Appeal No. UKEAT/0677/05/MAA – UKEAT/0681/05/MAA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 17 March 2006

Before
THE HONOURABLE MR JUSTICE ELIAS (PRESIDENT)
(SITTING ALONE)

MRS J JEFFERY & OTHERS 	APPELLANT

(1)	SECRETARY OF STATE FOR EDUCATION
(2)	BRIDGEND COLLEGE 	RESPONDENTS

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MRS E M HUGHES & 
MRS A M MUTTON
(The Appellants in Person on behalf of all five Appellants)
	
For the First Respondent

For the Second Respondent	WRITTEN SUBMISSIONS ONLY

MR DALE MARTIN
(of Counsel)
Instructed by:
Messrs Eversheds LLP Solicitors
1 Callaghan Square
Cardiff
CF10 5BT	

SUMMARY

Equal Pay Act

Appellants to have membership of the employer’s pension scheme backdated to include earlier periods of part-time employment.  Chairman held that the applications were out of time.  Was this an error of law?  Observations on what constitutes a stable employment relationship. 

THE HONOURABLE MR JUSTICE ELIAS (PRESIDENT)

1.	This is an appeal against the decision of the Chairman, Mr Thomas, sitting alone in Cardiff in which he struck out certain claims made by the Appellants under the Equal Pay Act 1970 (read with Article 141 of the Treaty of the European Union) on the grounds that they had not been made in time.

2.	The Appellants are all employees who are employed by the Bridgend College.  The First Respondent is the Secretary of State who has not made any representations to me today, and the Second Respondent is the Bridgend College.  The Appellants have appeared in person.  I have heard from two of them, Mrs Hughes and Mrs Mutton, who have presented their cases with conspicuous skill and courtesy.  I have also heard, and am grateful for, the submissions on behalf of the College from Mr Dale Martin. 

3.	The Appellants’ claim is that they are entitled to have their membership of the employer’s pension scheme backdated so as to include earlier periods of part-time employment.  The Chairman heard the matter first on 15 April 2005, but the Appellants sought a review at the same time as they appealed the matter to the Employment Appeal Tribunal.  The review was granted on 28 February 2006 and a fresh Decision was sent to the parties on 14 March 2006.  The conclusion was the same, namely that the applications were out of time, but there was additional material before the Chairman; and the reasoning in the review Decision is much fuller than in the original determination.  It was accepted by all parties that it is this review decision on which I should now focus.  

The Material Facts outlined in the Chairman’s Decision
4.	There are five Appellants.  I take the case first of Mrs Hughes and, by way of illustration, set out the Chairman’s findings of fact in relation to her employment relationship with the College.  He said this:  
“12.		The evidence in her case and others is not contested and the facts are as follows. Her contracts ran from early September to June or July of the following year. In June or July there would have been every intention on the part of her employer and herself (and this applies to the other Claimants) that she would continue for the following term. The evidence for this (which I again emphasise is not in issue) lies in the letters from the then Principal, Mr Wyle, at pages 46 and 47 of the Claimants' bundle and also from the Vice-Principal at pages 70 and 71 and the aspirations contained in the Strategic Plan for the Bridgend College contained in pages 48 to 69 of the bundle. She agreed however with Mr Wayne Jones that the terms of the contract depended on the prospective pupil numbers as indeed were the renewal of the contracts. Each contract signed was a fresh contract.
13.		She was to teach human biology, chemistry and nutrition every day. There were sessions in the morning and afternoon. Two evenings during the week were also taken up with teaching. Greater detail of her duties was 	not possible at this distance in time.
14.		Nevertheless her payslips show that she remained in the same employment with the same employer with unvarying regularity. She was working in my view if not full-time hours then a very similar number even though she was contracted as an hourly paid part-time lecturer.
15.		In 1987 she was appointed as a full-time lecturer. An example of the appointment is contained in correspondence of 9 September 1987 from Mr J D Davies, the Principal, which indicates that Mrs Hughes was to be made a temporary full-time lecturer for one year up until 31 August 1988. By a letter signed by Mrs Hughes dated 5 November 1988 she accepts the offer of a "fixed term contract commencing 1 November 1988 terminating 31 August 1989". Following the same pattern on 20 September 1990 she accepted an offer of a "temporary lecturer" to commence on 1 September 1990 until 31 August 1991. During the course of her temporary contract she was appointed as a permanent lecturer with effect from 1 December 1990 as set out in correspondence of 12 November 1990 in the Respondents' bundle. It is agreed that this involved 21 hours per week over ten sessions.

5.	The position of Mrs Mutton was, in certain respects, similar.  In particular, as far as she and Mrs Jeffery were concerned, they share this feature with Mrs Hughes, namely that they were told that their relationship with Bridgend College would become permanent during the course of a temporary contract.  In Mrs Mutton’s case, for example, she had entered into a contract with effect from 1 September 1993 to 31 August 1994 and was told that tenure would be reviewed during March 1994 and, in fact, she was notified before then that her position would become permanent with effect from 1 February 1994 subject, of course, to her accepting that change.  

6.	The position of Mrs Ness was a little more complex.  She also appears to have had her status changed from that of temporary to permanent employee during the course of a specific contract, but she had earlier been employed as a full-time employee.  

7.	Mrs Dimond, by contrast, appears to have been notified that she would be employed on a fresh permanent contract as from a particular date.  

8.	The Chairman set out the relevant principles of law, to which I will come in a moment, and he made certain findings which, he said, were common to all the Claimants and which he set out at paragraph 34 of the Decision.  He said this:
34.1		All the Claimant were employed under a series of separate contracts. They were termly or academic yearly or similar contracts which would commence in September and end in or about June or July.
34.2		For the purposes of continuous employment it is likely that each Claimant did have continuous employment for the purposes of various employment rights including unfair dismissal but not claims under the Equal Pay Act 1970.
34.3		The work that each of the Claimants did both in nature and hours (certainly in respect of Mrs Mutton and Mrs Hughes) would represent an approximation to full-time hours or certainly not a significant reduction.
34.4		Each of the contracts were separate and despite the intention of the parties to renew the contracts each September they were nevertheless new contracts and were couched with a caveat that was understood that the contracts so far as detail of hours and sessions were concerned and also the discretion to issue or not was dependent upon the numbers of students.
34.5		All the Claimants were eventually entitled under the short-term contracts to membership of the employer's pension scheme.
34.6		Each Claimant entered into a permanent contract from their temporary contracts on the following dates:
Mrs Hughes on 1 December 1990
Mrs Mutton on 1 February 1994
Mrs Jeffery in 1983
Mrs Dimond on 1 September 1992
Mrs Ness in September 1990. 
I am satisfied that there was a radical change in the terms of the contract on those dates by reason of the change from a temporary contract to permanent status.
34.7		The claims have been submitted in respect of each Claimant as follows:
Mrs Hughes on 23 December 1994
Mrs Mutton on 23 December 1994 Mrs Jeffery on 22 December 1994
Mrs Dimond on 22 December 1994
Mrs Ness on 29 December 1994.
32.8		Each is unfortunately for them outside the six month statutory time limit set by the Equal Pay Act 1970 and these applications are dismissed”
There appears to be an error in relation to Mrs Mutton at paragraph 34.6 because she, in fact, entered into the permanent contract with effect from 1 February 1994.  That, indeed, is identified by the Chairman at paragraph 21 of his Decision.  

The Law
9.	I turn to the law.  The starting point must be the domestic law.  S2(4) of the Equal Pay Act 1970 is as follows:
“No claim in respect of the operation of an equality clause relating to a woman’s employment shall be referred to in an Industrial Tribunal…if she has not been employed in the employment in the six months preceding the date of the reference”.

10.	In the case of Preston v Wolverhampton Health Care NHS Trust [1998] ICR 227; [1998] IRLR 1999, their Lordships made it plain that as far as domestic law is concerned, the time limit under s2(4) runs from the end of each contract under which an employee is employed.  It does not run from the end of any employment with an employer comprehending a succession of different contracts of employment with the same employer, but their Lordships also noted in that decision that there was a question of whether, in certain circumstances, the application of domestic law might be incompatible with the law of the European Union.  In particular, in circumstances where employees like these Appellants are subject to a series of short term contracts, the issue was raised whether it made it excessively difficult or impossible in practice for employees to pursue their claims if they had to initiate proceedings in respect of each short term contract.  

Accordingly, the following question was referred for consideration by the European Court (page 51)
“51 3.	In circumstances where:
(a)	an employee has served under a number of separate contracts of employment for the same employer covering defined periods of time and with intervals between the periods covered by the contracts of employment; 

(b)	after the completion of any contract, there is no obligation on either party to enter into further such contracts; and

(c)	she initiates a claim within six months of the completion of a later contract or contracts but fails to initiate a claim within six months of any earlier contract or contracts:

Is a national procedural rule which has the effect of requiring a claim for membership of an occupational pension scheme from which the right to pension benefits flow to be brought within six months of the end of any contract or in contracts of employment to which the claim relates and which, therefore, prevents service under any earlier contract or contracts from being treated as pensionable service compatible with: 
(1)	the right to equal pay for equal work in Article 119 of he EC Treaty; and
(2)	the principle of EC law that national procedural rules for breach of Community law must not make it excessively difficult or impossible in practice for the claimant to exercise her rights under Article 119?”
The European Court did, indeed, conclude that it was incompatible with European law for a woman to have to make a claim in respect of each contract in these circumstances.  The relevant conclusion of the Court was as follows:
“67.		As pointed out in paragraph 33 of this judgment, the Court has held that the setting of reasonable limitation periods is compatible with Community law in as much as the fundamental principle of legal certainty is thereby applied.  Such limitation periods cannot, therefore, be regarded as capable of rendering virtually impossible or excessively difficult the exercise of rights conferred by Community law.  
68.		Whilst it is true that legal certainty also requires that it be possible to fix precisely the starting point of the limitation period, the fact nevertheless remains that in case of successive short term contracts, the kind referred to in the third question setting the starting point of the limitation period at the end of each contract renders the exercise of the right conferred by Article 119 of the EC Treaty excessively difficult.
69.		Where, however, there is a stable relationship resulting from a succession of short term contracts concluded at regular intervals in respect of the same employment to which the same pension scheme applies, it is possible to fix a precise starting point for the limitation period.
70.		There is no reason why that starting point should not be fixed as the date on which the sequence of such contract has been interrupted through the absence of one or more of the features that characterise a stable employment relationship of that kind either because the periodicity of such contracts has been broken or because the new contract does not relate to the same employment as that to which the pension scheme applies.  
71.		A requirement in such circumstances that a claim concerning membership of an occupational pension scheme be submitted within the six months following the end of each contract of employment to which the claim relates cannot therefore be justified on grounds of legal certainty.  
72.		The answer to the third question must therefore be that Community law precludes a procedural rule which has the effect of requiring the claim…to be brought within six months of the end of each contract of employment to which the claim relates where that has been a stable employment relationship resulting from a succession of short term contracts concluded at regular intervals in respect of the same employment to which the same pension scheme relates”. 

11.	 When the case went back to the House of Lords in the case known as Preston No.2 [2001] IRLR 237, Lord Slynn said this (paragraph 33).  
“33.		Accordingly it is clear that where there are intermittent contracts of service without a stable employment relationship, the period of six months runs from the end of each contract of service, but where such contracts are concluded at regular intervals in respect of the same employment regularly in a stable employment relationship, the period runs from the end of the last contract forming part of that relationship”.
All other members of the House of Lords agreed with Lord Slynn’s speech.  I pause there to note that the effect is that, in effect, a series of successive contracts are, in certain specific circumstances, treated as a single contract.  As Lord Slynn points out, the period of limitation then runs from the end of the last contract forming part of that stable employment relationship.  It does not run from the end of the stable employment relationship itself in so far as that might identify a different point in time.  

12.	In Preston No. 3 [2004] IRLR 96, HHJ McMullen QC, giving the judgment of the Employment Appeal Tribunal, had to deal with a number of issues arising out of the rulings of the European Court of Justice and the House of Lords.  In particular, he had to deal with two matters which have some relevance to the issues which I have to decide in this case.  First, he considered a submission in that case that where there was an amendment of the final contract in the series of the successive contracts forming a stable employment relationship, that time did not begin to run until the contract had come to an end.  In other words, it was submitted that there was a distinction between a termination of the contract and a variation of the contract and that where the change in terms and conditions merely effected a variation, that did not start time running.  

13.	In fact, in that case, this argument was advanced only in relation to a particular employee called Mrs Bunyon, and in her case she entered into a newly created post.  She ceased to be employed on 13 June 1984 and she accepted an offer of a newly created post with effect from 1 September 1984.  In that case, not surprisingly, HHJ McMullen commented that he did not accept “that it was possible to vary a contract which had terminated”.  He referred to the distinction which was drawn in the case of Merritt v Oxford & District Co-operative Society [1969] 1 WLR 254 which drew the distinction between a variation of the contract and the rescission and creation of a new contract in the following terms:
“An important consideration is the nature of the alleged variation.  In order to amount to a rescission, it must be so fundamental that nobody could claim that the original contract was still in being.  On the other hand, the new terms may be on such minor matters, that really the only common sense of the case is that the original contract is in being, subject to slight variations.  In other words, each case must depend upon the circumstances of the case (page 259C)”
but he observed that, in fact, that principle did not have any bearing on the particular facts relating to Mrs Bunyon.  

14.	Then he considered a separate argument of whether the stable employment relationship could continue in certain circumstances where the succession of short term contracts was superseded by a permanent contract.  He analysed the point as follows:
“112.	The Chairman accepted (Reasons paragraphs 251(1) to (2) (above)) that a stable employment relationship may in certain circumstances arise following a succession of regular short-term contracts even where there is a sequence of intermittent short-term contracts. It was contended that the graduation of an employee from a succession of short-term contracts to a permanent contract reflects an increase in the stability of the employment relationship, not its cessation. Far from being incompatible with the continuation of a stable employment relationship, entering into a permanent contract typically cements the stability of the relationship. It is contended that there should be no artificial restriction on the types of successive contracts leading to a stable relationship. On behalf of the Respondents it is contended that the expression of this relationship by the ECJ provides a complete answer. All three test cases raise the same issue. 
113.		In ordinary language any permanent job can be described as a stable employment relationship. But in the context in which it is coined by the ECJ, it is there to rescue employees who do not have a permanent job. The rescue operation is limited to cases satisfying the conditions defined by the ECJ and adopted by the House of Lords. (I will leave aside for one moment the special circumstances of Mrs Bunyan since Mr Lewis contends that in any event his client is not liable in the circumstances of Mrs Bunyan's employment at a college”.
One of the arguments advanced here is essentially that identified by HHJ McMullen QC.  It was contended that by virtue of continuing in this relationship on a permanent basis, the stable employment relationship has obviously continued in precisely the same way as before.  HHJ McMullen QC, after considering different forms of intermittent or temporary contracts, summarised his conclusions in the following way:
“115.	It is therefore necessary to consider the "features that characterise a stable employment relationship" (ECJ judgment para 70) and these can be broken down as follows: 
(1) A succession of short-term contracts.
(2) Concluded at regular intervals.
(3) Relating to the same employment.
(4) To which the same pension scheme applies.
As to (1), this devolves into two parts. The subject matter must be short-term contacts. The House of Lords in its Order for Reference and in its consideration of the ECJ judgment when referred back to it has in mind as "short-term" contracts which are termly, or for the academic or sessional year. It follows that those contracts and anything for a shorter period are "short-term". There must be a "succession" or a "sequence" (ECJ judgment para 70). I interpret this to mean three or more, for the existence of two such contracts is not usually described as a sequence or a succession of such contracts. It would ordinarily be described as the repetition of a contract.
116.		As to (2), the intervals which must be regular, this is described as "periodicity" which of course implies regularity. The periods are regular because they are clearly predictable and can be calculated precisely; and they are also regular where the intervals between work, and the length of the spells of work, are not to be predicted with accuracy; but nevertheless it is possible to say that the teacher, for example, is frequently, or even customarily, called upon whenever a need arises. This arises, by definition in the field of supply teaching, several times a term and thus may be described as regularly; but the precise dates cannot be calculated or predicted and so the work may accurately be described as intermittent. 
117.		As to (3) "same employment", no guidance is given. As to (4), the same pension scheme, it seems that the adoption of the expression "over-arching" is encompassed within the same scheme. 
118.		In order to succeed in bringing the test cases within the above framework, Mr Cavanagh submits that the Chairman was wrong to find that the stable employment relationship ceases when the terms of the contract, or the work done, alter radically; that is, when a succession of short-term contracts is superseded by permanent contract (Reasons paragraph 251(3)(e)). But in the context of the analysis of the ECJ's judgment as applied by the House of Lords, the submission fails because feature (1) is missing. The succession of short-term contracts ceases, or is interrupted, when a new permanent contract is negotiated. It is not apt to describe a succession of short-term contracts and a permanent contract as a succession of short-term contracts. The succession is broken, and the nature of the contract changes from short-term to permanent. The submission also fails because there is no periodicity about the contracts. There is no interval, let alone a regular interval, between the contracts since on the footing of the test cases each relationship is regulated by a single permanent contract. Thirdly, the cases may also founder under feature (3) as not being in "the same employment". I will examine this matter in more detail below. I would further agree with the Chairman that in respect of Mrs Cockrill, her claim would fail because the pattern of her working was too spasmodic and could not be characterised as meeting each of the features set out above. She would fail principally on feature (2): the lack of periodicity of the employments”.

The Grounds of Appeal
15.	There are essentially two distinct grounds on which it is said that the Chairman ought to have found that these applications were lodged in time.  First, it is submitted that even if there was a new contract which came into existence when these employees entered into a permanent relationship, nonetheless the stable employment relationship continued throughout the temporary contracts and embraced the permanent contract also.  

16.	The second ground is this.  It is said that the Tribunal Chairman erred in concluding, as he did in terms at paragraph 34.6, that there was a radical change in the terms of the contract by reason of a change from a temporary contract to permanent status.  The Chairman had seen this as giving rise to a new permanent contract.  It is submitted that there was a mere variation of the original contracts and, in those circumstances, time would not run until the contract had come to an end.  In other words, since they were all still employed, it is submitted that time has not begun to run at all yet and their claims should have been accepted.

17.	As to the first ground, it seems to me that the decision of HHJ McMullen QC in Preston No. 3 is decisive of the point.  Although, in layman’s terms, it may understandably be said that entry into a permanent job does not destroy a stable employment relationship, that concept in the context of this jurisprudence is a very much more precise one.  As HHJ McMullen QC pointed out:  “It is not apt to describe the succession of short terms contracts and a permanent contract as a succession of short term contracts”.  

18.	I entirely agree with his analysis on this point.  In my judgment, it cannot be said that there is a continuation of the stable employment relationship into a new permanent contract.  To put it in my own words, the concept of a stable employment relationship has the effect of requiring a series of intermittent contracts or temporary contracts to be treated as if they were a single contract terminating at the conclusion of the last of those sequential contracts.  But this only modifies the basic principle that time runs from the end of each contract in the very precise circumstances identified by the European Court of Justice.  It does not permit an employee to treat a succession of contracts not falling within those criteria as amounting to a single stable employment relationship.  If that were right, it would mean that, in practice, in almost all cases employees would be able to bring claims within six months of the termination of the employment relationship with a particular employer, however many separate contracts there may have been during the course of those relationships, and whether they were short term, long term or, indeed, whatever form they took.  That would involve a fundamental change in the law which is plainly not the effect of the decision of the European Court.  

19.	That seems to be decisive in particular of the case of Mrs Dimond because she entered into a new contract of a permanent nature.  In relation to the other Appellants, however, save possibly Mrs Ness whose position is less clear-cut, the Appellants can seek to rely upon their second argument.  As I have said, the contention here is that the Tribunal Chairman ought not to have concluded that there was a fresh contract entered into when these employees were given permanent, as opposed to temporary, status.  

20.	Mrs Hughes put her argument succinctly.  She submitted that there was really, as far as the employees were concerned, nothing different day to day about the nature of their relationship with the College at all.  Their duties remained the same, the contractual terms did not vary in any material respect, the work done was essentially the same, it was the same employer, it was the same relationship to all intents and purposes and they could take advantage of the pension scheme as both temporary and permanent employees.  They were fully integrated into the system and they had letters from senior staff at the College to support that, and she commented that permanent status itself was, in any event, somewhat precarious because the continued employment still rested upon sufficient students wanting to do particular courses.  It was suggested that, in truth, it was little more than a change of label rather than a fundamental contractual change as found by the Claimant.  

21.	Mr Martin submitted that whether there was a variation or a termination made no difference.  His contention was that once it was agreed that the relationship would be a permanent one, then the stable employment relationship as defined by the European Court of Justice came to an end.  In fact, he submitted that even if there were a variation with no termination of the contract, the stable employment relationship should be treated as having come to an end immediately prior to the contract which had been varied.  But that would have very odd consequences because if, say, somebody was employed on a nine-month temporary contract and had their status converted into a permanent employment relationship seven months into that contract then, on this analysis, it would be too late for them to claim equal pay if they had to rely upon six months from the immediately preceding contract.  In any event, it seems to us that as far as this part of his submission is concerned, it is inconsistent with the analysis of Lord Slynn in the House of Lords.  As we have indicated, time begins to run from the end of the last contract forming part of the stable employment relationship.  

22.	If there is a mere variation in the contract, that contract still, it seems to me, constitutes the last contract in the stable employment relationship and time will not run until that contract comes to an end.  But Mr Martin submitted that in any event, even if he were wrong about that – I think he is wrong about that – then the Chairman was fully entitled to conclude that the change from temporary to permanent status was of sufficient significance to justify the conclusion that there had been effectively a termination of the temporary contract and the creation of a new permanent contract.  He reminded me of the fact, relying upon Council of the City of Newcastle-upon-Tyne v Allen [2005] IRLR 504 by way of example, as Burton J pointed out in that case at paragraph 43 that the Tribunal is the industrial jury and a judge of the facts and I have to be satisfied that the Chairman’s conclusion on this matter was perverse and involved an error of law.  He submits that there is inevitably, as a matter of law, a fundamental change where a contract which is due to finish in the normal course of events within a short period of time is made indefinite.  The continuation of the terms and conditions for an indefinite period thereafter, even if those terms and conditions do not in other material respects change, is clearly of sufficient significance, he submits, to constitute a new contract.  More importantly, he says that in any event, it was plainly open to the Chairman to reach that conclusion.  It may be, as he accepts, that in the ordinary way for employees who might anticipate that their temporary contracts would be continued, it may not seem to be highly material from that perspective that nonetheless, in terms of the contractual obligations of the parties, it is a very significant step and the Chairman was fully entitled to find that there was a new contract entered into at that stage.  

23.	I agree with this submissions on this point.  I appreciate that it will be very disappointing to the Appellants concerned and I appreciate that they feel, from their perspective, that the Chairman ought not to have concluded that this was effectively a new contract.  But, it seems to me, he was fully entitled to say that where one moves from a temporary relationship under a particular contract to a permanent relationship which may carry on indefinitely, that that is a fundamental change in the nature of the relationship between the parties and their obligations such as to amount to a new contract as a matter of law.  If that is right, then of course the new contract was a permanent contract and the stable employment relationship thereby came to an end once that relationship was entered into.  That meant that the Chairman found that each of these claims was therefore brought outside the time limit.  For those reasons, therefore, I concluded that the Chairman did not err in law in the conclusion he reached and that his decision should stand.