The claimant requested that he work for another two years following his 65th birthday. The respondent rejected his request. The Tribunal held that the dismissal was unfair on the basis that the managers in question regarded themselves as absolutely bound by a company policy against granting extensions; accordingly the request had not been genuinely considered as required by paragraph 6 of schedule 6 of the Employment Equality (Age) Regulations 2006. The claimant was awarded compensation equivalent to two years loss of earnings on the basis that that was the period of extension requested. No Polkey deduction was made.

The EAT upheld the ET judgment. The consideration of a request under schedule 6 did indeed have to be genuine, or 'in good faith', notwithstanding the generally limited nature of the relevant obligations. The appeal against the quantum award was also dismissed; the issue of a Polkey deduction had not been raised at the ET.

__________________

Appeal No. UKEAT/0484/10/SM

EMPLOYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 26 May 2011

Judgment handed down on 14 July 2011

Before

THE HONOURABLE MR JUSTICE UNDERHILL (PRESIDENT), BARONESS DRAKE OF SHENE, MR M WORTHINGTON

COMPASS GROUP PLC (APPELLANT)

MR K A AYODELE (RESPONDENT)

Transcript of Proceedings

JUDGMENT

**APPEARANCES**

For the Appellant
MR DANIEL BARNETT (Of Counsel)

Instructed by:
Gregsons,
St. Christopher's House
Tabor Grove
Wimbledon
London
SW19 4EX

For the Respondent
MS NAOMI CUNNINGHAM (Of Counsel)

Instructed through:
Bar Pro Bono Unit

**SUMMARY**

UNFAIR DISMISSAL – Retirement

UNFAIR DISMISSAL – Polkey deduction

Employee reaching retirement age requests extension – Employer purports to follow procedure under Schedule 6 of Employment Equality (Age) Regulations 2006 and rejects request – Tribunal holds, on basis of admissions from employer's witnesses, that the managers in question regarded themselves as absolutely bound by a company policy against granting extensions; that accordingly his request had not been genuinely "considered" as required by para. 6 of Schedule 6; and that the dismissal was thus unfair – No "Polkey deduction" made

**HELD**, dismissing the appeal,

(1) Consideration of a request under Schedule 6 did indeed have to be genuine (or "in good faith"), notwithstanding the generally limited nature of the relevant obligations;

(2) Although a tribunal should in assessing a case of a dismissal which is unfair by reason of section 98ZG (2) of the Employment Rights Act 1996 "apply Polkey" if the issue is raised, it had not been raised in the present case.

**THE HONOURABLE MR JUSTICE UNDERHILL (PRESIDENT)****INTRODUCTION**

1. The Claimant was employed by Compass Group Plc (to which we will refer as "the Respondent", though it is in fact the appellant before us) as a kitchen porter. The normal retirement age for the Respondent's employees was 65. The Claimant was due to reach that age on 21 January 2008. On 24 November 2007 the Respondent wrote to him notifying him of its intention to retire him at that date and of his entitlement to request an extension. The Claimant duly made such a request and had two meetings with his manager, Mr Lilley; but on 9 November he was told that the request was refused. The refusal letter gave no reasons. He appealed. The appeal meeting was conducted by a Mr Bolam, but the appeal was again dismissed without reasons. His employment accordingly duly terminated on 21 January 2008.

1. The Claimant commenced proceedings in the Employment Tribunal claiming for unfair dismissal and age discrimination. It will be convenient at this stage to set out, so far as material to the issues on the appeal, the statutory provisions (as they were at the material time – they have since been repealed) relating to dismissals by way of retirement. As regards whether such a dismissal constitutes age discrimination, reg. 30 (2) of the Employment Equality (Age) Regulations 2006 provided that a dismissal at or over the age of 65 did not constitute unlawful age discrimination where the reason for the dismissal was retirement. As regards whether it was unfair, section 98 (2) (ba) provided that retirement was an admissible reason for dismissal. In a case where it is the principal reason section 98ZG (2) provided that:

"(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 2),

(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)."

Schedule 6 to the 2006 Regulations, as there referred to, set out the procedure to be followed by an employer as regards notifying employees of an intention to retire them and of their right to request an extension. We need not set it out in full. The relevant obligations in the present case are those applying where an employee has requested an extension. Paras. 6-9 read (so far as material to this appeal):

6. An employer's duty to consider a request. An employer to whom a request is made is under a duty to consider the request in accordance with paragraphs 7 to 9.

7. Meeting to consider request

(1) An employer having a duty under paragraph 6 to consider a request shall hold a meeting to discuss the request with the employee within a reasonable period after receiving it.

(2) The employer and employee must take all reasonable steps to attend the meeting.

(3)-(5) ...

(6) The employer shall give the employee notice of his decision on the request as soon as is reasonably practicable after the date of the meeting....

(7) A notice given under sub-paragraph (6) shall—

(a) where the decision is to accept the request, state that it is accepted and—

(i) where the decision is that the employee's employment will continue indefinitely, state that fact, or

(ii) where the decision is that the employee's employment will continue for a further period, state that fact and specify the length of the period or the date on which it will end,

(b) where the decision is to refuse the request, confirm that the employer wishes to retire the employee and the date on which the dismissal is to take effect,

and, in the case of a notice falling within paragraph (b), and of a notice referred to in paragraph (a) that specifies a period shorter than the period proposed by the employee in the request, shall inform the employee of his right to appeal.

(8) ...

*

Appeals*

8.

(1) An employee is entitled to appeal against—

(a) a decision of his employer to refuse the request, or

(b) ...

by giving notice in accordance with sub-paragraph (2) as soon as is reasonably practicable after the date of the notice given under paragraph 7 (6).

(2) A notice of appeal under sub-paragraph (1) shall set out the grounds of appeal.

(3) The employer shall hold a meeting with the employee to discuss an appeal within a reasonable period after the date of the notice of appeal.

(4) The employer and employee must take all reasonable steps to attend the meeting.

(5)-(7) ...

(8) The employer shall give the employee notice of his decision on the appeal as soon as is reasonably practicable after the date of the meeting or, if sub-paragraphs (6) and (7) apply, his consideration of the appeal.

(9) A notice under sub-paragraph (8) shall—

(a) where the decision is to accept the appeal, state that it is accepted and—

(i) where the decision is that the employee's employment will continue indefinitely, state that fact, or

(ii) where the decision is that the employee's employment will continue for a further period, state that fact and specify the length of the period or the date on which it will end,

(b) where the decision is to refuse the appeal, confirm that the employer wishes to retire the employee and the date on which the dismissal is to take effect.

(10) ... .

9. Right to be accompanied ...."

The result, in short, is that a dismissal by way of retirement will be unfair if the employer has failed to consider the employee's request in accordance with the specified procedure.

1. The proceedings were stayed for a period pending the outcome of the Heyday litigation, but on 7 June 2010 the claims were heard by an Employment Tribunal sitting at London Central, chaired by Employment Judge Burns. The Claimant was unrepresented; the Respondent was represented by its Employment Relations Director, Mr Crighton. The decision, with oral reasons, was given at the conclusion of the hearing, and the Tribunal provided written Reasons on 20 June. It found that the reason for the Claimant's dismissal was indeed retirement, and accordingly that it did not constitute age discrimination; but it upheld his claim of unfair dismissal on the basis that the Respondent was in breach of its obligations under paras. 7 and 8 of Schedule 6 of the Regulations because it had not given genuine consideration to the Claimant's request for an extension. It awarded him compensation in the sum of £15,981, which included a compensatory award based on two years' loss of earnings. (There was also an award of £192.46 by reason of the fact that the notice of intended retirement had not been given timeously; but nothing turns on that for the purpose of this appeal.)

1. The Respondent appeals against both the decision on liability and the quantum of the compensatory award. (The Claimant also cross-appealed against the dismissal of his claim of age discrimination, but that appeal was rejected on the sift.) Before us the Respondent was represented by Mr Daniel Barnett and the Claimant by Ms Naomi Cunningham, both of counsel. We will take in turn the liability and quantum appeals.

**LIABILITY**

1. At paras. 29 and 30 of the Reasons the Tribunal said:

"29. On the facts, we have found both Mr Lilley and Mr Bolam acted on the basis that there was no alternative other than the claimant being retired at 65 no matter what he had to say. The meetings with Mr Lilley and the appeal with Mr Bolam were therefore meaningless formalities which did not in any real sense involve the employer giving consideration to the Claimant's request.

30. The effect of the regulations is that a discretion is vested in the employer to decide the request and, if it so decides, to refuse it solely with regard to its own interest, but before doing so, it must meet with the employee with an open mind so that the substance of the employee's representations can be considered in a genuine sense. For representations to be considered genuinely, it is necessary that they can potentially have some effect on the outcome. That did not happen here."

The reference to earlier findings is to paras. 8-12 of the Reasons, which cover the meeting between the Claimant and Mr Lilley, and to para. 14, which covers the appeal meeting with Mr Bolam. We need not set these out in full. The evidential position about the second meeting with Mr Lilley was rather surprising, because on the Claimant's evidence there had in fact been substantial discussion of possible options for an extension, whereas it was Mr Lilley who insisted – against the Respondent's interest – that he did nothing of the kind and that (as recorded at para. 8 of the Reasons):

"… as far as he was concerned the company's policy had to be applied and there were no exceptions to this, and that the meeting was a formality and there was nothing that the Claimant could either say or do to change the outcome which was pre-determined by the policy and by what he (Mr Lilley) had been told before and by HR, namely that the Claimant would be retired when he reached the age of 65, no matter what."

The Tribunal explicitly found at para. 10 of the Reasons that it preferred Mr Lilley's evidence about that. As for Mr Bolam, it found, at para. 14:

"Mr Bolam told us very clearly that he also had decided before his meeting with the Claimant that the Claimant's request to be allowed to carry on working beyond his 65th birthday was to be refused. He agreed (in response to a question put by the Tribunal) that the matter was a "done deal", that "the policy was the policy" and that he had already decided that the policy would apply rigidly before the appeal started. The appeal was a meaningless formality. There was nothing that the Claimant could say or do at the appeal to overturn the decision which had been dictated by the policy that retirement took place at age 65."

1. The Tribunal considered whether meetings conducted on such a basis were capable of discharging the obligation of the Respondent to "consider" the Claimant's request for an extension. At para. 27 of the Reasons it referred to a passage in the IDS Age Discrimination Handbook which read as follows:

"It is clear that the employer does not have to give reasons for denying the employees request to continue working. This, together with the fact that the requirement found in the draft regulations that employers must consider employees requests "in good faith" does not appear in the final version, effectively gives the employers the green light to turn the whole retirement procedure into a charade if they so wish."

It held that that passage did not represent the law. It said, at para. 28:

"We accept that the wording in the Regulations in paragraph 6, 7 and 8 suggests that a summary process is permissible and that no reasoned decision has to be issued in the case of a refusal. However, we do not find that a completely sham process or a mere charade complies with the letter or the spirit of the legislation. Even though the express words "in good faith" apparently were deleted from an earlier version of the regulations, that does not in our view mean that a sham or fraudulent process is permissible, because it is implicit without the necessity for express wording that any statutory obligation must be performed in good faith and genuinely."

1. It is the Respondent's case that that was a misdirection on the part of the Tribunal. Para. 7.1 of the Notice of Appeal pleads that the Tribunal:

"… wrongly created a requirement that the duty to consider a request to work beyond retirement age ("the duty to consider") must be exercised 'in good faith'".

We do not accept that submission. In our view the Tribunal stated the law entirely accurately in para. 28 of the Reasons. A duty to "consider" a request necessarily connotes an obligation that the person on whom the duty lies considers it in good faith, in the sense that he genuinely considers whether it should be accepted. It would indeed, as the Tribunal says, be contrary to both the letter and spirit of the legislation if it was enough for an employer simply to sit through the meeting with a closed mind as the result of a pre-determination of the outcome.

1. Mr Barnett advanced a number of arguments in support of his submission, which we will take in turn.

1. First, he submitted that, since the obligation under para. 6 of Schedule 6 was to consider the employee's request "in accordance with paragraphs 7-9", paras. 7-9 should be treated as containing an exhaustive statement of the relevant obligations, and they said nothing about what the "consideration" should consist of: specifically, they did not specify that it should be in good faith. We were referred to the usual authorities about the importance of not reading words into statutory provisions which the legislators had chosen not include. But we do not believe that our understanding of the relevant obligation involves reading anything into the statute: it depends on the natural meaning of the word "consider".

1. Secondly, he invited us to have regard to the legislative history of Schedule 6, and in particular the duty to consider a request for an extension. We were shown a variety of different materials, including the draft Regulations referred to in the passage from the IDS Handbook quoted by the Tribunal (see para. 6 above). The general point made, which can in fact be inferred from the terms of the Regulations themselves, was that the Secretary of State plainly did not intend to impose any very onerous obligation on employers: we return to this at para. 12 below. But the more particular point was that the earlier draft of the equivalent to para. 6 had included the phrase "in good faith" but that that had been removed in the final version. We do not believe that that material is admissible as an aid to construction. The relevant provisions of the Regulations are in no way ambiguous, nor do they lead to an absurd result. We would not in any event necessarily infer from the decision to remove the words in question from a previous draft that the Secretary of State did not intend to require that any consideration of an extension request should be in good faith. Arriving at an appropriate formula in the case of a sensitive provision such as this involves complex judgments in which political considerations often play a considerable part: we can see, for example, how even if a requirement of good faith was intended it might have been thought to be inexpedient to refer to it expressly in case it unduly encouraged ill-founded challenges to employers' decisions.

1. Thirdly, Mr Barnett initially sought to obtain some support from the decision of this Tribunal in Commotion Ltd v Rutty [2006] ICR 290, but this point was abandoned in the course of oral submissions.

1. Fourthly, Mr Barnett submitted that it was clear that the Secretary of State intended that the obligation imposed on employers by paras. 7 and 8 of Schedule 6 should not be an onerous one. The duty was to do no more than "consider" any request. The employer does not have to give reasons for a decision to refuse a request, and it was plainly not intended that an employee whose request was refused should be entitled to challenge that decision on the merits. We agree with the general point made, but we do not think that recognising the possibility of a challenge on the basis that the request has not even been (genuinely) considered undermines the policy behind the provisions or opens the door to what will in substance be merits challenges. No inference of bad faith can be drawn from the facts that a request, however reasonable the employee may think it, has been refused. Nor, to address a point raised in argument before us, do we think that any adverse inference can be drawn from the fact that an employer, like the Respondent in this case, has a policy of not agreeing to request for extensions: such a policy is in principle legitimate, provided that it is a policy rather than an inflexible rule and accordingly admits of the possibility of exceptions. For those reasons, it would always have been difficult under the scheme for a case of bad faith to be established. We would add that employers would have been unlikely often to make the kind of admissions made by Mr Lilley and Mr Bolam in the present case (even if a sufficient prima facie case had been raised to get them into the witness box in the first case).

1. Accordingly, we do not believe that the Tribunal misdirected itself in any way. Para. 7.2 of the Notice of Appeal contended that, even if an employer were indeed required to consider a request for an extension "in good faith" the Tribunal had failed to consider whether the Respondents could rely on its "company-wide retirement age of 65" as a policy decision taken in good faith. Mr Barnett did not press this point, plainly rightly: the problem, as we have noted above, is not with the policy but with the refusal to contemplate the possibility of exceptions to it.

1. We accordingly dismiss the liability appeal.

**QUANTUM**

1. The Tribunal, as we have said, awarded the Claimant compensation equivalent to two years' loss of earnings. It took that figure on the basis that that was the period of extension which he had sought. It is the Respondent's case that that was the wrong approach, and that the Tribunal should have considered what was the chance that, if it had given proper consideration to the Claimant's request, any, and if so what, extension would have been granted. Mr Barnett relied, unsurprisingly, on Polkey v A. E. Dayton Services Ltd [1988] ICR 142.

1. At para. 33 of the Reasons the Tribunal says:

"The Respondent had no problems with the Claimant's work performance nor with his sickness record and there is no evidence of any doubts on its part as to the Claimant's ability to do his work. None of these matters were given any consideration because of the unthinking application of the Respondent's blanket policy. The Respondent has not adduced any evidence before us suggest that had it given the Claimant's request due consideration, that it would have concluded that the Claimant had to go anyway, or that it would have possibly offered him only part time work. There is simply insufficient evidence before us to show that it is appropriate to apply a Polkey

reduction."

It is relevant also to note that in a postscript to the written Reasons the Tribunal recorded that when it had delivered its oral judgment and reasons Mr Crighton complained that he had not had an opportunity to cross-examine on remedy. It rebutted that complaint, saying that the case had been explicitly listed to consider both liability and remedy and that the Claimant's evidence-in-chief, as supplemented by questions from the Tribunal itself, had clearly covered the question of remedy. It stated, at para. 35 of the Reasons:

"Mr Crighton in our view had every opportunity to cross-examine and indeed to make submissions on quantum had he so wished."

Thus the Respondent neither adduced any evidence about what the outcome would have been if Mr Lilley or Mr Bolam had understood that they had a discretion to make exceptions to the Respondent's policy, nor did it make any submissions about that question.

1. Ms Cunningham submitted that the "Polkey issue" does not arise in cases of a dismissal which is unfair pursuant to section 98ZG (2). We were, with respect, unable to understand the basis of that submission and we see no reason why the ordinary principles governing of the assessment of compensation for unfair dismissal should not apply.

1. The real question here is about how a Polkey point ought to be raised. The primary burden is no doubt on the employee to prove his loss. In the ordinary case, however, that burden is discharged simply by showing that he has been (unfairly) dismissed, since that prima facie establishes that he has lost the earnings that he would have received had the employment continued: the loss is in principle indefinite, at least up to the natural terminus of retirement - though of course in practice it will usually be limited by reference to the time that it has taken, or should have taken, for him to find a new job at the same rate of pay. If the employer wishes to rely on the fact, or the chance, that the earnings would have been lost at some earlier date for some particular reason (e.g., in the classic Polkey case, that he could and would himself have fairly dismissed the employee at or shortly after the date of the actual dismissal - but it may be something else, such as a subsequent redundancy exercise) – it is for him to raise that contention and to support it with any evidence that may be necessary (though often the relevant evidence will overlap with what is in any event before the tribunal for other purposes). If he does so, the incidence of the burden of proof thereafter may not be straightforward - see Virgin Media Ltd v Seddington (UKEAT/0539/08), at paras. 15-16 - but at least the point will have been put in issue. It is true that the circumstances of the present case are rather unusual. The unfairness of the dismissal consisted specifically in a failure to consider an extension to a retirement date which would otherwise have applied, and Mr Barnett argued that in those circumstances it was inherent in the exercise of assessing loss that the Tribunal should form a view about what would have happened if the request for an extension had been properly considered. But we do not see a sufficient reason to take a different approach from that taken in the ordinary case. In our view the Claimant established a prima facie loss of earnings by showing that his actual dismissal was unfair, and the Tribunal was entitled in assessing the duration of that loss to proceed on the basis of his evidence that he wanted to work for another two years. If the Respondent wished to contend that the employment would have terminated at or around the time that it in fact did even if it had acted fairly, that needed to be expressly put in issue, however much the point may have been pregnant in the facts already established. It is clear that that did not happen: see para. 16 above.

1. In those circumstances the appeal as to remedy must be dismissed.