directives that pre-transfer contractual rights of employees should be preserved post-transfer. It is also common ground that the effect of the main rule in Daddy’s Dance Hall is not to put a complete ban after transfer on changes adverse to transferred employees, since, as Mr Underhill observed, such a ban would put them in a uniquely favourable position compared with other of their fellow employees holding the same position at the same time. As Lord Slynn indicated in Wilson, at paragraph at 89D-F, a change is not invalidated merely because the undertaking has been transferred in the meantime, but only where the transfer itself is the reason for the change, for example where it is made at or around the time of transfer to bring transferred employees’ terms into line with those of the transferee’s existing workforce; see e.g. Case C-04/01 Martin v South Bank University [2004] ICR 12324.
Thus, in the case of Mr Cross, if he and BA had first agreed on the new retirement age of 55 on his move a year after the transfer to the London-Heathrow fleet in 1989, any such post-transfer agreement would have been unobjectionable. The agreement would not have been “transfer-related” in the relevant sense. The move to Heathrow was not a consequence of the merger: BA continued to operate out of Gatwick and Mr Cross could have stayed with the Gatwick fleet and would have still been in the same position as all BA pilots. In addition, neither Mr Cross nor, for that matter Mrs Gibson, entered into any further agreement, post-transfer, on the matter of retirement or behaved over the 13 years or more of their respective employments with BA in such a way as to suggest any non-transfer agreement or understanding on the subject different from that on transfer.
In Mr Cross’s case, he had already signed at or shortly after transfer standard BA terms providing for a contractual retirement date of 55, and no-one saw any need for him to do so again. In Mrs Gibson’s case, she also entered into a new contract of employment on or shortly after transfer to similar effect, although without appreciating its effect on her contractual retirement date until later. The fact that, whether by contractual variations or otherwise, she moved back and forward from full-time to part-time employment over her 13 years with BA, would not bear on a normal retiring age of 60 assumed for the purpose of considering this alternative issue.
Accordingly, if the issue had arisen for decision in the appeals, I would have held that it was open to the Employment Tribunal to find as a matter of law and fact that in the case of neither appellant was there any post-transfer contractual or other conduct bearing on their normal retiring age that could be regarded as independent of the transfer so as to enable BA to defeat their claim for transfer of their BCal normal retiring age of 55 if it were to lose on the main issue in the appeal.
Both sides are in agreement that there is some suspensory effect in the notion of transfer in regulation 5 for this purpose – only the precise ambit of it being in issue. In my view, whatever the scope for dispute about its extent, including matters such as effluxion of time, the issue in this case would essentially be one of fact for the national tribunal. It would no more be a candidate for a reference to the European Court of Justice than that under the main issue in these appeals.
Lord Justice Laws
I agree.
Lord Justice Richards
I also agree.
___________