British Broadcasting Corporation v Ioannou
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE STEPHENSON,LORD JUSTICE GEOFFREY LANE |
| Judgment Date | 14 February 1975 |
| Judgment citation (vLex) | [1975] EWCA Civ J0214-1 |
| Date | 14 February 1975 |
| Court | Court of Appeal (Civil Division) |
[1975] EWCA Civ J0214-1
In The Supreme Court of Judicature
Court of Appeal
Appeal by B.B.C. from the National Industrial Relations Court on 18th January 1974.
The Master of The Rolls (Lord Denning),
Lord Justice Stephenson and
Lord Justice Geoffrey Lane
Mr. ALEXANDER IRVINE (instructed by Messrs. Allison & Humphreys) appeared on behalf of the Appellant.
Mr. ALAN TYRRELL (instructed by Messrs. Murray Maclean & Co.) appeared on behalf of the Respondent.
Under modern statutes an employee is given a right to a "redundancy" payment if he is dismissed by reason of redundancy: and a right to "compensation for unfair dismissal" if he is dismissed unfairly. The statutes forbid any employer or employee to contract out of these provisions: save that it is permitted when the contract of employment is "for a fixed term of two years or more". The question in this case is what is meant by "a fixed term".
By an agreement dated 7th August 1967 the B.B.C. employed Mr. Ioannou as an assistant in the Greek section. It contained this provision: "This agreement shall date from 7th August 1967 and shall expire on 6th August 1970 unless previously determined as hereinafter mentioned or renewed by mutual agreement. During this period this engagement may be determined (a) by the Corporation giving you one month's notice during the first six months of the engagement or (b) by either party giving to the other three months notice in writing at any time after the first six months of the engagement."
By an agreement dated 8th January 1970 that agreement was renewed for a further period of two years, so that it was to expire on 6th August 1972, the other terms being continued in force for the period of the extension.
Whilst that agreement was still current Parliament passed the Industrial Relations Act 1971 which contained provisions for compensation for unfair dismissal. The B.B.C. clearly had those provisions in mind. So much so that in February 1972 they attempted to contract out of them, so far as they could legitimately do so, The Act was to come into force on 28th February 1972. Shortly before it came into force, on 8th February 1972 the B.B.C. wrote to Mr. Ioannou this letter:-
"Dear Mr. Icannou, With reference to your five year short-term contract which is due to expire on the 6th August 1972, I am writing to let you know that it has been agreed exceptionally that you be offered a further year's contract to take effect from the 7th August 19?2. This contract is enclosed, in duplicate. Please initial page 1 and sign and return the copy to me. The other copy is for you to keep…. You will realise that this extension of your service is indeed exceptional. I must make it clear that there is no likelihood of your contract being extended beyond the 6th August 1973."
In that letter they enclosed the new 1-year's contract. He signed it and returned it on 22nd February 1972. It contained a very important new provision:-
"This engagement will be for a period of one year from 7th Auguest 1972 to 6th August 1973 unless previously determined by either party giving to the other not less than three months' prior notice in writing. Insofar as it is permitted by the Industrial Relations Act, 1971 and the Redundancy Payments Act, 1965, non-renewal or non-extension of this engagement when its term expires shall not constitute grounds either for a claim of unfair dismissal or for any redundancy payment."
On 6th August 1973 Mr. Ioannou's first year expired. It was not renewed. He claimed compensation for redundancy payment or unfair dismissal. The B.B.C. took a preliminary point. They said that he had contracted out of any such right. They relied on the clause I have Just read. This was the only point argued below. It was rejected by Sir John Clayden, the Chairman of the Industrial Tribunal, and afterwards, on appeal, by Sir John Donaldson and his colleagues in the Industrial Relations Court. Now the B.B.C. appeal to this Court, seeking to show that he had contracted out.
The provisions as to contracting out are contained in section 15(2) of the Redundancy Payments Act 1965: and section 30(b) of the Industrial Relations Act 1971, which is re-enacted in the Trade Union and Labour Relations Act 1974, Schedule 1, paragraph 12(b). Those provisions permit an employee to contract out of his right to redundancy payment, or compensation for unfair dismissal, as the case may be, so long as he does it by an agreement in writing; but he can only do so when he is employed "under a contract of employment for a fixed term and two years or more", and he must make this agreement in writing before the expiry of that term.
In the present case Mr. Iouannou was employed for three years, renewed for two years, and then a final year, I will assume at this stage that this was equivalent to a contract for six years. But throughout the whole of those six years, it was determinable by either party giving to the other three months notice in writing. At once, the point arises: Was it a contract for a "fixed. term"? If a contract of employment is for a stated term of two or three years, but is determinable by three months notice during that time, is it a "fixed term"?
This is a very important point. There has been no discussion of it in the cases. But Professor Grunfeld in his book suggests that it is a "fixed term" even though it is determined by notice. He says (at page 29):-
"A notice clause does not alter the character of a contract for a fired term. Had the legislature intended to refer to contracts for definite periods containing no notice clause, one would have expected the use of the fairly established common law phrase 'term certain'".
I take a different view from the Professor. In my opinion a "fixed term" is one which cannot be unfixed by notice. To be a "fixed term", the parties must be bound for the term stated inthe agreement: and unable to determine it by notice on either side. If it were only determinable for misconduct, it would, I think, be a "fixed term" - because that is imported by the common law anyway. But determination by notice is destructive of any "fixed term".
This view is supported by a reference to other statutory previsions. It is the duty of an employer to give to his employee written particulars of the terms of his employment. If it is determinable by notice, he has to state "the length of notice": and "if the contract is for a fixed term, the date when the contract expires": see the Contracts of Employment Act 1972, section 4(1)(e) and 4(4), re-enacting the 1963 provisions Obviously there 13 a "fixed term" in one which is not determined by notice.
In the present case none of the contracts with Mr. Iouannou were fixed term contracts because they are all determinable by notice. It was not permissible for the B.B.C. to contract out of them. Mr. Iouannou is therefore entitled to proceed with his claim.
In the proceedings below, the case took a different course. It seems to have been assumed by all concerned that these were "fixed term" contracts. But it was argued for Mr. Iouannou that the relevant contract was the final contract of one year. The Industrial Tribunal accepted that contention. They held that the original contract for three years was renewed for a further two years, and thus became a contract for a fixed term of five years: but the final contract for one year was not a renewal of the original contract. It did not turn the five years into six years. It was a new contract for one year: and being less than two years, it was not permissible for the employeeto contract out of his rights. The Industrial Relations Court took a somewhat different course. They thought that in reality the employment of Mr. Iouannou was for a continuous period of six years, but that the final year was not a "renewal" of the previous contract. It was a "re-engagement" by the same employer under a "new contract" of employment, such as is contemplated by section 3(2) of the Redundancy Payment Act 1965. Being a new contract, for less than two...
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