Bhatt v Chelsea & Westminster Health Care Trust (1) & Charing Cross & Westminster Medical School (2) [1997] IRLR 657
We reported in Issue 12 of LELR (Fixed-term contracts - waiver clauses) the welcome decision of the Employment Appeal Tribunal in BBC v Kelly-Phillips. Now a different division of the EAT has taken a conflicting approach leading to a further period of uncertainty and confusion for employees on fixed term contracts.
The BBC's appeal in the Kelly-Phillips case is due to be heard by the Court of Appeal and it is hoped that the Court resolves the confusion and restores certainty for employees.
In Bhatt the EAT looked at the validity of an unfair dismissal waiver clause. The Employment Rights Act s.197(1) provides that the unfair dismissal provisions of the Act do "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 its being renewed, and (b) before the term expires the employee has agreed in writing to exclude any claim in respect of [his/her unfair dismissal] rights in relation to the contract".
"Renewal" includes extension and any reference to renewing a contract or a fixed term contract should be construed accordingly (s.235).
Dr Bhatt was employed as a Clinical Lecturer with the Charing Cross Medical School. He also had an honorary contract as a Research Assistant with the Trust. His employment depended on funding from outside sources.
He was employed under a series of contracts, in each case there was a waiver clause which Dr Bhatt accepted. He received a contract in July 1992 for a period of three years.
Attached to the contract was a waiver clause. At the end of the contract he received a letter saying that the contract was to be extended for three months, attached was a further waiver clause which Dr Bhatt signed.
In October 1995 the contract was extended for a further three months and again a waiver clause was attached. His employment ended on 31st January 1996.
The EAT in Kelly-Phillips, faced with a similar employment contract history, said that the correct approach was to look at the final contract and if that was for a period of less than one year the waiver clause was not valid.
In Bhatt the EAT's approach was that Dr Bhatt could not claim unfair dismissal as he had waived his rights. The waiver clause was valid since the original term i.e the contract made in July 1992 was for a year or more and "a contract for a fixed term may be extended as to its terms, leaving the same contract in place".
The exclusion of unfair dismissal rights was not invalidated by the fact that the final two terms were for three months each since the final extension was "not to be taken as the correct point of focus for the purpose of s.197(1)".
Industrial Tribunals will be free to follow either Kelly-Phillips or Bhatt until the Court of Appeal decide the matter. The confusion is in no-one's interests least of all employees on fixed term contracts.
It is to be hoped that the Court of Appeal follows the decision in Kelly-Phillips otherwise unscrupulous employers will exploit the loop-hole in the law to give one fixed term contract of over one year followed by any number of short extensions to exclude employment protection rights. This undermines the logic of the unfair dismissal waiver provisions which allow employees to waive their rights only in exchange for the certainty of a fixed term contract for one year or more.