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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> British Broadcasting Corporation v Kelly-Phillips [1997] UKEAT 1397_96_2506 (25 June 1997) URL: http://www.bailii.org/uk/cases/UKEAT/1997/1397_96_2506.html Cite as: [1997] UKEAT 1397_96_2506

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APPEARANCES

 

For the Appellants	MR J BOWERS (Of Counsel) The Solicitor Litigation Department BBC White City 201 Wood Lane London W12 7TS
For the Respondent	MISS J EADY (Of Counsel) Messrs Thompsons Solicitors Congress House Great Russell Street London WC1B 3LW


 


MR JUSTICE LINDSAY: This appeal raises important questions as to cases in which employees contract out of the protection against unfair dismissal otherwise afforded to them . The current legislation in the area is to be found in Section 197 of the Employment Rights Act 1996, replacing Section 142 of the Employment Protection (Consolidation) Act 1978. At the hearing of a preliminary issue in the case before us the Industrial Tribunal under the Chairmanship of Ms V. Gray unanimously held, firstly, that the employee, Miss Kelly-Phillips, had not been employed under a fixed term contract; that, secondly, even if she had been it was not one for one year or more; thirdly that in any event her dismissal on the expiry of her contract had not consisted only of the expiry of its term without its being renewed because the employer, the BBC, had also relied on her alleged incapability. The Industrial Tribunal accordingly held that Miss Kelly-Phillips was not precluded from bringing a claim for unfair dismissal and directed the matter to go forward to a full hearing. The employer appeals against that decision and challenges the Industrial Tribunal's conclusions under all three of those headings.

We shall first set out the facts, as derived from the holdings of, and the unchallenged documents that were before, the Tribunal.

Miss Kelly-Phillips began work for the BBC as a temporary assistant in the Community Programmes Unit for term agreed in writing to be a fixed term from the 6th September 1993 to the 5th March 1994. There was provision for that term to subsist until 5th March 1994 unless previously determined by written notice. She was asked to sign and did sign and then returned to the BBC a copy of the written contract. Clause 3 of that document specified that fixed-term and continued:-

"4. In so far as it is permitted by current employment legislation, non-renewal or non-extension of this contract when its term expires shall not constitute grounds either for a claim of unfair dismissal or for any redundancy payment".

The letter from the BBC that accompanied the contract offered to Miss Kelly-Phillips added:-

"I must emphasise that regrettably this engagement does not imply any prospect of your being offered another contract beyond the 5th March 1994".

The "current employment legislation" there referred to included Section 142 of the Employment Protection (Consolidation) Act 1978 which, under the heading "Contracts for a fixed term" provided, so far as material, as follows:-

"(1) Section 54 does not apply to dismissal from employment under a contract for a fixed term of [1 year] or more, where the dismissal consists only of the expiry of that term without its being renewed, if before the term so expires the employee has agreed in writing to exclude any claim in respect of rights under that section in relation to that contract.

(2) .......................

(3) Such an agreement as is mentioned in sub-section (1) ...... may be contained either in the contract itself or in a separate agreement."

On the 10th January 1994 the BBC offered in writing to Miss Kelly-Phillips to vary that still-existing contract by the addition of a provision to read:-

"The term of your engagement shall now expire on the 3rd September 1994; clause 3 of your contract being amended to that effect".

The offer made matters clear by adding:-

"The other provisions of your contract will continue in force, including your agreement, in so far as it is permitted by current employment legislation, that non-renewal of this engagement when its term expires shall not constitute grounds either for a claim of unfair dismissal or for any redundancy payment. I must emphasise that this variation does not imply that there is any prospect of your employment continuing beyond the expiry date of your fixed term contract or of your transfer to a pensionable staff contract".

The Industrial Tribunal found that Miss Kelly-Phillips signed to indicate her acceptance of that offer on the 12th January 1994.

Miss Kelly-Phillips worked throughout that term and at its end was offered a new fixed-term contract, now as Assistant in the Disability Programme. The new contract offered was, by its clause 3, to run from the 4th September 1994 to the 3rd September 1995 unless previously determined by notice. The reason why she was offered a new contract rather than an extension of her previous one was because the new proposal would entitle her to join the BBC's Group Personal Pension Scheme. The letter of offer explained eligibility for severance payments and redundancy payments after appropriate qualifying periods of employment. Miss Kelly-Phillips accepted the offer and signed and returned to the BBC a copy of the new contract. It specified the term we have described and, as had its predecessor, it contained a contracting-out provision exactly in the form of clause 4 of her first contract. Miss Kelly-Phillips was told by the letter of offer that the engagement did not imply any prospect of her being offered another contract after the 3rd September 1995.

On the 14th November 1994 the BBC wrote to Miss Kelly-Phillips telling her that her designation or job title would change; she was now to be a "Facilitator" in the Disability Programmes Unit, Television. The tone of the letter suggests that that was a superior title to her previous one but the letter explained that the change in title was not accompanied by any "additional financial reward ...... and you will remain on your current grade and salary". She was asked to and did sign a variation to her then-subsisting contract, changing the title of her job.

Before her fixed-term to the 3rd September 1995 had expired Miss Kelly-Phillips was offered an extension "beyond the 5th September 1995 until the 31st December 1995". She was asked to sign and return copies of a "variant letter". She did so on the 30th August 1995. What was thus accepted was that the term of engagement would now expire on the 31st December 1995 and that clause 3 of the existing contract was amended to that effect. In conformity with the pattern of previous events, Miss Kelly-Phillips was told in the offer letter:-

"The other provisions of your contract will continue in force, including your agreement that in so far as it is permitted by current legislation, non-renewal of this engagement when its term expires shall not constitute grounds either for a claim of unfair dismissal or for any redundancy payment".

The letter warned, as had the earlier ones, that there was no implication that there was any prospect of employment continuing beyond the expiry date of the fixed-term contract.

Before the expiry of that extension to the 31st December 1995 Miss Kelly-Phillips had a conversation with and then a letter from Miss Janet Wilson, the BBC's personnel and training manager to the Community and Disability Programmes, Television. The letter, of the 22nd December 1995, began:-

"I am just writing to confirm that as spoken your fixed term contract will come to an end on 31 December 1995. The reason it is not being renewed is because the question arose of the appropriateness of your approach to your position as outlined in your appraisal report of June 1995 (second interview 11th September 1995)".

Miss Kelly-Phillips' contract thus expired on 31st December 1995 and she left the BBC's employment; the Industrial Tribunal found her to have been dismissed on that day, a finding which, given the terms of Section 55 (2) (b) of the 1978 Act, was inevitable.

Miss Janet Wilson gave evidence to the Industrial Tribunal and she was accepted as a witness of truth. Her evidence led to the following comment by the Industrial Tribunal:-

"Ms Wilson said that the Disability Programmes Unit was engaged in producing one regular programme and in making further documentary programmes when funding was available. The unit only needed to employ Facilitators when it was making programmes, the function of the Facilitators being to enable Disabled production staff to function effectively. Funding for disability programmes was only available for a year at a time and could not be relied upon to continue. Ms Wilson also said that the purpose of engaging employees like the applicant on fixed term contracts was to ensure that they only had such employees for periods when they were making programmes and when funding was therefore available. We accept this evidence as being true, but we consider that it has its limitations, to which we refer below".

With effect from the 22nd August 1996, well after the events in this case, Section 142 of the 1978 Act supra was replaced, by way of consolidation, by Section 197 of the Employment Rights Act 1996 which is worded very slightly differently and is laid-out in a markedly different manner to Section 142. Although the Industrial Tribunal heard argument by reference to, and thus themselves refer to, Section 197 and, in particular, to Section 197 (1) (a) and although we do not suggest their doing so rather than referring to Section 142 would have made any difference to the arguments or conclusions below, the correct course, as we see it, is to refer to Section 142. The Industrial Tribunal's decision was expressed as follows:-

"The unanimous decision of the Tribunal at this preliminary hearing is that the applicant is not excluded by the provisions of section 197 (1) (a) from bringing a claim for unfair dismissal".

The Industrial Tribunal arrived at that conclusion by each of four or five different routes which it will be convenient, but at the risk of inaccuracy, briefly to describe as follows:-

(i) That, upon applying a "Reality" or "Officious Bystander" approach to the question of whether or not there had been a fixed term contract, it can be seen that there was here no such contract;

(ii) & (iii) That there was an absence of any need for a fixed term contract in Miss Kelly-Phillips' case and accordingly there was not one; it was a sham;

(iv) That, even if Miss Kelly-Phillips did have a fixed term contract, her contract was for a fixed term of less than one year or more;

(v) That, in the events which happened, her dismissal did not "consist only of the expiry of that term without its being renewed" within the meaning of, in effect, Section 142 of the 1978 (or, as the Industrial Tribunal expressed it, Section 197 (1) (a) of the 1996 Act).

Mr Bowers in his careful argument on behalf of the BBC attacks, as he has to, all five of those separate routes to that conclusion and seeks to show that Miss Kelly-Phillips' dismissal consisted only of the expiry of her fixed-term contract, that being, he argues, a fixed-term contract for a term of one year or more. We shall take the five headings but in a different order.

The "Reality" or "Officious Bystander" approach

The Industrial Tribunal held as follows:-

"Having digested the various submissions, we do not consider that the mere existence of a contract which contains a start date and an end date will always suffice to render it a fixed term contract. We consider that at the very least there is an additional requirement, namely that the "officious bystander" should know or believe that the contract would indeed finish at the given end date unless something untoward were to happen as, for example but not exhaustively, where unexpected extra funding became available so that the employment could beyond expectation be continued or where misconduct was identified, so that the employment terminated earlier".

The Industrial Tribunal expressed a view that:-

"We have to be astute to ensure that the protection afforded to an employer by the use of fixed term contracts (that is those with a start and end date) is only used in proper circumstances and not permitted or encouraged by judicial laxity to be used so as to have the effect of undermining the intention of the employment protection legislation. The use of fixed term contracts could have this effect if they were used consecutively, continuously and over several years".

The Industrial Tribunal continued a little later that:-

"......... the reality here was one of a continuing employment relationship with no fixed end in view and with only that degree of uncertainty surrounding its termination which is normal in "permanent" employment".

The Industrial Tribunal then reverts to the Officious Bystander by saying:-

"When the applicant signed the last agreement which took her employment relationship on to the 31st December 1995, we are satisfied that no officious bystander would have thought that that meant that the employment would really terminate on that date. Rather, they would have said: "Oh, no. She'll go on working for them until they have no more work - which may be years away - or until she misbehaves or something like that"."

This approach is in error of law at several points. First, fixed-term contracts were not defined by the legislature; the meaning of the phrase has been left to the Courts. Leaving aside cases of sham, to which we will return later, there is binding authority that for present purposes contracts with fixed beginning dates and fixed end dates are contracts for fixed terms and are to be regarded as such regardless, for example, of their terminability by notice - Dixon and Anor -v- B.B.C. [1979]ICR p. 281 C.A. at p. 286 B; p. 286 C-D; Wiltshire C.C. -v- National Association of Teachers in Further Education [1980] ICR p. 455 C.A. at p. 460 E-F; p. 461 H to p. 462 B; p. 462 H.

Secondly, the Industrial Tribunal's reference to the officious bystander is best described as, at lowest, heterodox. That bystander is generally thought to have been called into existence by Mackinnon L.J. in Shirlaw -v- Southern Foundries (1926) Ltd [1939] 2 K.B. p. 206. The bystander's only role, then and since, is in testing whether a term, said to be implied into a contract, is so obviously necessary that:-

"........... if, while the parties were making their bargain, an officious bystander were to suggest some express provision for it in their agreement, they would testily suppress him with a common "Oh, of course"."

Beyond that he has no role; he simply raises a question to be answered by the parties. What he thinks or does not think would be appropriate to be in the content or within the meaning of the contract is of no relevance whatsoever. It is, of course, relevant to examine what was or was not in the contemplation of the parties at the time of the contract and that is properly and frequently done by paying regard to the objective meaning of the language they have used. However, it seems likely only to confuse to enquire not whether a matter is within the contemplation of both parties or of either party but instead to consider whether some officious bystander, deriving his information from who-knows-whom, could, unprompted by parties' enquiry, have come out with some remarks such as the Industrial Tribunal attributes to him namely:-

"Oh no, she'll go on working for them until they have no more work - which may be years away - or until she misbehaves or something like that".

Thirdly, unless the Court assumes that such protection is to extend to such cases (and hence would be involved in asking a question which begs its own answer) it cannot be taken obviously to "undermine the intention of the employment protection legislation" to permit its disapplication where there is, consecutively, more than one fixed-term contract. Nothing could have been simpler than for Parliament to provide that the contracting-out provisions of Section 142 (now Section 197) should be inapplicable to a second or subsequent fixed term and to complement that with anti-avoidance provisions. It has not done so as to contracting out of the unfair dismissal protection and must be taken to have chosen not to do so over the many years (going back, as to unfair dismissal, to 1971) since such contracting-out provisions were first introduced. It is therefore not to undermine the will of the legislature to allow the employment protection legislation to be disapplied when Parliament has not specified that it cannot be.

Fourthly, when the Industrial Tribunal speaks of "the reality here was one of a continuing employment relationship with no fixed end in view" it was confusing employment (with which Section 142 is not, as such, concerned) with a contract of employment (with which it is). As for the Industrial Tribunal's approach to the officious bystander on the point, were it proper first to give him information as to all necessary surrounding circumstances and then, contrary to our views, to make inquiry of him, the question to ask him would have to be not about employment but about contracts of employment. We speculate that even he would, perhaps, have had to agree that whereas her employment might continue, Miss Kelly-Phillips' last contract (clearly expressed by both parties to it to end on a given date and described by both to be a fixed-term contract) might well end and, indeed, that it did end on its end-date and was a fixed-term contract, a view not at all inconsistent with his supposed but equally speculative answer that she would continue to work for the BBC.

The Industrial Tribunal was, of course, correct in asking itself whether Miss Kelly-Phillips was dismissed from employment under a fixed-term contract, but, in inquiring into that, they should have not departed, as they did, from binding authority, from a proper regard to the terms used by the legislature and from a proper approach to the interpretation of contracts. Had they not so strayed they would have had to conclude that the contracts here, including the one from employment under which Miss Kelly-Phillips was dismissed, were fixed-term contracts. They erred in law in this first route to their conclusion.

The absence of need for a fixed-term contract and "sham"

The Industrial Tribunal held:-

"A secondary way of putting our reasoning here is that there was no single, defined event requiring a fixed term contract or operating so as to make it a genuine fixed term contract. Funding, on the evidence, was relatively firm and certain, although it might come from different sources at different times. The expression within the contract of the fixed term was in effect, a "sham" (although the applicant's Counsel did not use that word and we do not do so pejoratively)".

That is a remarkable conclusion; it replaces regard to the terms agreed between parties and the meaning of those terms in the matrix of circumstances in which the agreement is made with some form of inquiry as to whether or not a contract of the type to which that regard would prima facie have led was "required", without which requirement or need, it would seem, the contract is not to be taken to be of that type. How, even if any such test of need were to be appropriate, the Courts could measure it is left unclear; it is certainly not obvious from the fact that "funding ..... was relatively firm and certain, although it might come from different sources at different times" (that itself coming close to a contradiction-in-terms) that the BBC had no need, in Miss Kelly-Phillips' case, to use a fixed-term contract. The possibility that such a need, if relevant at all, could only be satisfactorily ruled upon after an examination of the whole economics of the BBC and a study of the terms on which it employed its many employees is only an additional ground for regarding the Industrial Tribunal's route here as involving error of law. A Court does not rule as to whether a contract is of a particular statutory description, as the Tribunal here did, by trying to measure in some way the need for the contracts to be of that or of some other description.

The reference to "sham" we have noted above could be elevated into being regarded as yet another route taken by the Industrial Tribunal to its conclusion. It is an unpleasant allegation to make of an otherwise responsible employer to describe his contracts (here plainly in common form usage by him) as "sham". Diplock L.J. explained the meaning of the term in Snook -v- London & West Riding Investments Ltd [1967] 2 W.L.R. p. 1020 at p. 1030 C.A. when he said:-

"....... it is, I think, necessary to consider what, if any, legal concept is involved in the use of this popular and pejorative word. I apprehend that, if it has any meaning in law, it means acts done or documents executed by the parties to the "sham" which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create. But one thing, I think, is clear in legal principle, morality and the authorities (see Yorkshire Railway Wagon Co. v Maclure and Stoneleigh Finance Ltd. v Phillips), that for acts or documents to be a "sham" ....... all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating."

The word "sham", as Diplock L.J. indicates, can only be pejorative; there is no evidence recorded in the findings of the Industrial Tribunal that would have justified its use in the only sense which the word has in the law and, whilst the applicant's Counsel below was right not to have used the word, the Industrial Tribunal was wrong in law in applying the word to the facts of this case.

Dismissal consisting only of the expiry of the fixed term

On this point the Industrial Tribunal (again referring to Section 197 rather than to Section 142) held as follows:-

"Doing the best we can, we conclude that the inclusion of the word "only" in section 197 (1) (a) of the Employment Rights Act 1996 does indeed mean that the dismissal must come about only by reason of the expiry of the term of the contract. That did not occur in the present case where the dismissal occurred because of a mixture involving both the expiry of the fixed term and the employer's belief that they had a reason, namely incapability, entitling them not to offer a renewal. That does not, in our opinion, satisfy the requirements of the statute."

In the 1978 and 1996 Acts there are, in relation to unfair dismissal, very many repeated references to the reason or reasons for or to the principal reason for a dismissal - see e.g. Section 57 (1) (a) and (b), Section 57 (2) and (3), Section 57 A, Section 59, Section 60, Section 60 A, Section 63, Section 64 (3), Section 72 (2), Section 73 (2) and (6) (a) and Section 77 A. Counsel before us have failed to find any use, other than in Section 142, of an expression such as "where the dismissal consists of" or "consists only of". It can thus fairly be taken that what the "dismissal consists ......... of" is looking to something other than the reasons for the dismissal, otherwise the far more familiar expression would surely have been repeated. In context that suggests, and we hold, that the question of what the dismissal consists is a reference not to the reasons for the dismissal but to what category of dismissal it is. The three possible categories (leaving aside the deeming provisions of Section 55 (3)) are described in the 1978 Act in Section 55 (2) where it is provided:-

"Subject to sub-section (3), an employee shall be treated as dismissed by his employer if, but only if, -

(a) The contract under which he is employed by the employer is terminated by the employer, whether it is so terminated by notice or without notice, or

(b) Where under that contract he is employed for a fixed term, that term expires without being renewed under the same contract, or

(c) The employee terminates that contract, with or without notice, in circumstances such that he is entitled to terminate it without notice by reason of the employer's conduct".

We therefore hold that the Industrial Tribunal erred in law by seeing the existence of a reason for dismissal other than the expiry of the fixed term of the contract - namely capability - to be relevant in this case and to have operated so as to have excluded the BBC's ability to rely on Miss Kelly-Phillips having contracted out of protection under section 142 (1) - see also London Underground -v- Fitzgerald [1997] ICR p. 271 E.A.T.

The Industrial Tribunal was understandably troubled by the word "only" in the expression in Section 142 (1) "where the dismissal consists only the expiry of that term .......". It is, we think, explicable. It is possible to imagine a case where an employee under a fixed-term contract of more than one year who has contracted-out under Section 142 (1) believes that he is entitled - for example by reason of a fundamental breach by the employer - to terminate the contract without notice because of the employer's conduct. The employer, if the fixed end-date for the contract is close or passes, might point to the disapplication of the unfair dismissal provisions of Section 54 and might thereby seek to escape all issues otherwise arising as to constructive dismissal. The presence of the word "only" would deny the employer that possibility; the employee in such a case could argue that the dismissal did not consist only of the expiry of the term (a case within Section 55 (2) (b)) but rather that the case was alternatively or also within Section 55 (2) (c) - a termination by the employee in circumstances such that he is entitled to terminate without notice by reason of the employer's conduct.

To conclude on the main argument under this heading, we hold that the existence (if such it was) of a reason, namely incapability, entitling or causing the BBC not to offer a renewal did not have the effect of making the dismissal consist otherwise than only of the expiry of the term; in that respect the Industrial Tribunal erred in law.

If the contract was for a fixed term, was it for less than a year?

The Industrial Tribunal held that at the date of her dismissal Miss Kelly-Phillips was, if employed for a fixed term at all, employed under one having a duration of a little less than four months (presumably from the 3rd September 1995 to the 31st December 1995). The Industrial Tribunal held accordingly that the BBC was not in a position to claim the benefits of her having contracted out of protection under Section 142 (1).

The 1978 Act at Section 153 defines "renewal" as "including extension, and any reference to renewing a contract or a fixed term shall be construed accordingly". Mr Bowers, relying on that, submits that the contract from employment under which Miss Kelly-Phillips was dismissed was one which was for a fixed term which had begun in September 1993 and which, by renewal (by way of extension), had an end-date of the 31st December 1995. It was thus for a fixed term and, he submits, for more than one year. A difficulty in accepting that is that it reads the statutory meaning of "renewal" as including extension into the opening words of Section 142. Those opening words run:-

"(1) Section 54 does not apply to dismissal from employment under a contract for a fixed term of [one year] or more .............".

They make no mention of renewal or extension. One cannot, merely by giving a large meaning to the word "renewal", reach the conclusion that a later contract which is a "renewal" of an earlier one is the same contract as the earlier one or is to be treated as having been made when the earlier one was or for a term which had begun when the earlier one's term had begun. Both Section 55 (2) (b) and Section 142 deal with cases "without" renewal; they have no need to regulate what has been an earlier renewal. Whatever the meaning of the word "renewal", it has no place in the construction of those opening words which are therefore to be construed by reference only to the ordinary and natural meaning of words. That throws one back to what it was that had happened in August 1995. Miss Kelly-Phillips had then had a contract set to expire on the 3rd September 1995. An offer was made to her to extend its term to the 31st December 1995. She was asked to sign and return a variant letter. She need not have done so but she did. She thus accepted the BBC's offer. A contract was made at that point. The fact that, its beginning-and end-dates apart, it was identical to the contract that had preceded it does nothing to deny it the character of a freshly-minted contract made on the 30th August 1995 for an employment to begin on the 4th or 5th September 1995 and to run to the 31st December 1995. In a sense it could be described as an extension or renewal of the one or more contracts previously made between Miss Kelly-Phillips and the BBC which had preceded it but the contract then made in August 1995 was not agreed by the parties to be treated between them as if made earlier than it was or to have regulated Miss Kelly-Phillips' employment any earlier than the beginning of the new term it provided, from the 5th September 1995. If we ask ourselves from employment under what contract Miss Kelly-Phillips was, within the meaning of Section 55 (2) (b) of the 1978 Act, dismissed on the 31st December 1995 the answer can only be that of the contract made on the 30th August 1995. The answer to the next question, what was the term of that contract, then becomes inevitably that it was for one of less than a year. So to conclude does not deny utility to the statutory extension of the word "renewal"; it comes into play in answering the question whether Miss Kelly-Phillips was dismissed at all within Section 55 (2) (b) where the fixed term "expires without being renewed under the same contract" and under Section 142 (1) (where the "dismissal consists only of the expiry of that term without its being renewed").

Accordingly and without, as yet, having had regard to authority on the subject, we would conclude that the Industrial Tribunal was correct in its conclusion that Miss Kelly-Phillips' contract (in our view for a fixed term) was one for a fixed term of less than one year. We must now look at the authorities cited to us to see if we are constrained to abandon that view.

In BBC -v- Ioannou [1975] ICR p. 267 C.A. the employee had begun work for the BBC in 1967. His contract was renewed in 1970 (to 6th August 1972). On the 22nd February 1972 he accepted a further year's contract from 7th August 1972 to 6th August 1973. The contracts were all determinable on notice. Lord Denning M.R. took the view, in judging whether the relevant employment was for a fixed term of (as it then was) two years or more, that the Court should look at the last contract that had been made - see p. 272 F-H. He observed:-

"It matters not whether the final contract is a renewal or re-engagement. It is the final contract alone which matters in this regard."

- see also p. 273 B-C. Stephenson L.J., whilst agreeing with Lord Denning - p. 273 C-D - uses language that suggests that a renewal may not of itself be a new contract - p. 273 H - but on the facts of that particular case he held that the last contract was a new one as there were not insignificant variations made on the "renewal" on the 22nd February 1972 - p. 274 A-E. Geoffrey Lane L.J. was of the same view - p. 275 E-F. Given that the last contract made in that case, on 22nd February 1972, contained provisions not contained in the earlier ones and was thus not a mere renewal, the views of Stephenson and Geoffrey Lane L.JJ. as to what the position might have been if the last contract had added nothing but a further term were plainly obiter and there is a further difficulty in that neither Stephenson L.J. nor Geoffrey Lane L.J. explained why it was that, unlike Lord Denning, they held it might be right to look other than at the latest contract. Stephenson L.J. speaks at p. 273 C-E of the "contract" of the 22nd February 1972. Yet on the next page he speaks of it as an "arrangement" where he says, at p. 274 C:-

"If the new arrangement had contained no new provision except the extension of the term, it might not have been a new contract even if called one".

He has there disguised a logical difficulty which would have been obvious had he called the new "arrangement" a new "contract", as he had done on the previous page. Ioannou has since been recognised by the Court of Appeal itself to have been wrong in its conclusion that a contract cannot be for a fixed term if determinable by notice. The better course is not to treat as anything but the obiter that it was any suggestion in it in the judgments of Stephenson and Geoffrey Lane L.JJ. that it might be relevant to look at anything but the last contract, the one from employment under which the employee is dismissed. As Lord Denning says at p. 272:-

"Suffice it to say that you must always take the final contract which expires, and on the expiration of which he claims ........ compensation for unfair dismissal".

In Open University -v- Triesman [1978] ICR p. 524 the employee contracted out of protection not in her first contract (one for eighteen months) but in her second contract, one which ran for seven months only. She then worked under that second contract down to its expiry, when it was not renewed. The E.A.T. (Phillips J. and two members) preferred the obiter views of Lord Denning in Ioannou - p. 528 C - and observed that one "cannot amalgamate successive terms to produce a single term of the correct length" - p. 529 D-E and see also p. 529 F. However, Triesman supra does not affirm that proposition as a matter of ratio as the view was taken that as the second contract contained a material term (the contracting-out of protection) that had not been in the first, it could not on any view be regarded as a mere renewal or extension of the first contract - p. 530 - and so the second contract necessarily stood alone as being a contract for seven months only, with the consequence that the employee was not denied the protection which statute had otherwise conferred on her.

In Dixon -v- BBC [1979] ICR p. 281 C.A. Mr Dixon had started to work for the BBC in 1974. He then signed a new contract to cover employment from the 1st February 1976 to the 31st March 1976 with provision for notice either way and with a contracting-out of protection on his part. That short contract was then extended to the 1st May 1976 under a document which again contained a contracting-out of protection on his part. His employment ceased on the 1st May 1976. The BBC argued that by reason of the provision for notice there had been no employment for a fixed term and hence no dismissal. The BBC was, in that respect, relying on Ioannou. The decision in Ioannou that terminability by notice precluded a term being regarded as fixed was in Dixon held to have been per incuriam - p. 287 D, p.288 C. Otherwise the case has no relevance to the appeal we are now considering.

In Wiltshire County Council -v- N.A.T.F.H.E. [1980] ICR p. 455 C.A. the employee teacher had had a fresh contract academic year by academic year from 1969, from the September in one year to the end of June in the next. She was offered no renewal at the end of the academic year 1976-1977. The Industrial Tribunal had held that she had been dismissed in that she had been employed for a fixed term which had not been renewed. The case, as we have indicated earlier, throws light on what is a fixed term but no question there arose as to aggregating the latest with the earlier contracts and the case adds nothing on that point.

In Mulrine -v- University of Ulster [1993] IRLR p. 545 the employee had a contract of two years from the 7th September 1987 which included a contracting-out of protection. Before that period had expired, on the 28th July 1989, her contract was extended to the 31st December 1989, the other provisions remaining unchanged. Her employment ceased on the 31st December 1989. She claimed unfair dismissal. The Industrial Tribunal held that she had contracted-out and that as her contract was for a fixed term of more than one year overall her contracting-out of protection was effective against her. The employee on appeal to the Northern Ireland Court of Appeal argued that the contract from which she was dismissed was one of less than one year's duration, namely from July or September 1989 to the end of December 1989. The Northern Ireland Court of Appeal held that the second agreement was "part and parcel" of the first and that the two were to be aggregated into a fixed term of more than one year - p. 548, paragraph 21. Speaking of Lord Denning's dictum that for this purpose the Court was to look only at the final contract, MacDermott L.J. says at paragraph 31:-

"In many cases the correct answer may be reached by applying the "Denning test", but if, as in this case, an unfair and unreasonable result is produced one must go back and ask the allegedly more difficult question: was the second contract an extension of the first?"

In paragraph 32 he indicates his view that the second contract was an unseverable extension of the first. Hutton L.C.J. at paragraph 47 says:-

"I respectfully share the view that in the sphere of industrial relations and employment law comity, the application of simple tests and the avoidance of fine distinctions are important. But I do not consider that this approach should be carried to the point where the application of a simple test, such as that stated by Lord Denning, will lead to an unjust and unreasonable result in a particular case. In my opinion this would be the consequence if the test were applied to this case".

We are not bound by that decision. We know of no reliable test which would indicate, even were it relevant, whether one contract was "part and parcel" of another and see no need for any such decision being made either under Section 142 (1) or Section 55 (2) (b) of the 1978 Act. Under the latter the Court inquires whether a term has expired without being renewed under the same contract; under the former, whether the employment from which the employee has been dismissed was under a fixed term contract of one year or more. Neither provision appears to include or require any aggregation of a later contract with an earlier one, still less an aggregation if only the latter is "part and parcel" of the former. It may also be questioned whether there can be any principle of statutory interpretation such that it is proper to apply a particular construction as the correct one if it leads to a just conclusion but that it can be discarded and supplanted if "an unfair and unreasonable result is produced". The Northern Ireland Court of Appeal decided with reluctance - see paragraph 49 - not to adopt the test stated by Lord Denning and applied subsequently by Phillips J. (in Triesman 1978 supra) and by Browne-Wilkinson J. in Richards -v- BP Oil E.A.T (which has not been cited to us). For our part, we prefer not to depart from that line of authority.

In doing so we find comfort in obiter in Cragg -v- Housing Services Agency, a redundancy payment case, where, at the E.A.T. (H.H. Judge Clark and two members) it was decided not to follow Mulrine supra. Whilst the E.A.T. there elected also not to follow Triesman supra in relation to redundancy payments it did so because of the terms of Section 197 (5) of the 1996 Act (formerly Section 142 (4) of the 1978 Act) which terms have no application to cases of unfair dismissal of the kind on appeal before us. So far from throwing any doubt on the acceptability of the line of authority which Mulrine had rejected, Cragg supra, albeit obiter, accepted in relation to unfair dismissal cases the "final contract test" as propounded by Lord Denning and as accepted by Browne-Wilkinson J. in Richards -v- BP Oil. However, the reference in Cragg to Section 197 (5) does oblige us to enquire into whether the inclusion of Section 197 (5) in relation to redundancy payments throws any light on the question of the aggregation of periods in order to arrive or not arrive at a fixed term of one year or more for the purposes of unfair dismissal. Section 142 (4) (now section 197 (5)) begins:-

"(4) Where an agreement under sub-section (2) is made during the currency of a fixed term ......"

Section 142 (4) thus pre-supposes that there is or has been employment under a contract of employment for a fixed term of, there, two years or more. It provides that one cannot carry over the contracting-out made under one contract into the period of employment provided for in the next contract; it says nothing about the ability to aggregate a second or subsequent short contract with an earlier longer one so as to arrive at an overall contract of the required length. That there is or has been a contract of the required length is already assumed before Section 142 (4) comes into application. We therefore do not find Section 142 (4) of any assistance in answering the question before us under Section 142 (1).

Having reviewed the authorities cited to us we find nothing that requires us to depart from the view, earlier expressed, which we had arrived at without looking at authority.

We thus conclude that in our judgment the Industrial Tribunal was correct in its view that Miss Kelly-Phillips was, at the end of her service, employed under and dismissed from a contract for a fixed term that was for less than a year. It follows that her employer is unable to claim the benefit of her having contracted-out of protection. In turn, the Industrial Tribunal was correct in our judgment in its conclusion that Miss Kelly-Phillips is entitled to proceed with her claim for unfair dismissal. The appeal is accordingly dismissed and we remit the matter to the Industrial Tribunal for a full hearing.