Appeal No.	 EAT/0672/00

EMPLOYMENT APPEAL TRIBUNAL
Sitting at
The Royal Courts of Justice
Strand
London WC2A 2LL

	At the Tribunal
	On 21 September 2001

Before
HIS HONOUR JUDGE PETER CLARK
MR I EZEKIEL
MR D A C LAMBERT

MR A M CHAFFER	APPELLANT

SOUTHERN BIRMINGHAM COMMUNITY HEALTH NHS TRUST	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR P DOUGHTY
(of Counsel)
Messrs Patwa Solicitors
25 Abbey Road
Bearwood
Smethwick
West Midlands
B67 5RA	
For the Respondent	MISS S MOOR
(of Counsel)
Messrs Mills & Reeve Solicitors
Midland House
132 Hagley  Road
Edgbaston
Birmingham
B16 9NN	

HIS HONOUR JUDGE PETER CLARK

1	On 25 October 1999 an employer’s capacity to legitimately agree with his employee that the latter would waive his right to bring a complaint of unfair dismissal ended.  The fixed term contract waiver provision, then contained in Section 197(1) of the Employment Rights Act 1996, was repealed by Section 18 of the Employment Relations Act 1999.  However, while the provision is dead, it will not lie down.  This case, involving a dismissal on 31 March 1999, raises a question not addressed in the considerable body of authority most recently reviewed by the Court of Appeal in BBC v Kelly-Phillips [1998] IRLR 294.

2	The facts may be shortly stated.  The Appellant, Mr Chaffer, commenced a period of continuous employment with the Respondent Trust or its predecessor on 4 September 1995.  On 
9 October 1997 he entered into a written contract of employment with the Respondent.  The agreement was expressed to be for a fixed term period of 2 years between 30 September 1996 and 29 September 1998.  Clause 25 of the agreement provided, so far as is material:

“25		FIXED TERM APPOINTMENTS
As this is a fixed term appointment I agree to:-
(i)	Exclude my rights to claim unfair dismissal if by the expiry of this contract my employment with the Trust is terminated.

3	The 29 September 1998 came and went without the employment coming to an end and with nothing by then having been said between the parties as to what would happen on the expiry of the fixed term.  Thereafter the employment continued on the same terms as before.

4	On or about the 21 October 1998 the Respondent wrote to the Appellant a letter headed “Changes to Contract of Employment”.  It read, so far as is material:

“Dear Mr Chaffer
Re:  Changes to Contract of Employment
Please find detailed below changes to your Contract of Employment:
This document will be attached to and will form an amendment to, and should be read in conjunction with, your Contract of Employment.
This change of Contract Form is sent to you in duplicate.  If you are in agreement with the following changes please sign both copies, one of which you should retain, the other should be returned to the above address where it will be attached to the original contract on your personal file.
Changes to Contract
Contract Extended From:	29TH SEPTEMBER 1998	To:	31ST MARCH 1999
As this is a fixed term appointment I agree to:-
	(i)  Exclude my rights to claim unfair dismissal if by the expiry of this contract my employment with the Trust is terminated. …..
All other Terms and Conditions of Employment remain as previously stated.

The Appellant signed a copy of that form, dated it 8 December 1998 and returned it to the Respondent, signifying his acceptance of the terms there set out.  On 31 March 1999 his employment came to an end.

5	On 29 June 1999 he presented a complaint of unfair dismissal to the Employment Tribunal.  The preliminary issue which came before an Employment Tribunal sitting at Birmingham on 14 March 2000 was whether the Appellant had waived his right to bring such a complaint, so that the Employment Tribunal had no jurisdiction to entertain his complaint.  By a decision with Extended Reasons dated 18 April 2000 the Employment Tribunal found that he had waived that right.  Against that decision this appeal is now brought.

6	The relevant statutory provisions, in force at 31 March 1999 and contained in the Employment Rights Act 1996 (the Act), were these:-
By Section 197:

“Fixed Term Contracts
(1)	Part 10 does not apply to dismissal from employment under the contract for a fixed term of one year or more if –
	(a)  the dismissal consists only of the expiry of that term without its being renewed and –
	b)  before the term expires the employee has agreed in writing to exclude any claim in respect of rights under that part in relation to the contract ….
(4)	An agreement such as is mentioned in sub section may be contained 
	(a)  in the contract itself, or
	(b)  in a separate agreement.”

Section 235(1) provides that:

“…..“renewal” includes extension, and any reference to renewal of contract or a fixed term shall be construed accordingly ….”

By Section 95:

(1)	For the purposes of this Part [Part X] an employee is dismissed by his employer if – …
	(b)  he is employed under a contract for a fixed term and that term expires without being renewed under the same contract ….

Part X of the Act deals with unfair dismissal.

7	Following considerable judicial debate the Court of Appeal held in Kelly - Phillips that where a fixed term contract is renewed by extension the whole of the period of the contract as extended is to be counted in order to determine whether the one year threshold mentioned in Section 197(1) has been passed.  There is no question but that the expiry of the fixed term contract without renewal amounts to a dismissal within the meaning of both Section 197(1)(a) and Section 95(1)(b) of the Act.

8	The question raised in this case is whether the supplemental written agreement entered into between these parties by way of an offer dated 21 October and acceptance by the Appellant on 8 December 1998 had the effect of renewing the original fixed term contract so as to provide:
	(a)	a fixed term contract of 2½ years, that is, for one year or more,
	(b)	a dismissal consisting only of the expiry of that term on 31 March 1999 and
	(c)	an agreement by the Appellant in writing before that term expired to waive any unfair dismissal claim in relation to the contract.
The novel point here is that the focus is on the first of those 3 conditions, specifically whether a fixed term contract can be renewed by agreement reached after the expiry of the original fixed term, here 29 September 1998.  The Employment Tribunal answered that question in the affirmative.  That conclusion is supported by Miss Moor on behalf of the Respondent and challenged by Mr Doughty on behalf of the Appellant.  

9	In our judgment the Tribunal were correct in so finding.  Our reasoning is as follows:-

(1)	Prima facie the Appellant was dismissed by the Respondent on 29 September 1998.  He was employed under a contract for a fixed term and that term expired without having been renewed under the same contract as at that date -  Section 95(1)(b)
(2)	Continued employed thereafter is not inconsistent with that dismissal having taken place - see  Hogg v Dover College [1999] ICR 39
(3)	In these circumstances, what is the effect of the parties subsequently agreeing in writing to a 6 month extension to the original fixed term contact, the terms and conditions of that contract otherwise remaining the same?  In answering that question we think that some assistance may be derived from the provisions of Section 138(1) relating to redundancy dismissals under Part XI of the Act.
(4)	Section 138(1) provides:

“No dismissal in cases of renewal of contract or re-engagement
(1)	Where –
(a)  an employee’s contract of employment is renewed, or he is re-engaged under a new contract of employment in pursuance of an offer (whether in writing or not) made before the end of his employment under the previous contract, and
(b)  the renewal or re-engagement takes effect either immediately on, or after an interval of not more than four weeks after, the end of that employment,
the employee shall not be regarded for the purposes of this Part as dismissed by his employer by reason of the ending of his employment under the previous contract.”

The position of the comma in Section 138(1) has been held to mean that a renewal of the contract automatically activates sub section (1) so that there is then no dismissal, whereas for re-engagement to have that effect it must be pursuant to an offer made by the employer before the ending of the employment under the previous contract – 
SI (Systems & Instruments) Ltd v Grist and Riley [1983] IRLR 391.  We observe that it must follow that whereas for re-engagement the offer must be made before the ending of the original contract, that is not necessary in the case of a renewal, provided that the renewal takes effect on or within the specified period of the ending of the employment under the previous contract.
(5)	By parity of reasoning, where a fixed term contract is renewed, as opposed to the employee being re-engaged on different terms, following termination of a fixed term contract, it is not necessary for the offer to renew, or its acceptance, to take place before the ending of the old contract.
(6)	Plainly ‘renew’, as defined by Section 235(1), must mean the same in Section 138(1) as it does in Section 95(1)(b) and Section 197(1)(a) of the Act.  Reading those provisions as a whole we conclude that the effect of an agreement to extend the original contract term, whether before or after expiry of the original fixed term by effluxion of time, amounts to a renewal.  The contract is now for a fixed term of 2½ years.  Before the expiry of that term the Appellant has agreed in writing, in a separate agreement (see Section 197(4)(b)), to exclude any claim in respect of his unfair dismissal rights under Part X of the Act.
(7)	We think that our construction is also consistent with the ordinary meaning of the word ‘renewal’, which, as counsel before us agree, can include revival.  That is what happened here.  The original fixed term contract was revived, by agreement between the parties, and extended to 31 March 1999 when it terminated on the expiry of the term as extended without its being renewed.  The Appellant was then dismissed within the meaning of Section 95(1)(b): he is precluded from bringing a complaint of unfair dismissal by virtue of Section 197(1).
(8)	Nor are we deflected from this conclusion by Mr Doughty’s submission that the Employment Tribunal considered, at paragraph 6.6 of their reasons whether the result reached as a pure matter of statutory construction accorded with common sense and fairness and justice between the parties.  Whilst common sense and concepts of fairness and justice in the abstract are a dangerous route to determining pure questions of law, such as this, it would be wrong to think that common sense and the law are necessarily mutually exclusive.
(9)	In short, we have found it necessary to attempt that distinction which Lord Denning MR considered “too fine a distinction for ordinary mortals to comprehend” in BBC v Iannou [1975] IRLR 184, 186, paragraph 14, namely that between renewal and re-engagement.  What happened here, in our judgment, was a renewal of a fixed term contract.  

10	The appeal fails and must be dismissed.