British Broadcasting Corpn v Kelly-Phillips

For the purposes of Employment Rights Act 1996, s.197(1), an employee dismissed when an extended fixed term expires may fall within the contracting-out exception where the original contract was for one year or more, the extension varied that contract rather than replacing it, the dismissal consisted only of expiry without renewal, and the written waiver preceded expiry. The relevant term is the term of the contract as varied, not the period added by the extension. The court must distinguish variation or renewal under the same contract from re-engagement under a new contract. Policy concerns about repeated extensions do not justify adding words to the statute.

Linda Kelly-Phillips worked for the BBC under successive fixed-term arrangements. Her September 1994 contract ran for just over a year and contained a written waiver of unfair-dismissal rights. In August 1995 the parties varied its expiry date to 31 December 1995 while leaving the other provisions in force. The BBC ended the employment at that date and relied on s.197(1) of the Employment Rights Act 1996.

The Industrial Tribunal held that the exemption did not apply. The Employment Appeal Tribunal held that the Tribunal was wrong on two grounds but right that the final term was too short, and dismissed the BBC’s appeal. The central issue before the Court of Appeal was whether the variation left the employee employed under a qualifying fixed-term contract.

Disposition

The appeal was allowed unanimously, with costs. The application to the Industrial Tribunal was dismissed. Leave to appeal to the House of Lords was refused.

1. Statutory construction. Lord Justice Gibson delivered the leading judgment. Lord Justice Thorpe agreed completely with his construction and analysis. Lord Justice Evans gave separate reasoning but agreed that the statutory requirement was satisfied. The general prohibition on contracting out of Part X rights is subject to the exception in s.197(1).
2. Variation and renewal. Section 95(1)(b), read with s.235(1), recognises that a fixed term may be renewed or extended under the same contract. The relevant distinction is between varying an existing contract on the same or substantially the same terms and replacing it with a new contract. An extension under the same contract does not create a new contract merely because it is effected by a later agreement.
3. Application. The September 1994 agreement was a new contract for a term exceeding one year. The August 1995 agreement varied its expiry date but left the remaining provisions, including the waiver, in force. There was therefore no dismissal at the original expiry date. The dismissal occurred when the extended term expired on 31 December 1995. The varied contract remained a qualifying contract for the purposes of s.197(1), even though the extension itself was less than one year.
4. Authorities and policy. The court rejected Lord Denning M.R.’s approach in BBC v Ioannou insofar as it treated the last extension agreement as the relevant final contract. It relied instead on the majority’s distinction between renewal and re-engagement. The approaches in Open University v Triesman, BP Oil Ltd v Richards and Housing Services Agency v Cragg were not followed to the extent that they required each later term to qualify separately. The approach in Mulrine v University of Ulster and Bhatt v Chelsea and Westminster Health Care Trust supported the result.
5. The court declined to imply a requirement that at least one year remain when an extension was agreed. The question whether an original term of less than one year could qualify through successive extensions was left undecided because it did not arise on the facts. Concerns about possible abuse or the desirability of a simpler test could not justify glossing the statutory language; any correction was for Parliament.

• Court of Appeal: Allowed the BBC’s appeal with costs, dismissed the respondent’s application to the Industrial Tribunal, and refused leave to appeal to the House of Lords.
• Employment Appeal Tribunal: Held that the Industrial Tribunal was wrong on whether there was a fixed-term contract and whether the dismissal consisted only of expiry, but agreed that the final term was less than one year; dismissed the BBC’s appeal.
• Industrial Tribunal: At a preliminary hearing, held that the exemption did not apply and allowed the unfair-dismissal complaint to proceed.