Appeal No. UKEAT/0370/10/ZT

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 12 January 2011
	   Judgment handed down on 18 May 2011

Before
HIS HONOUR JUDGE RICHARDSON
MRS R CHAPMAN
MR C EDWARDS

MR M J BAILEY	APPELLANT

R & R PLANT (PETERBOROUGH) LTD	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR ALEX YOUNG
(of Counsel)
Instructed by:
Messrs Greenwoods Solicitors
Monkstone House
City Road
Peterborough
PE1 1JE	
For the Respondent	MR GUY SIMS
(of Counsel)
Instructed by:
Fraser Dawbarns LLP
1-3 York Row
Wisbech
PE13 1EA	

SUMMARY
UNFAIR DISMISSAL
AGE DISCRIMINATION

The appeal concerned the statutory right to request not to retire and in particular paragraphs 2 and 5 of Schedule 6 of the Employment Equality (Age) Regulations 2006 (now repealed).

Held:

(1) 	In order to comply with paragraph 2(1) of Schedule 6 an employer was required to inform an employee in writing of the essential conditions for exercising the right conferred by paragraph 5.

(2) 	Paragraph 5(3) required that an employee’s statutory request must be in writing and must state that it was made under this paragraph.  These were mandatory requirements.

(3) 	Accordingly the employer’s letter, which did not inform the employee of this essential condition for exercising the right conferred by paragraph 5(3), did not satisfy the requirements of paragraph 2(1) of Schedule 6.

Appeal allowed.  Finding substituted that the reason for dismissal was retirement and the dismissal was unfair.  Compensation awarded in the sum of £4455.

HIS HONOUR JUDGE RICHARDSON 

1.	This is an appeal by Mr Michael Bailey (“the Claimant”) against a judgment of the Employment Tribunal (Employment Judge Brian Mitchell presiding) sitting in Bury St Edmunds dated 29 April 2010.  By its judgment the Tribunal dismissed his claims of unfair dismissal, wrongful dismissal and age discrimination.  He appeals only against the dismissal of his claim of unfair dismissal.

2.	The appeal concerns Schedule 6 of the Employment Equality (Age) Regulations 2006 (“the Age Regulations”).  This Schedule has now been repealed, as we will explain further below.  We will, however, for convenience use the present tense in describing its provisions.

3.	Sch.6 provides what is in effect a procedural right for an employee whose employer intended to impose compulsory retirement.  Such an employer has a duty to notify the employee in writing of “the employee’s right to make a request” under para 5: sch. 6, para 2(1)(a).  The employee can then make a request under para 5 not to retire on the intended date of retirement.  If the employee makes such a request the employer is required to consider it by holding a meeting (para 6) and entertaining any appeal at a further meeting (para 8).

4.	The employee’s right to make a request under para 5 is hedged about with prescriptive requirements.  This appeal is concerned with a requirement in para 5(3) that the request must “be in writing and state that it is made under this paragraph”.  This is not a provision of which most employees would be aware unless they are alerted to it in some way.  Two interlinking questions arise.  (1) Is it the employer’s duty under para 2(1)(a) to inform the employee of the requirement?  (2)  Is it essential to the validity of a request under para 5 that it must state that it was made under that paragraph?  Whether the employee was unfairly dismissed and with what consequences will depend on the answer to these questions.

The legal context
5.	The Age Regulations were intended to give effect to the requirements concerning age discrimination of EC Directive 2000/78 (“the Framework Directive”) which had established a general framework for equal treatment in employment and occupation throughout the European Union.  The general effect of the Age Regulations was to prohibit discrimination and harassment on grounds of age in the field of employment and vocational training.

6.	However, the Age Regulations contained what was in effect a special scheme to deal with retirement, focussing upon a designated age of 65.  We will call these “the DRA provisions”.  The lawfulness of these provisions was the subject of challenge: see R (Incorporated Trustees of the National Council on Ageing (Age Concern England) v Secretary of State for BERR (“Heyday”) [2009] IRLR 373 (ECJ) and R (Age UK) v Secretary of State for Business Innovation and Skills (“Heyday”) [2009] IRLR 1017 (Blake J, Admin Ct).  It was held that the scheme was lawful at the time of its imposition; doubts were expressed as to whether a default age of 65 would survive a review.

7.	Most of the DRA provisions once contained in the Age Regulations became incorporated into the Equality Act 2010.  However the DRA provisions have now been swept away: see the Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011, which took effect (subject to limited transitional provisions) on 6 April 2011.

8.	The DRA provisions were summarised by Blake J in Heyday as follows:

“The age of 65 has become a designated retirement age (“DRA”) in the United Kingdom as opposed to a default position in the absence of a contractual term.  Employers will be able to dismiss on retirement grounds at an earlier age but only if they can justify this measure as proportionate, necessary and for a legitimate purpose ...  Employers are not obliged to dismiss workers at 65.  They will be free to keep workers on in employment after 65, but if they do so they may subsequently dismiss them on retirement grounds without liability for unfair dismissal.  Under new provisions established by the Regulations employers are required to give a minimum period of notice of an intended decision to retire employees and must listen to any representations made by the employee against such a course under a procedure spelt out in Schedule 6 to the Regulations.”

9.	It is the procedure under Schedule 6 to the Regulations with which we are concerned in this case.  This procedure was one of the few parts of the Regulations to survive the passing of the Equality Act 2010; but (as we have said) it has now been repealed.

The facts
10.	The Claimant was employed by R & R Plant Hire (Peterborough) Ltd (“the Respondent”) as a motor vehicle engineer repairing plant and machinery.  The Respondent is a small company – a family business consisting at the relevant time of about 6 employees.  It supplies plant and machinery on hire to the building construction industry.  Mr Colin Rust was its managing director.

11.	The Claimant’s employment began on 11 October 1999.  The Tribunal found, and it is not in dispute on appeal, that he had a normal retirement age of 65.  His 65th birthday was 20 January 2009.  On 11 July 2008 Mr Rust met with him and told him that he would have to retire when he was aged 65.

12.	On 18 July 2008 Mr Rust wrote to the Claimant in the following terms:

“As your employer and under current legislation we are required to write to you six months in advance of your 65th birthday to formally inform you that when you reach 65 years of age you have to retire from full time work.
Should you wish to continue employment beyond this date you are required to make this application to the company in writing”

13.	On 14 August the Claimant replied:

“Thank you for your letter with relevant information about the law and my approaching 65th birthday.  I hope for the foreseeable future to continue working full time for R & R regardless of age.
I enjoy my job and feel I give an excellent service and commitment to the company.
As long as my health and strength survive I hope you will consider my employment with you as a long term certainty.”

14.	Mr Rust met the Claimant on 12 September.  He told him it was company policy that he should retire at the age of 65.  He held out the possibility of part-time work but no more.  The Claimant received no written notification of any decision.  In January 2009 the Claimant was still hoping to be kept on; but Mr Rust again said that the most he could do was offer some part-time work when it was available.  This was not acceptable to the Claimant.  His employment terminated on 20 January 2009.

Relevant statutory provisions
15.	Against that background we must now delve into the DRA provisions of the Age Regulations.  These provisions adopt drafting techniques which are complex and opaque.  We think we are on safe ground if we say that no employee could possibly be expected to understand the provisions as a whole without the clearest of guidance; and that no ordinary employee could be expected to locate, read and apply paragraph 5 of Schedule 6 by the use of ordinary endeavour.  We will use the present tense in describing the provisions as they were applicable to the circumstances of this case, although as we have said many provisions have since been replaced by the Equality Act 2010, and all the DRA provisions have now been repealed.

16.	The starting point is Reg. 30, which provided:

“30 Exception for retirement
(1) This regulation applies in relation to an employee within the meaning of section 230(1) of the 1996 Act, a person in Crown employment, a relevant member of the House of Commons staff, and a relevant member of the House of Lords staff.
(2) Nothing in Part 2 or 3 shall render unlawful the dismissal of a person to whom this regulation applies at or over the age of 65 where the reason for the dismissal is retirement.
(3) For the purposes of this regulation, whether or not the reason for a dismissal is retirement shall be determined in accordance with sections 98ZA to 98ZF of the 1996 Act.”

17.	The Age Regulations inserted sections 98ZA to 88ZF into the Employment Rights Act 1996.  It would overburden this judgment to set the provisions out in full.  We will content ourselves with explaining how (as we understand it) they would apply to the case of the Claimant, an employee with a normal retirement age of 65.

18.	In order to do so, it is first necessary to turn to Schedule 6 of the Regulations.  This is entitled “duty to consider working beyond retirement”.

19.	Schedule 6, paragraph 2 is headed “Duty of employer to inform employee” and provides:

“2. Duty of employer to inform employee
(1) An employer who intends to retire an employee has a duty to notify the employee in writing of -
(a) the employee’s right to make a request; and
(b) the date on which he intends the employee to retire,
not more than one year and not less than six months before that date.
(2) The duty to notify applies regardless of –
(a) whether there is any term in the employee’s contract of employment indicating when his retirement is expected to take place,
(b) any other notification of, or information about, the employee’s date of retirement given to him by the employer at any time, and
(c) any other information about the employee’s right to make a request given to him by the employer at any time.”

(Schedule 6, paragraph 1 provides that “request” means a request under paragraph 5, to which we shall turn in a moment).

20.	Compliance with this duty has important consequences.   In the case of the Claimant, if the Respondent’s letter dated 18 July was a sufficient compliance, it would follow (since he was dismissed on the intended date) that his retirement must be taken to be the only reason for the dismissal by the Respondent and that any other reason must be disregarded: see section 98ZD(2).  The dismissal would not be unlawful age discrimination: see reg. 30(2), quoted above.

21.	There will also be important consequences for the law of unfair dismissal.  Section 98ZG would apply (see section 98(3A)).  Section 98ZG provides:

“98ZG Retirement dismissals: fairness
(1) This section applies if the reason (or principal reason) for a dismissal is retirement of the employee.
(2) The employee shall be regarded as unfairly dismissed if, and only if, there has been a failure on the part of the employer to comply with an obligation imposed on him by any of the following provisions of Schedule 6 to the 2006 Regulations –
(a) paragraph 4 (notification of retirement, if not already given under paragraph 12),
(b) paragraphs 6 and 7 (duty to consider employee’s request not to be retired),
(c) paragraph 8 (duty to consider appeal against decision to refuse request not to be retired).”

22.	Conversely, if the Respondent’s letter dated 18 July was not a sufficient compliance, it would follow that the reason for dismissal was open for determination by the Tribunal.

23.	The Tribunal could still find that retirement was the reason for dismissal: see section 98ZD(5) and section 98ZF.  But it would not be bound to do so.  It might find that the Respondent had not established the principal reason for dismissal, in which case the dismissal would be unfair: see section 98.  Or it might find that the principal reason for dismissal was some other reason falling within section 98(1) and (2), in which case the Tribunal would have to assess whether the dismissal was fair, applying section 98(4) of the Act.

24.	Moreover, in the event of non-compliance with paragraph 2, an employee may make a complaint to the Tribunal; and if it is well founded the Tribunal may make an award of up to 8 weeks’ pay: see Schedule 6, paragraph 10.

25.	We turn next to paragraph 5 of Schedule 6.  This provides:

“5. Statutory right to request not to retire
(1) An employee may make a request to his employer not to retire on the intended date of retirement.
(2) In his request the employee must propose that his employment should continue, following the intended date of retirement –
(a) indefinitely,
(b) for a stated period, or
(c) until a stated date;
and, if the request is made at a time when it is no longer possible for the employer to notify in accordance with paragraph 2 and the employer has not yet notified in accordance with paragraph 4, must identify the date on which he believes that the employer intends to retire him.
(3) A request must be in writing and state that it is made under this paragraph.
(4) An employee may only make one request under this paragraph in relation to any one intended date of retirement and may not make a request in relation to a date that supersedes a different date as the intended date of retirement by virtue of paragraph 3(3) or 10(3)(b).
(5) A request is only a request made under this paragraph if it is made –
(a) in a case where the employer has complied with paragraph 2, more than three months but not more than six months before the intended date of retirement, or 
(b) in a case where the employer has not complied with paragraph 2, before, but not more than six months before, the intended date of retirement.”

26.	The making of such a request again has important consequences.   It triggers a duty on the employer to consider the request by complying with paragraphs 7 and 8.  These paragraphs, in summary, require the employer to hold a meeting, give notice in writing of his decision and (if the employee appeals) hold an appeal and give notice of the decision on appeal.  As we have seen, where the reason for the dismissal is retirement the question whether the employer has complied with these provisions is central to the question whether the dismissal is unfair: section 98ZG.

The Tribunal’s reasons
27.	The Tribunal’s reasons do not contain any analysis of the question whether the Respondent’s letter dated 18 July 2008 was a sufficient compliance with Schedule 6, paragraph 2 of the Regulations.

28.	The Tribunal said (paragraph 16):

“16. Considering the matter under Section 98ZD therefore we are satisfied that the date of termination fell on 20 January being the Claimant’s birthday and that the employer complied with the requirement to notify the employee six months before that date by his letter of 18 July informing him that the would have to retire on his 65th birthday.”

29.	The Tribunal does not appear to have considered expressly whether the letter complied with the duty to inform the Claimant in writing of his right to make a request under paragraph 5.

30.	The Tribunal went on to consider whether the Claimant had made a request complying with paragraph 5.  The Tribunal accepted the Respondent’s argument that the request was defective because it did not state in terms that the request was made under paragraph 5 of the Regulations.

31.	The Tribunal first quoted and followed an earlier decision of an Employment Tribunal in Holmes v Active Sensors.  This passage read:

“19. The wording of the Section appears clear and was considered in the Holmes v Active Sensors case.  We adopt the rationale given in the case as follows: 
‘Paragraph 5(3) of Schedule 6 states ‘A request must be in writing and state that it is made under this paragraph.’ These words are very clear and the only interpretation is that ‘For any notice under paragraph 5 to be valid it must state that it is pursuant to that paragraph.  The Tribunal note that a single stringent requirement is not placed on any notices that need to be served by the employer.  It is therefore quite clear that when the Regulations were drafted the intention was that an employee should be placed under this obligation when serving a request not to retire…While the Tribunal find it surprising that the Regulation should place such an onerous burden on the Claimant to refer specifically to the Regulations, it is nevertheless not open to the Tribunal to do anything other than to follow the clear wording of the Regulation.’”

32.	The Tribunal rejected an argument by the Claimant that the language of paragraph 5 should be construed purposively so as to accord with the Framework Directive.  The Tribunal “reluctantly” concluded that the words of paragraph 5 were clear and that the Claimant had not made a request complying with that paragraph.

33.	It followed from these conclusions that the Claimant’s claims for age discrimination and unfair dismissal failed.

34.	The Tribunal said, in parting from the case:

“If our conclusion concerning the strict obligation in paragraph 5 of Schedule 6 is found to be incorrect, it may assist the parties to know that we would have concluded that the dismissal was unfair by reason of the failure of the employer to notify the Claimant as provided by paragraph 7 of a result of the meeting, but that the employment would still have come to an end at the Claimant’s 65th birthday if the correct procedure had been adopted.”

Submissions
35.	On behalf of the Claimant Mr Young submitted that the Tribunal erred in law in holding that the Respondent’s letter dated 18 July was a sufficient compliance with para.2 of sch.6.  The letter should have referred to para.5 and its requirements expressly.  He relied on para.1(1), which states that a “request” means a request under para.5.  He submitted that the employer’s duty was to inform the employee of the essential requirements of a para.5 request.

36.	Further, Mr Young submitted that the Tribunal erred in holding that the Claimant’s letter dated 14 August was not a valid request under para.5.  He submitted that para.5(3) could be interpreted so that the only essential requirement was for writing.  A literal construction of para.5(3) would, he argued, place a substantial and unjustified obstacle in the way of an employee seeking to exercise the rights given to him by the Age Regulations.  He submitted that there were features within Sch.6 which suggested that para.5(3) should be given a purposive construction.  He contrasted the wording of para.5(3) with para.5(5): only the latter expressly says that a request is “only a request under this paragraph” if its requirements are not met.  Mr Young also suggested that consideration of para.5(2) alongside para.1(2)(c) might lead to a similar conclusion.

37.	Mr Young further submitted that, since the Age Regulations were introduced to give effect to the Framework Directive it was appropriate to apply principles of construction laid down in such cases as Pickstone v Freemans plc [1989] AC 66 Litster and ors v Forth Dry Dock and ors [1990] 1 AC 546 and more recently EBR Attridge Law LLP v Coleman [2010] 1 CMLR 28.  These principles allowed national courts to read down the words of a statute, or read words into a statute, in order to ensure that the statute gave effect to the underlying Directive.

38.	Mr Young accepted that the DRA provisions were in effect a derogation from the Framework Directive and had been held compatible; but he submitted that even so the words of para.5.3 should be read down so as to ensure that the employee’s limited rights in connection with retirement were not the subject of a technical obstacle of the kind which a literal construction would place in the way of an employee.  He placed particular reliance on the approach of Blake J in the Heyday case at paragraph 88:

“... Whilst the Directive permits the member state to make derogations from the equal treatment principle in pursuit of legitimate social aims, I conclude that the Regulations must spell out what derogations have been made.  The legislative context needs to identify the social policy aims that have led to the derogation.  The court needs to ensure that the aims are legitimate and the means for giving effect to them are reasonable, necessary and appropriate.”

39.	On behalf of the Respondent Mr Sims submitted that para.2(1)(a) required an employer to do no more than place an employee on notice that he had a right to request the employer to not to retire him.  Any other construction effectively read into para.2(1)(a) words which were not there.   If Parliament had wished to impose any greater requirement on an employer it would have said so.  Moreover he submitted that the Tribunal was correct to read para.5(3) literally.  He submitted that the words were too clear to admit of any other meaning.  Further he submitted that any other construction would place an intolerable burden on an employer.  By contrast, all an employee would have to do to comply was read and follow the “clear words” of Sch.6.

40.	Mr Sims did not accept that paras.2 and 5, read in the way for which he contended, placed any real obstacle in the way of an employee.  He submitted that, so long as an employee appreciated he had a right to make a request, the primary purpose of the Schedule would have been met.  While Mr Sims accepted that the employee would lose any remedy or sanction if he did not comply with the technical requirements of para.5, this was a secondary matter.

41.	Mr Sims did not accept that there was any validity in the argument that the Age Regulations should be interpreted in line with the Framework Directive.  The setting of a retirement age and the wide discretion allowed in implementation of the Directive was emphasised in the Heyday case both by the European Court and the High Court: see especially paragraphs 18 and 34 of the judgment of Blake J.

Conclusions
42.	The right which Sch.6 of the Age Regulations affords to an employee is called (in the heading to para.5) a “statutory right to request not to retire”.  Quite apart from Sch.6, an employee is of course free to ask his employer not to retire him; but the statutory right is more than this.  Once the right is exercised, the employer is placed under a duty to consider the request in accordance with a set procedure which involves a hearing for the employee (with a right to be accompanied) and if necessary a second hearing by way of appeal.  It is true that the employer is not required by Sch.6 to apply any particular criteria in making a decision upon the request; nor is the employer required to give any reasons for the decision notified to the employee.  The right is essentially procedural in nature.

43.	Since the right is intended to be procedural in nature, we do not find it surprising that there are some conditions attached to its exercise.  An employer must be able to discern when the right has been exercised.  We therefore do not find it surprising that the right must be exercised by the making of a request in writing, and that it must be exercised sufficiently prior to the intended date of retirement for the employer to consider the request in accordance with the statutory procedure.

44.	Speaking for ourselves, we find some of the provisions of para.5 surprising.   We do not see why there is any need to provide that a request is “only made under this paragraph” if it is made not more than six months before the intended date of retirement.  This means that an employee who immediately responds to a notice given under para.2 by giving notice under para.5 may find that his notice is premature.  Likewise we do not see why there is any need to provide that a request must state that it is made under para.5.   In the vast majority of cases the employee’s request will be consequent upon a notice under para.2 from the employer.  The employer ought to be ready to deal with a written request in accordance with the legislation.

45.	Nevertheless, we consider that the words of para.5 are clear in their meaning.  In particular, we have no doubt that the requirements of para.5(3) are mandatory.  A request under para.5 must be in writing and must state that it is made under this paragraph.

46.	How, then, is an employee to know that his request must comply with this requirement?  As we have said, an employee is not likely to discover the requirements of para.5 unless alerted to them in some way.

47.	In our judgment the answer lies in para.2(1)(a).  The employer’s duty to notify the employee in writing of the employee’s right to make a request places upon the employer a duty to inform the employee of the conditions which are essential if a valid request is to be made.  Thus, for example, the employer must notify the employee that a request under para.5 must be in writing and must state that it is made under that paragraph.

48.	We reach this conclusion for two reasons.

49.	Firstly, as we have said, the right afforded by para.5 is essentially a statutory procedural right.  It is the statutory procedural right about which the employer must notify the employee under para 2(1)(a); see para 1(1)(b).  In our judgment an employee is not informed of the statutory procedural right merely by being told that he may make a request not to retire – after all, an employee may always make a request not to retire.  He is informed of the statutory procedural right only if he is told the essential conditions by which it may be exercised.

50.	Secondly, Sch.6 contemplates that in the general run of cases it will be for the employer to initiate the procedure which results in retirement.  Para.2(1) imposes a duty on him to do so.  It is true that an employee may still serve a request under para.5 even if an employer has not given him notification (see para.5(2)), but this is an additional protection for an employee whose employer has not complied with his duty.  Since the employer must generally initiate the procedure, the employer must inform himself about the requirements of Sch.6.  It was surely not the intention of the Regulations that an employer, having achieved familiarity with the statutory procedure, should then give notice to the employee in a way which would leave the employee in ignorance of the essential features of his statutory right.

51.	We do not think this construction places an impossible burden on an employer.  An employer can comply with it in more ways than one.  He can copy the relevant provisions for the employee.  He can summarise them.  He can provide the employee with an application form for a statutory request designed to ensure that the request is compliant.

52.	We read the provisions of Sch.6 in this way by adopting ordinary, common law, principles of statutory construction.  We have not found it necessary to resort to any special interpretive technique by reason of the European background to the legislation.  We therefore need express no view concerning the interesting arguments which we heard on that question.

53.	It follows from our conclusions that the Respondent’s letter dated 18 July did not comply with the duty set out in para.2 of Sch.6.

54.	This being so, section 98ZD(2) is inapplicable.  The Claimant’s dismissal is not deemed to be by reason of retirement.  But it remains open to the Tribunal to find that the reason is retirement: see section 98(2)(ba), section 98ZD(5) and section 98ZF.

55.	The Tribunal did not have to make a finding on this question.  But it is entirely plain from the Tribunal’s findings taken as a whole that the reason for dismissal was retirement.

56.	Since retirement was the reason for dismissal, the fairness of the dismissal was to be assessed applying section 98ZG.  Again the outcome is plain.  The Respondent never complied with the duty under para.2 and para.4.  Accordingly the dismissal was unfair: see section 98ZG(2)(a).

57.	We discussed with the parties what should happen if this were to be our conclusion.  The parties addressed us on remedy.  The Claimant seeks compensation – in particular a basic award.  We will make such an award.  In the light of the Tribunal’s findings it is not just and equitable to award compensation after the date of retirement: see paragraph 25.  We asked the parties to agree the amount of the basic award and they have done so.  We have been asked by letter to make a modest award for loss of statutory rights; but on the Tribunal’s findings these statutory rights would in any event have been lost at the same time.

58.	For these reasons we will allow the appeal; we will declare that the Claimant was unfairly dismissed; and we will award a basic award in the sum (agreed by the parties) of £4455.