JURISDICTIONAL POINTS – excluded employments – employee shareholder –
Section 205A Employment Rights Act 1996
In September 2015, the Claimant had entered into a section 205A employee shareholder agreement. It was agreed that this had met the requirements provided such that the Claimant thereby became an employee shareholder and was thus excluded from the statutory right to claim unfair dismissal or a redundancy payment. At the same time, however, the parties entered into a separate agreement (‘the September 2015 deed’) which gave him a contractual means of seeking equivalent remedies should he subsequently consider he had been unfairly dismissed or was entitled to a redundancy payment. In March 2017, the Claimant entered into a new service agreement with the Respondent, which included a ‘whole agreement’ clause (clause 27.5) stating that it superseded all previous agreements between the parties dealing with the same matters, save for the contractual ‘reinstatement’ of rights in the September 2015 deed. In February 2018, the Claimant was dismissed in circumstances that he regarded as unfair. The Respondent paid him a statutory redundancy payment and, in replying to his pre-action correspondence, did not seek to rely on the section 205A agreement until it entered its response in the ET proceedings. At a Preliminary Hearing, the ET found that the Claimant was an employee shareholder for the purposes of section 205A Employment Rights Act 1996 and was thus excluded from the right to claim unfair dismissal. The Claimant appealed.
Held: dismissing the appeal
The Claimant argued that section 205A must be construed purposively, in accordance with the restrictions on contracting out of statutory rights (under section 203) and consistently with his rights under the ECHR and other international instruments laying down a right not to be unjustifiably dismissed. Adopting that approach, he contended that the ET had erred in failing to require that the parties had affirmed the conditions laid down for section 205A to apply as at the date of the statutory contravention in issue (here, dismissal). He further argued that the March 2017 service agreement had superseded the section 205A agreement, evincing the parties’ intention that the Claimant’s statutory rights were reinstated.
It was not accepted that the Claimant’s construction arguments were assisted by reference to section 203 ERA or by the provisions of the ECHR or other international instruments. A section 205A agreement did not fall to be considered under section 203; the Claimant had not demonstrated that any article under the ECHR was engaged; and UK law provided for protection from unjustified dismissal but the Claimant had contracted out of that protection (something not prohibited by any of the international provisions relied on). A purposive construction of section 205A meant no more than interpreting the exemption from statutory protection narrowly and ensuring strict compliance with the pre-conditions for employee shareholder status. In this case, it was common ground these were met when the Claimant entered into the section 205A agreement and the ET did not err in failing to require that the conditions laid down by section 205A were re-affirmed by the parties at the date of dismissal.
As for the effect of the March 2017 service agreement, although section 205A did not state how employee shareholder status might be lost, this might arise as a result of some subsequent inconsistent agreement between the parties. The question thus became one of construction of the March 2017 service agreement. In this regard, the ET had permissibly found that the factual background (the context in which it was construing the agreement) was not as the Claimant had contended: rather, the facts suggested that the parties’ intention was that the only ‘reinstatement’ of rights was by contract – as provided in the September 2015 deed. That position was not undermined by the parties’ subsequent failure to reference the section 205A agreement when the Claimant was dismissed (something the ET had found arose from inadvertent error and was not reflective of any intention that the section 205A agreement no longer applied). The March 2017 service agreement did not supersede the section 205A agreement because it did not deal with the same matters. In any event, the express reservation in respect of the September 2015 deed made clear that the parties intended the Claimant’s contractual rights to complain of unfair dismissal and redundancy would continue, something that was only consistent with the Claimant continuing to be an employee shareholder and thus excluded from the ability to pursue such claims under the statute.
Judges:
Eady HHJ
Citations:
[2019] UKEAT 0079 – 19 – 2208
Links:
Jurisdiction:
England and Wales
Employment
Updated: 03 September 2022; Ref: scu.642756
