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The respondents are quasi autonomous body who operate under the auspices of the Scottish Office Environment Department and have various statutory responsibilities. The applicant was appointed their Chief Executive from 1 April 1992 for an original fixed term of 5 years. His appointment was renewed on 1 April 1997 for a further period of 3 years. He continued in the post until 31 March 2002 when he was dismissed. Thereafter the applicant made application to the Employment Tribunal claiming unfair dismissal. The respondents entered appearance. In their Notice of Appearance they admitted dismissal. They contended however that the original fixed term contract contained a valid waiver of his entitlement to claim unfair dismissal under Section 142(1) of the Employment Protection (Consolidation) Act 1978. They contended that his second fixed term appointment for the duration 1 April 1997 to 31 March 2000 also contained such a valid waiver as then provided for under Section 197 of the Employment Rights Act 1996. They contended that the extension of that contract was for a fixed period of two years from 31 March 2000 and that this was agreed between the parties in an exchange of correspondence between the respondents’ Chairman, John Markland and the applicant dated 8 and 24 July 1999. They contended that that extension complied with the requirements of paragraph 2(2) of Schedule 3 of the Employment Relations Act 1999 (Commencement Number 2 and Transitional and Savings Provisions) Order 1999. The applicant’s waiver of his entitlement to claim unfair dismissal under Section 197 of the Employment Rights Act 1996 accordingly remained in full force and effect at the date of termination of his employment. The matter proceeded to a preliminary determination. The issue essentially the question for the Tribunal was whether the admitted correspondence between the respondents’ Chairman John Markland and the applicant dated 8 and 24 July 1999 amounted to an extension of the applicant’s existing fixed term contract on the same terms and conditions and accordingly complied with requirements of the above mentioned paragraph 2(2). Given that the terms of the letters were agreed no evidence required to be led. Both parties made full submissions. It was a matter of agreement between the parties that the applicant had indeed continued to be employed as the respondents’ Chief Executive from 1 April 2000 to 31 March 2002.

Decision

Section 197 of the Employment Rights Act 1996 originally stated that:

“ (1) Part X does not apply to dismissal from employment under a contract for a fixed term of one year or more if

(a) the dismissal consists only of the expiry of that term without it being renewed

and (b) before the term expires the employee has agreed in writing to exclude any claim in respect of rights under that part in relation to the contracts”.

By letter dated 26 March 1997 from Scottish Natural Heritage to the applicant the respondents stated:-

"SNH CHIEF EXECUTIVE: NEW CONTRACT

I am writing to clarify the position regarding your appointment as Chief Executive of Scottish Natural Heritage.

The Board has agreed that it wishes to reappoint you as Chief Executive. This would be for a fixed term appointment for a period of three years with the possibility of extension for up to two years to be agreed mutually between you and SNH. The Secretary of State has approved your reappointment”.

The applicant signed an acceptance of the terms of this letter. This acceptance also confirmed that he accepted that he could not claim unfair dismissal under Section 94 of the Employment Rights Act 1996 on the grounds that the term of this appointment was not renewed on expiry. He had signed a similar waiver in terms of the then legislation on his initial appointment to the post in 1992.

Section 18 of the Employment Relations Act 1999 repealed Section 197(1) and Section 197(2) of the Employment Relations Act 1996. The transitional provisions relating to this repeal are contained in paragraph 2(2) of Schedule 3 of the Employment Relations Act 1999 (Commencement Number 2 and Transitional and Savings Provisions) Order 1999. This states:-

“…..(2) the amendments to the 1996 Act, the National Minimum Wage Act 1998 and the Tax Credits Act 1999 made by sub-sections (1) to (5) of Section 18 of the Act (Agreement to exclude dismissal rights) and the repeal specified in Part 3 of Schedule 9 to the Act, shall have effect in relation to a dismissal to which this paragraph applies where the effective date of termination (within the meaning of Section 97 of the 1996) falls on or after 25 October 1999 unless both the following conditions are satisfied - (a) that where there has been no renewal of the contract, the contract was entered into before 25 October 1999 or, where there has been one or more renewals, the only or most recent renewal was agreed before 25 October 1999, and (b) that the agreement to exclude any claim rights under Part X of the 1996 Act was entered into before 25 October 1999.
(b) In this paragraph, renewal includes extension, and references to renewing a contract or a fixed term shall be construed accordingly.

It is therefore clear that for S197 to apply the most recent renewal of the contract had to have been agreed prior to 25 October 1999.

On 8 July 1999 John Markland, the Chairman of the respondents, wrote to the applicant. This letter stated

“…As you know, this matter was considered by the Board at its meeting on 6 July. I am writing to advise you that the Board, unanimously agreed to propose extending your contract for a period of two years, from 1 April 2000 until 31 March 2002. 1 am today writing to the Scottish Executive to tell them of the Board's decision in this matter.

I am enclosing, for your information, a copy of the confidential report which was considered by Board members at the meeting and from it you will see that it is our present intention to offer the extension to your contract on the basis of present terms and conditions. Having said that, the Board was also unanimously agreed that I should enquire further as to the salaries and remuneration packages of other, broadly equivalent posts, in the public service. I have asked for this information to be made available as soon as practicable with the hope that we can deal with this at the September Board meeting. I should make it clear that the Board will consider any possible change to your present terms and conditions as a separate matter, to be determined once the further information is available”.

By letter dated 24 July 1999 the applicant wrote to Mr Markland stating:-

“Thank you for your letter of 8 July setting out the Board's conclusions on my contract and for letting me have a copy of the Board paper. Thank you also for ensuring that the Board's decision was taken expeditiously.

I am pleased to accept the offer of a contract extension for a period of two years from 1 April 2000 to 31 March 2002”.

The applicant then went on to make various comment regarding levels of salary.

The respondents' position was that this exchange of correspondence amounted to a renewal or extension of the fixed term contract for a period of two years. The applicant's position was that it did not. The applicant referred to the general rule of contract that there must be consensus in idem between the parties. In the applicant's view there was no consensus in idem in this case because a major part of the contract had not yet been agreed, namely the salary. 'in the applicant's view the contract was therefore void from uncertainty. Accordingly it was the applicant's view that there had been no agreement to renew or extend prior to 25 October 1999. The contract was not perfected until the applicant turned up for work on 1 April 2000. The applicant's view was that the agreement crystallized on this date.

The applicant pointed out that the letter of 8 July mentions that the respondents “propose” extending the contract. It is not an unequivocal offer. In the second paragraph they refer to their "present intention" with regards to salary. In the applicant's view the letter was not sufficiently certain to be a binding offer in contract terms. There was no certainty regarding the terms of the renewal. The applicant painted out that it was impossible to tell from the exchange of correspondence what the terms of the renewal were so far as salary was concerned. In the applicant's view the only evidence of a concluded contract is the fact that the applicant actually did work for a further two years. The applicant's view was that this exchange of correspondence was not sufficient to come within the terms of Section 2(2). The applicant also pointed out that in every previous exchange of correspondence regarding his initial appointment and renewal the applicant had been required to sign a separate document which contained a specific waiver. No waiver was signed by the applicant at the time of this correspondence.

The respondents' position was there was quite clearly an agreement to extend the contract. It is not particularly unusual for a contract to be entered into in principle with specific details to be worked out at a later date. Those parts of the contract where agreement has clearly been reached and which stand by themselves are clearly enforceable. In this case the applicant stated “I am pleased to accept the offer of a contract extension for a period of two years from 1 April 2000 to 31 5 March 2002. (It should be noted that the letter actually says contact extension however the applicant's solicitor conceded that this was simply a typographical error and that the word should be read as contract). The Tribunal agreed with the respondents’ submissions. A valid waiver in terms of Section of 197 had been made by the applicant on the renewal of his contract in 1997. This contract letter specifically stated that although he was being appointed for a fixed term appointment of three years there was a possibility of extension of two years to be agreed mutually between himself and the respondents. There is no need for a fresh waiver to be signed by the applicant in respect of the extension from 1 April 2000 onwards since this was quite clearly the extension which had been envisaged in his original letter of appointment in 1997. The Tribunal were of the view that the exchange of correspondence in July 1999 did amount to a renewal of the contract in terms of the aforementioned paragraph 2(2). There was clear consensus in idem between the parties as to the basic point which was that the applicant's contract was being renewed for a period of two years. It was clear from the correspondence that both parties were of the opinion that the detailed question of salary was something which would have to be sorted out later on. Given that there has been a renewal in. terms of the said paragraph 2(2) the repeals contained in Section 18(1) of the 1999 Act had no effect so far as the applicant's employment was concerned. Accordingly the unanimous decision of the Tribunal was that the applicant's contract of employment contained a valid waiver of his entitlement to claim unfair dismissal. It was common ground between the parties that in this case the dismissal consisted only in the expiry of the fixed term without it being renewed. Both of the requirements of S1 97 having been met the applicant is not entitled to claim unfair dismissal under Part X of the 1996 Act. The application is accordingly dismissed.

Chairman: [Ian McFatridge]
Dated: [18 December 2002]
Entered in Register/Copied to Parties: 23 December 2002

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