Employment

Employee's post abolished - employee continuing to work on different basis pursuant to ultra vires agreement - relationship of employment continuedEastbourne Borough Council v Foster: CA (Lords Justice Aldous, May and Rix): 11 July 2001The employee had been employed by the local authority as its director of environmental services since 1993.

In July 1998 the authority decided to abolish the employee's department.The employee, then aged 48, opted for redundancy and early retirement but, since under the Local Government (Discretionary Payments) Regulations 1996 (SI 1996 No 1680) he would not be entitled to be considered for enhanced benefit pension payments if his employment ceased before he reached 50, he entered into negotiations with the authority resulting in a 'compromise agreement' whereby he would remain employed by the authority, albeit on a part-time basis, until 31 August 1999, nine days after his 50th birthday.The employee continued in the director's post until it was abolished on 28 September 1998.

Thereafter he worked for three days a week.

From February 1999 he was placed on 'gardening leave' but to ensure a smooth handover he agreed to be available until 31 August to assist anyone who wanted information from him.He continued to receive his salary and other benefits.

The district auditor considered the compromise agreement ultra vires and the authority commenced an action to recover the money it had paid the employee after 25 August 1998.The deputy judge gave judgment for the authority on the basis that the employee's employment had ended on 28 September.

The employee appealed.Michael Curtis (instructed by Mayo & Perkins, Eastbourne) for the employee; Daniel Stilitz (instructed by Solicitor to Eastbourne Borough Council, Eastbourne) for the local authority.Held, allowing the appeal, that although the compromise agreement was invalid and no reliance could be placed on any promise or representation, the conduct of the parties could not be ignored for all purposes; and that, since following the abolition of the employee's post the authority had continued to offer him employment and he had continued to work for the authority (albeit on an entirely different basis), the employee was to be treated as having accepted the employer's repudiation of his old contract but the employment relationship had continued.