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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> London Borough Of Haringey v Reynolds [1999] UKEAT 1070_98_1012 (10 December 1999) URL: http://www.bailii.org/uk/cases/UKEAT/1999/1070_98_1012.html Cite as: [1999] UKEAT 1070_98_1012

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APPEARANCES

 

For the Appellant	MR J TAYLER (of Counsel) Legal Services Department Alexandra House 10 Station Road Wood Green London N22 4TR
For the Respondents	MR G CLAYTON (Solicitor) Hamilton House Mabledon Place London WC1H 9BD


 


JUDGE WILKIE QC:

1. This is an appeal by the London Borough of Haringey (the Appellant) against a decision of the Industrial Tribunal (as it then was) held at London (North) which unanimously decided that the applicant Ms Y M Reynolds was entitled to a redundancy payment of £5,565.00 and an award by way of damages for breach of contract so as to enhance the pension payable to her by the Appellant by adding 6 added years service.
2. There is, in addition, a cross appeal by Ms Reynolds against the decision by the Tribunal to limit her redundancy payment to the statutory maximum.
3. We have been greatly assisted by the written and oral arguments respectively of Mr Tayler for the Appellant and Mr Clayton for Ms Reynolds. Each of them made reference to their view of the underlying merits of the matter with which the Tribunal was dealing. We wish to make it clear that this decision is based upon our view of the law as it is properly to be applied to the facts in this case which were not substantially in dispute.
4. Ms Reynolds commenced employment with the Appellant on 1 September 1974. On 1 September 1986 she was appointed Head Teacher of Earlham Junior School. She entered into a written contract of employment on that date which provided that she was appointed as full-time qualified Head Teacher in the employ of the Appellant for service on the staff of Earlham Junior School or such other school maintained by the Appellant in which she may be called upon to serve. The contract also provided that her terms of employment were covered by existing collective agreements made with recognised Teacher's Associations as varied from time to time.
5. At the relevant time the school was a county school with a delegated budget. In December 1996 the Governing Body of that school and its sister school the Earlham Infant School requested the Appellant to proceed to amalgamate the schools. In statutory terms this had to be effected by the Appellant first ceasing to maintain each of the infant and junior schools and, thereafter, establishing a new county school to be known as Earlham Primary School.
6. On 13 February 1997 the Appellant gave notice of its decision to seek to cease to maintain the two schools and to establish a new school pursuant to the requirements of Sections 35(1) and 167(1) of the Education Act 1996. It was at that stage proposed that the proposals would take effect respectively at the end of the summer term 1997 and the beginning of the autumn term 1997. In fact this particular set of proposals required the approval of the Secretary of State by virtue of Section 37(3) and 169(3) of the Education Act 1996.
7. In anticipation of the Governing Body requesting the amalgamation, on 2 April 1996 Ms Reynolds wrote to the Appellant asking what her position would be if she did not apply for the Headship of the amalgamated school. The Appellant, through Ms Dowson head of Education personnel, replied on 25 April 1996. In essence that letter indicated that the existing head teachers or deputies of the two schools would have an opportunity to opt for voluntary redundancy. This would apply irrespective of whether they chose to apply for the posts at the new school or not. In that letter it was indicated that the estimated benefits would need to be calculated at the appropriate time but a set of indicative guidelines were attached. The final payment, it was stated, would comprise immediate payment of pension with a maximum of 6 added years, together with statutory termination payment based on a calculation of weekly pay multiplied by complete years of continuous service.
8. In fact Ms Reynolds did not continue to work at the school, which was in receipt of "special measures". Rather she was granted a period of unpaid leave of absence to take up a paid research post at the Institute of Education from 1 March 1997 to 31 December 1997. She nonetheless remained employed as the Head Teacher of Earlham Junior School.
9. At this stage it is necessary to summarise certain of the important statutory provisions which apply to this case. Section 139 of the Education Act 1996 deals with payments in respect of dismissals etc. in relation to schools with delegated budgets. Subsection 1 provides that the section applies to a county or voluntary school at any time when it has a delegated budget. Subsection 2 provides that it shall be for the governing body to determine (a) whether any payment should be made by the LEA in respect of the dismissal, or for the purpose of securing the resignation of any member of the staff of the school and (b) the amount of any such payment. Subsection 5 provides that costs incurred by the local education authority in respect of the dismissal or premature retirement, or for the purpose of securing the resignation of any member of the staff of the school, shall not be met from the school's budget share for any financial year except in so far as the authority have good reason for deducting these costs or any part of these costs from that share. These provisions were originally contained in the Education Reform Act 1988.
10. The Teachers (Compensation for Redundancy and Premature Retirement) Regulations 1989 provide, inter alia as follows. Regulation 4(3-4), (which define the persons to whom the regulations apply); apply to this case as Ms Reynolds was an eligible teacher who had attained the age of 50 and had completed a qualifying period of at least five years pursuant to the relevant superannuation regulations. It was a further condition of a teacher being eligible that, "(e) the former employer has notified the Secretary of State in writing that the employment was terminated by reason of his redundancy or in the interests of the efficient discharge of the employers functions".
11. Paragraph 5 of the Regulations provides for compensation for redundancy and permits the person by whom the teacher was employed to pay her compensation for redundancy which does not exceed the difference between the maximum statutory redundancy payment and the sum which would be payable by way of a redundancy payment but for the statutory maximum.
12. Paragraph 6 of the Regulations provides for additional service credit in respect of compensation for premature retirement. In summary that provides that the governing body may credit an eligible teacher with a period of service not exceeding in this case, ten years. Paragraph 17 of the regulations provides that the cost of compensation to which a person is entitled under these Regulations is to be met by, the LEA.
13. Thus the statutory scheme provides that it is for the Governing Body to decide whether, and if so how much, to pay to a teacher who is dismissed by reason of redundancy, or whose employment is terminated in the interests of the efficient discharge of the employer's functions. The LEA provides the money which shall not come from the School's budget share unless the Authority has good reason for deducting the costs from that share. In particular the Governing Body had the power to decide to credit such a teacher with additional service not exceeding ten years. By way of contrast it appears that the decision whether to dis-apply the statutory maximum redundancy payment was one for the LEA alone.
14. The Appellant had adopted policies applying, respectively, where a teacher was dismissed by reason of redundancy and where the teacher took premature retirement in the interests of the efficiency of the service. In the former case the policy was contained in the Appellant's redundancy policy which makes it clear that each case was to be considered on its individual merits but having regard to specific guidelines. For a person in the position of Ms Reynolds the guidelines provided for, inter alia, an award of compensatory added years of 6, and the statutory redundancy payment on weekly pay in excess of the statutory limit. In respect of premature retirement in the interests of the efficiency of the service the policy was for the credit for added years to be subject to a maximum of two years additional service. Thus, in the run up to the end of the summer term 1997 Ms Reynolds was taxed with the question of whether any cessation of her employment would be by reason of dismissal by way of redundancy or by resignation by way of premature retirement. This was made all the more urgent because it was the common belief that after the commencement of the school year 1997 the statutory scheme and/or the appellant's policy might change so as to reduce or remove the availability of the credit for 6( additional years service.
15. On 30 April 1997 Ms Reynolds applied for premature retirement. This application was made "without prejudice". It was explicitly on the grounds of "the efficiency of the service" and on the footing that the amalgamation issue might not be decided before the cut off date for premature retirement.
16. This application was forwarded by Ms Dowson to the Governors on 16 May 1997. In that letter she indicated that, if the amalgamation went ahead, the authority's advice was that Ms Reynolds would be entitled to payment under the Council's redundancy policy that is to say with a maximum of 6( added years. If the amalgamation did not proceed the appellant recommended two added year's enhancement. If the governing body decided to exceed that advice without good reason then, pursuant to section 39(5) of the 1996 Act, payment of any enhancement would be charged to the School's budget share.
17. On 20 May 1997 the Governing Body approved her application for premature retirement to be offered as of 31 August 1997 with an enhancement of two years as recommended by the appellant in its letter of 16 May 1997. On 23 May 1997 Ms Reynolds was notified of the decision of the Governing Body and asked to confirm her retirement for 31 August 1997. On 18 June 1997 Ms Reynolds wrote to Ms Dowson and returned the form in which she accepted the offer of premature retirement with two added years to retire on 31 August 1997 but she added in writing "subject to my post not being redundant on 1 September 1997".
18. On 2 July 1997 the appellant wrote to Ms Reynolds to the effect that there could be no conditional acceptance of the premature retirement offer. The letter made it clear that the offer was not subject to change in the light of any decisions the LEA or any Governing Body may implement in relation to the amalgamation of the schools. The letter further indicated that the writer would presume, if she did not hear within five working days, that the offer of premature retirement was accepted in the light of such clarification. On 18 July 1997 Ms Dowson wrote to Ms Reynold's Trade Union Regional Secretary. That letter contained the following 2 paragraphs;

"In Yvonne's case, there is an added complication as she wishes to leave on 31 August 1997 and the schools are not amalgamating on the 1 September 1997. As I understand it, the Secretary of State has not yet approved the amalgamation proposal, and therefore the earliest they could now amalgamate is 1 January 1998, by which time both teacher posts will have been vacant for at least a term…

"I understand that Yvonne is currently on one year's (unpaid) leave of absence until 31 December 1997. She could request a withdrawal of her resignation for the end of August and await the outcome of the amalgamation decision. Assuming that the schools do amalgamate and there is a head teacher in post, and the school still has a delegated budget, and the redundancy policy does not change, and she was declared potentially redundant, and she applied for voluntary redundancy, Yvonne could get the maximum enhancement of 6 years plus redundancy pay as set out in the attached indicative guidelines. In view of these uncertainties, I can appreciate that Yvonne may wish to take what is on offer now"

19. On 29 July 1997, and contrary to what was stated in the letter of 18 July, the Secretary of State did approve the proposals which require the new school to be established on 1 September 1997. That letter was received by the Appellant on 31 July 1997. On 30 July 1997 Ms Reynolds wrote to Ms Dowson that on reflection she had decided to accept without conditions the LEA's offer of premature retirement with two years enhancement from 31 August 1997. Her letter was also received by the Appellant on 31 July 1997.
20. The appellant did not notify Ms Reynolds of the Secretary of State's decision, nor its effect on the statement contained in the letter of 18 July 1997. It appears that the Appellant did not inform her Trade Union Representative either. On 2 September 1997 her Trade Union Representative wrote to the Appellant, inter alia, asserting that he understood from the DFE that they had agreed to the amalgamation to take place from 1 September and calling on the Appellant to confirm that Ms Reynolds would now be entitled to premature retirement based on 6 year enhancement together with the Appellant's normal redundancy terms. The Appellant declined so to do and stood on the termination of her employment on 31 August 1997 by way of resignation and premature retirement on the terms to which she had unconditionally agreed by her letter of 30 July.
21. The Tribunal considered whether Ms Reynold's employment ended by way of resignation or dismissal by reason of redundancy. It concluded that the unconditional acceptance of the premature retirement was based on the statements made by Ms Dowson in her letter of 18 July 1997 which turned out not to be true. The Tribunal considered whether those statements amounted to actionable misrepresentations. It did so by applying the Court of Appeal's decision in Brown v Raphael [1958] Chancery 636. It concluded that whilst Ms Dowson's statements were statements of honestly held opinion, the circumstances in which they were made gave rise to a further implied representation that she had reasonable grounds for her opinion. The Tribunal concluded that she had no such reasonable grounds for her opinion and, accordingly, concluded that her statements did amount to actionable misrepresentations. Mr Tayler's first Ground of Appeal attacks that conclusion. He accepted in argument that the Tribunal approached the issue correctly as a matter of law and that, in essence, his submission was to the effect that no reasonable Tribunal properly directing itself could have found that she had no reasonable grounds for that opinion. In our judgement there was ample basis for the Tribunal properly to reach the conclusion which it did and therefore we reject this Ground of Appeal.
22. The Tribunal then went on to hold that by reason of those misrepresentations the agreement for premature retirement was rescinded. Mr Tayler sought to attack that decision on three bases. The first was abandoned by him in argument as it was apparent that, on authority, rescission is the action of the party seeking to rescind and the letter of 2 September 1997 plainly was capable of being read as an assertion of such right. His second basis for attack was that rescission was not available as there could not be restitutio in integrum. In our judgement there is nothing in this point. The agreement for premature retirement was to the effect that the contract of employment which was then subsisting would come to an end on 31 August 1997. The background for that agreement was that the contract of employment was subsisting and it was anticipated by both parties that it would come to an end either on 31 August 1997 (if approval was given in time, or 31 December 1997 if approval was delayed. The act of rescission took place on 2 September 1997 by which time the approval for closure of the school on 31 August 1997 had been given. Thus as of 2 September 1997 there was no contract of employment, whether by operation of the agreement sought to be rescinded or in the events which had in fact happened. In our judgement since in that respect the position on 2 September was identical whether the contract was rescinded or not, the restitutio in integrum argument is one of pure technicality. It is clear to us from the passages in Chitty to which we were referred that the courts have, in exercising an equitable jurisdiction, sought to be flexible in the application of the doctrine of restitutio in integrum. It was, therefore, plainly open to the Tribunal to act on the basis that rescission was available in these circumstances.
23. The third basis for attacking the decision that the contract be rescinded was based on an assertion of affirmation. As of 2 September 1997 the employment had ended and Ms Reynolds was in receipt, or potentially in receipt, of sums pursuant to the enhanced pension entitlement under that agreement. As we have pointed out, even if the contract were rescinded the contract of employment had come to an end so that does not constitute any act of affirmation of the particular agreement. The claim of Ms Reynolds is that she was entitled to more than the enhancement to which she was entitled under the non-rescinded agreement therefore even if it be the case that she had received monies under the premature retirement agreement, that was capable of being construed as an acceptance of money on account. Thus we see no basis upon which the Tribunal erred in law in concluding that the premature retirement agreement was rescinded and, in effect, swept away. It follows therefore that the conclusion of the Tribunal in paragraph 15 of its decision that the applicant's employment did not terminate by reason of her voluntary resignation is one which contained no error of law nor was it a decision which was not open to the Tribunal on the facts.
24. The Tribunal then, correctly, went on to determine whether the Applicant was dismissed and if so whether the dismissal was by reason of redundancy. It decided that there was a dismissal pursuant to Section 136(5) of the Employment Rights Act 1996. That provides

"where in accordance with any enactment or rule of law – (a) an act on the part of an employer, or (b) an event affecting an employer operates to terminate a contract under which an employee is employed by him the act or event shall be taken for the purposes of this part to be a termination of the contract by the employer".

25. In paragraph 20 of the decision the Tribunal concluded that the closure of the Earlham Junior School on 31 August 1997 in accordance with the Education Act provisions referred to amounted to an act or event within Section 136(5). In addition, in paragraph 19 the Tribunal concluded that in the particular circumstances of Ms Reynolds there was no realistic prospect of her being offered suitable alternative employment by the respondent. Again, in our judgment, that was a conclusion of fact to which this Tribunal was manifestly entitled to come on the evidence before it. As of 2 September the position was, in fact, that Ms Reynold's employment had terminated. The LEA asserted that it had terminated by virtue of her resignation. Her Union was asserting that it had terminated by reason of dismissal arising from the redundancy situation inherent in the closure of the school at which she had been employed. We were referred in argument to the case of Ely v YKK Fastener (UK) Ltd [1993] IRLR 500. In that case it was taken as an uncontroversial statement of the law that the employer's insistence upon treating the employee erroneously as a resigning employee amounted in law to a dismissal. In our judgement the Employment Tribunal in effect concluded that the actions of the LEA and the Secretary of State, coupled with the effect of the Education Act 1996 and the Rule of Law enunciated in Ely V YKK Fasteners Ltd meant that her contract of employment terminated in accordance with the combination of that enactment and that Rule of Law. Thus, in our judgment, the decision of the Tribunal that there was a deemed dismissal pursuant to Section 136(5) of the Employment Rights Act 1996 was one which contained no error of law and to which it was entitled to come on the facts found by it.
26. The LEA did not, nor could it, dispute that if there was a dismissal it was by reason of redundancy.
27. The next issue for the Tribunal to determine was whether the LEA's redundancy policy had become incorporated into Ms Reynold's contract of employment. The Tribunal concluded that it was so incorporated by custom and practice. The evidence which the Tribunal accepted was that the policy had been applied to every case of redundancy over the previous 18 years of which there had been some 100 instances. In our judgement there was nothing in the way in which this Tribunal approached the authority of Quinn v Calder Industrial Materials Ltd [1996] IRLR 126 and applied the facts to the principles set out in that case which constituted an error of law.
28. Mr Tayler also sought comfort from the fact that under the statutory scheme the LEA was limited to making a recommendation to the Governing Body which in turn had to exercise its discretion. There is nothing whatsoever in the redundancy policy which purports to fetter the discretion either of the LEA in tendering advice to Governing Bodies nor Governing Bodies in exercising their discretion whether or not to accept that advice. On the contrary it is clear that the policy requires individual consideration of each case based on a series of criteria and, in addition, any particular individual circumstances of any given case. Thus in our judgment the Tribunal was entitled as a matter of law and fact to conclude, as it did, that Ms Reynolds had the advantage of the redundancy policy as a contractual term.
29. In paragraph 25 of the Tribunal's decision it specifically considered and appears to have accepted the argument then put forward by Mr Tayler that the incorporation of the redundancy policy as a term of the contract did no more than entitle her to the benefit of a consideration whether the LEA should recommend any particular level of enhancement to the Governing Body. In paragraph 26 the Tribunal, consistent with that approach, considered the evidence before it on the issue which it then had to decide namely, what was the chance that, had the LEA given effect to the contractual entitlement of Ms Reynolds, it would have recommended, and the Governing Body would have decided, to grant her the maximum credit for years added pursuant to the redundancy policy. On that issue the evidence was plain and was consistent. Mr Harrison of the NUT stated that over the previous 18 years the maximum possible enhancement had always been granted. The evidence of Ms Dowson for the Appellant was that she had no reason to doubt that the Applicant would have been granted the maximum of 6 years enhancement. We add that the letters referred to from Ms Dowson dated 25 April 1996 and 16 May 1997 assumed that the Appellant would in that event tender advice to the Governing Body to grant Ms Reynolds the maximum enhancement in the event that she were dismissed by reason of redundancy.
30. In paragraph 27 of the Tribunal's decision it decided that in the light of that evidence she was entitled to have her pension enhanced by 6( added years. Whilst this is not precisely as we would have formulated that decision it is clear to us that the Tribunal was, on the evidence, deciding that there was a 100% chance that, had the Appellant given effect to its contractual obligation to tender advice to the Governing Body pursuant to its discretion under the scheme, it would have made such a recommendation which would have been accepted. Accordingly, the effect of the Tribunal's decision was that by reason of the Appellant's breach of contract in refusing to deal with Ms Reynold's case under its redundancy policy she had lost the 100% chance that she would have been granted 6 years enhanced service credit. The Tribunal left the question of the quantum of compensation for that Breach of Contract over to another occasion in the event that the parties did not agree how she was to be recompensed for that breach. In our judgment that was a conclusion to which the Tribunal was entitled to come on the facts and in so concluding it has made no error of law. It therefore follows that we dismiss the Appeal.
31. We now consider the Cross Appeal. As we have indicated the redundancy policy does indicate that the LEA has the discretion to decide that the redundancy payment should be on the basis of weekly pay and not limited to the statutory maximum. In the light of the Tribunal's rulings it had to follow that the Appellant was in Breach of Contract by failing to consider that issue under its redundancy policy and, accordingly, Ms Reynolds had lost the chance of that consideration. It is clear, however, that the Tribunal did not apply its collective mind to this issue as the redundancy payment it awarded was based on the statutory maximum. Further, in its decision it did not apply its mind to the evidence to see what was the chance that the Appellant would have so exercised its discretion. Thus, whilst it is plain that the Tribunal erred in failing to consider this issue, the material is not before us upon which we can decide what the Tribunal would have decided had it addressed the issue. Accordingly we allow the Cross Appeal but only to the extent that the matter be remitted to the same Tribunal for it to consider the evidence before it, receive any further evidence on this issue that is presented to it, to take submissions from both sides if they wish to make them, and for the Tribunal then to decide what, if any, award to make by way of damages for the Breach of Contract by the Appellant in failing to apply its redundancy policy on the issue of the calculation of the redundancy payment.