Stilgoe & Anor v UK Coal Mining Ltd. [2003] EWHC 2428 (QB)

Case No HQ03X01723[2003] EWHC 2428 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 23 rd October 2003
Before
THE HONOURABLE MR JUSTICE NEWMAN
Between
(1) NIGEL STILGOEClaimants(2) JOHN FRANCIS SMITHClaimantUK COAL MINING LIMITEDDefendant
Brian Langstaff QC & Jason Galbraith-Marten (instructed by Keeble Hawson) for ClaimantsNicholas Underhill QC (instructed by Freshfields Bruckhaus Deringer) for DefendantHearing Hearing dates : 2 nd, 3 rd and 6 th October 2003
Judgment
[1]This case raises a short point on the proper construction of the Claimants’ contracts of employment. Both Claimants are "officials" employed by UK Coal Mining Limited ("the Defendant"). Although employed at different pits, the Claimants’ contracts are in identical form. They are in a form common to the majority of officials employed by the Defendant. The claim is brought by (in effect) the National Association of Colliery Overmen Deputies and Shotfirers (NACODS) on behalf of its members in order to resolve a dispute as to the contractual working hours of officials.[2]There is no dispute that the Claimants’ contracts incorporate, in so far as apt, the provisions of collective agreements reached between the Defendant (previously known as RJB Mining (UK) Limited) and the recognised trade unions, NACODS, for the Yorkshire Area, and the Midland Area Association of Colliery Officials (MAACO). There is no dispute that the terms of a collective agreement known as the ‘Improving Effectiveness and Efficiency’ Partnership Agreement entitled ‘Ways of Working’ have become incorporated into, and form part of, the terms and conditions of the Claimants’ employment.[3]The term "officials" applies to the class of employee in the coal mining industry, previously known as "deputies", occupying an intermediate supervisory role between coal miners and management. They have acquired new job titles and, as part of the sequence of events leading to the present claim, they have acquired management status.[4]Both Claimants were issued with a standard form ‘Statement of Terms of Employment’, the statutory statement pursuant to section 1 of the Employment Rights Act 1996. The terms of the standard form and the terms in the relevant part of the collective agreement are in similar form but there are some differences. It is necessary to set each out in full so far as they relate to the matter in dispute.[5]In their material part the Statements of Terms of Employment supplied to each of the Claimants were as follows: "STATEMENT OF TERMS OF EMPLOYMENT The following terms and conditions of employment are pursuant to the Employment Rights Act 1996….. All parties to the agreement accept the implementation and application of the complete flexibility of all employees in their respective disciplines subject only to safety requirements and regulations and personal capability. As a consequence, with reasonable notice, you may be required to change within your own discipline from your current job/task/shift to other jobs/tasks/shifts in order to utilise your skills to meet operational and business needs. This may require a combination of changes for example from: Task to Task Job to Job District to District Shift to Shift (should it be necessary to change an individual’s regular shift pattern then not less than 7 days notice will be given) Mine to Mine (for an identifiable permanent job) The Company may qualify any of the following terms by specific reference thereto in the letter of offer. This Statement of Terms of Employment cancels and supersedes any previous document made in accordance with the Employment Law relating to Contracts of Employment. 1. HOURS OF WORK The basis of your normal weekly hours will be as follows:- The hours of work will be flexible. The basic attendances, inclusive of holidays, are those required to cover a normal working week of 40 hours, Monday to Friday. Working hours will be subject to business operational need and/or safety requirements. The hours will be worked on a rostered system to cover the business needs and will be equally split between all Supervisors in this agreement appropriate to the skills requirements. All employees shall be expected to fully co-operate with mine management with the objectives of securing effective and safe operations, improving efficiency, output and productivity including safety/training meetings. This objective will not detract from the requirement placed on employees at all times by reason of the jobs they hold, to discharge their responsibilities under MASHAM and Regulations thereunder. Normally no attendance will extend beyond 13 hours and the gap between attendance will normally be not less than 11 hours. 2. … 3. … 4. … 5. … 6. … 7. TERMINATION OF EMPLOYMENT … The terms of employment will take into account of [sic] and incorporate the relevant terms of any agreement reached between the Company and the recognised trade union in relation to the matters covered by this document. Any amendments to these terms of employment will be notified to you where possible prior to implementation or, in any case, within one month of the effective date of amendment. These terms and conditions supersede any other agreement or arrangement that may have been entered into by the parties. Should there be a conflict in this and any other incorporated terms then this or any subsequent changes will prevail".[6]The collective agreement headed ‘Improving Effectiveness and Efficiency Enabling Agreement’ was divided into some eight sections including its appendices. Section 5 is headed ‘Ways of Working’. Article 5.1 is headed ‘Flexibility’. The first three bullet points are material. ◦ "In order to be competitive we need to maximise the utilisation of manpower and achieve optimum utilisation of our facilities. All parties to this agreement accept the implementation and application of the complete flexibility of all employees in their respective disciplines subject only to safety requirements and regulations and personal capability. ◦ All operations to accomplish the targets required to meet our business needs, need to be covered statutorily. Our employees agree through this agreement to work to cover the reasonable operational needs as required by the Company. ◦ The unions and the Company agree that the roster for each individual conditioned to this agreement shall be carried out in consultation with the roster officials and Senior Management, and that every individual within his own discipline shall be treated equitably in the requirements to cover operational needs".[7]Article 5.2 is headed ‘Mobility’. So far as it is material, it states:- ◦ "Whilst the Company and all employees recognise the advantages of utilising the skills of employees on jobs that they do best, they also accept given reasonable notice, the need for everybody to be available and willing to change within their own discipline from their current job/task/shift to other jobs/tasks/shifts and utilise their skills to meet operational and business needs. ◦ This may require a combination of changes, for example from: Task to Task Job to Job District to District Shift to Shift Mine to Mine (on a regular basis) ◦ Employees need to be available to stay on at work for a reasonable period (but not normally exceeding 2 hours) if immediate relief is not available. ◦ With lower numbers of employees on site, there is a need to achieve the highest levels of attendance to minimise the amount of mobility required from employees who are on site. The Unions agree that the Company should, following investigation, take any necessary action against those who consistently and persistently do not attend or do not attend for a rostered shift".[8]Article 5.3 is headed ‘Shift Changes’: "To ensure an effective operation, the Company may need to vary individual shift working hours or days, or require major changes to shift or work patterns affecting significant numbers of employees. We will consult with employees and unions about any necessary changes, as soon as possible. In the case of changes affecting individuals, volunteers will be sought where this is operationally efficient. In the event that the voluntary route is not achieved, or in the event of major changes to total shift or work patterns, the extent and timing of consultation and any notice of change will reflect the extent of the changes required. If an individual’s required shift pattern requires changing then not less [than] seven days notice will be given".[9]Article 5.4, headed ‘Working Hours’, is particularly relevant and is as follows: ◦ "Employees covered by this agreement will have flexible hours of work. ◦ The basic attendances, inclusive of holidays, are those required to cover a normal working week of 40 hours, Monday to Friday. ◦ Working hours will be subject to business operational need or safety requirements. ◦ The hours will be worked on a rostered system to cover the business needs and will be equally split between all Supervisors in this agreement appropriate to the skills requirements. All employees shall be expected to fully co-operate with mine management with the objectives of securing effective and safe operations, improving efficiency, output and productivity including safety/training meetings. This objective will not detract from the requirement placed on employees at all times by reason of the jobs they hold, to discharge their responsibilities under MASHAM and Regulations thereunder. ◦ Allegations that the roster of duties is operating unfairly or that the amount of time worked by a member is unreasonable or is not reasonably distributed, or that any alternative work which an employee is required to perform by management is not reasonable should be dealt with through the grievance procedure. Pending such matters being resolved, the member is required to perform such work as may be required by management. ◦ Normally no attendance will extend beyond 13 hours and the gap between attendance will normally be not less than 11 hours. ◦ For safety reasons employees will be required to have their time recorded in line with the Manager’s Scheme for the Mine".[10]The Claimants’ contracts of employment fall to be construed within their proper legal context and background. The principles to be followed are those summarised in the speech of Lord Hoffman in Investors Compensation Scheme Ltd v. West Bromwich Building Society & Others [1998] 1 WLR 896 at p. 912. "(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract. (2) The background was famously referred to by Lord Wilberforce as the "matrix of fact", but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man. (3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them. (4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable a reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investments Co Ltd v. Eagle Star Life Assurance Co Ltd [1997] A.C. 749. (5) The ‘rule’ that words should be given their ‘natural and ordinary meaning’ reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania Naviera SA v. Salen Rederierna AB [1985] A.C. 191, 201:
"If detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense"
. THE BACKGROUND[11]The essence of the dispute, shortly stated, is whether officials are required to work such hours as are necessary to meet the needs of the Defendant’s business, subject to a requirement of reasonableness - the Defendant’s case. Or whether, as the Claimants maintain, they are not obliged to work more than ‘a normal working week of 40 hours’, subject only to extra hours when emergencies arise or safety requirements demand it.[12]Both sides were prompted into the re-negotiation of the existing contracts of employment and, in particular the working hours, by the decision of the court in the case of Barber & Others v. RJB Mining (UK) Ltd [1999] IRLR 308. The judgment was delivered on 3rd March 1999. On 5th March 1999 Terms of Reference for negotiation between the unions and the employers were drawn up. In Barber, the court had resolved a dispute which had arisen out of the application of Working Time Regulations 1998 (SI 1998 No. 1833). The Regulations provided (Regulation 4(1)) that:
"Subject to Regulation 5, workers’ working time, including overtime, in any reference period which is applicable in his case shall not exceed an average of 48 hours for each seven days."
[13]As the judgment records, it was common ground that for the 17 weeks which started immediately after the Regulations came into force on the 1st October 1998, the members had worked a greater number of hours than produces an average of 48 hours, or less, per week. At the time of the proceedings it was accepted by Mr Ian Parker, the President of NACODS (Yorkshire Area), that under the agreements then in force between the employer and the union, an employee was contractually required to work 21 shifts in a 28 day period. A shift is eight hours and one of the 21 shifts is a shift of compulsory overtime. Working this number of shifts meant a working week of 42 hours. But the working requirements of the Defendant, in particular the need for weekend working, meant that members were being required to work longer hours than the contractual number of 42 hours each week.[14]The court held that Regulation 4(1) was mandatory and that an employee could not work for any more than the permitted 48 hours unless he opted out of the protection provided by the Regulations. This was a victory for the employees and, armed with it, the terms of reference for negotiation were agreed and then implemented. Prior to the negotiations the officials signed opt outs in return for negotiations on the future changes in this status and terms of employment.[15]The joint statement signed between the Defendant and NACODS on 5th March 1999 sets out the agreed terms of reference as:
"(a) To examine the pay and terms and conditions of employment of the Yorkshire area NACODS members, with a view to securing a collective agreement on a new pay-structure/package and amended terms and conditions of employment which shall reflect the interests of both NACODS members and RJB. (b) To examine ways with a view to securing the full integration of Yorkshire Area NACODS members into the management team at the respective collieries which would jointly reflect the interests of both NACODS members and RJB"
. A Working Party was set up in which the principal participant for the Defendant was Mr Irving and for NACODS Mr Parker. The outcome of the negotiations was the agreement Improving Effectiveness and Efficiency which has been set out in paragraphs 6, 7, 8 and 9 above.[16]The witness statements from each side included relevant background material but also contained accounts of the negotiations which took place leading up to the collective agreement being signed. The evidence was considered without objection, it being acknowledged by all that the previous negotiations were not admissible background material for the purposes of interpreting the contracts of employment. The court was also informed that there were numerous drafts leading to the agreement being signed in its final form. Since the Claimants desired to make reference to the drafts in support of their interpretation argument, the detail in connection with drafts was investigated in evidence and copies were supplied to the court. By the close of the case, Mr Langstaff, Queen’s Counsel for the Claimants, did not pursue the argument in connection with the state of the drafts. Had he done so I would have held the material to be inadmissible.[17]NACODS proceeded in the negotiations keeping its members advised of the progress. Equally it is obvious the union needed to have information from members as to their willingness to accept the changes in the contracts of employment, which changes the Working Party was considering with the employer. To facilitate and acquire knowledge and understanding of the members’ views, questionnaires were employed. Again, reference was made in the course of the case to the questionnaires and the results of the questionnaires. They are, in my judgment, inadmissible for the purposes of construing the contracts of employment.[18]By July 1999 negotiations had advanced to a stage at which Mr Parker required to know with more precision how the members would respond to the proposals, or options, which had been worked out. He reported in a letter dated 9th July 1999. Prior to its dispatch, a copy of it was faxed to Mr Irving for the Defendant so that he could see whether or not it represented the Defendant’s understanding of the state of the negotiations to that date. On the evidence before me, he agreed that it did. The precise terms of the letter received attention from Counsel for both sides. Its contents and the circumstances in which it is alleged it had been written were, as I have already foreshadowed, relied upon by the Claimants. It was urged upon the court that it was after this letter had been written that critical amendments were made to the terms of the draft collective agreement to which, it is said, the letter referred. As I have already stated, the argument amounted to an impermissible invitation to the court to resort to the negotiations to construe the contractual terms which had been agreed but, further and in any event, the evidence, as I so find, failed to establish that the draft referred to in the letter was not the final draft as later agreed. Mr Parker contended in evidence that it was the penultimate draft. By the time Mr Parker wrote the letter he had received the final draft and, in my judgment, it is almost inconceivable he would have tendered the advice he did in the letter, in particular in connection with Article 5.4, when amendments had been discussed, by reference to anything other than the final draft. Further, the letter itself lists the outstanding issues and Article 5.4 is not one of them. Yet further if this was not the letter by which the members were informed of the effect of the proposals, there is no evidence as to when they were informed of the effect of the final proposals which later became embodied in the agreement.[19]It has been common ground that there was an understanding on the part of both the Defendant and the unions in the course of the negotiations, that the number of hours which officials would be required to work, in the future, would be reduced from its historic levels. On the evidence, it would seem that, for the employer, the reduction was to be to a figure below 48 hours. For the unions, according to the evidence of Mr Parker, the understanding was that over a course of time the reduction would be more significant than that and reach, if possible, something of the order of 40 hours a week. Neither side suggest that there was a term agreed between the employer and the unions that hours would be reduced over any particular period of time. The common understanding, therefore, that hours would be reduced at some time in the future is not reflected in the agreement.[20]Although it was not reflected in the agreement, I have little doubt, having seen the material in the case, that many union members expected working hours to be reduced to a figure significantly less than 48 hours over some period of time and to a figure which was less than 46 hours, which some of the data before the court suggests has been the period worked at various times prior to these proceedings. The evidence points to a disappointment on the part of the men in the progress towards reduction and it has been a factor giving rise to the discontent which this dispute reflects.[21]The Claimants, who I take to be two examples of the cases of many, have been rostered compulsorily to work weekend shifts every third week, or 15 times a year. Both object to the regularity of this intrusion upon their weekends. Each of them dispute that the concept of flexibility entitles the Defendant to require them to work more than 40 hours each week. It is the Claimants’ case that, as opposed to enabling the Defendant to require them to work more than 40 hours, the concept of flexibility merely enables the Defendant to set flexible shift patterns not exceeding 40 hours in any one week.[22]In my judgment, certain parts of the collective agreement are particularly relevant. It was agreed that there should be the "implementation and application of the complete flexibility of all employees …subject only to safety requirements and regulations and personal capability". The purpose of the agreement was expressed to be, among other things, that employees should work to cover "the reasonable operational needs as required by the Company". Rostering was to be the basis for establishing the requirement of the officials’ working hours. Officials were to be treated equitably "in the requirements to cover operational needs". Mobility was explained and the obligation to accept mobility, subject to reasonable notice, was with a view to skills being employed "to meet operational and business needs".[23]Further, officials became salaried. The annual salary as agreed is set out in section 7 of the collective agreement. It was to be paid by bank transfer in twelve equal monthly instalments every calendar month on the date on which it was agreed payment should be made. It follows that, in order for the new arrangements to be set in place, an annual figure for salary had to be agreed between NACODS and the Defendant. An obvious consequence of a change to a salaried basis of employment is that the previous concept of overtime, which had prevailed under the contracts of employment, was no longer part of the contracts of employment. The proposed change, giving rise as it did to salary being paid for hours worked must have given rise to the question raised in these proceedings, namely whether agreement was to be reached on the maximum number of hours officials could be required to work. Plainly one would expect the question to be addressed and one would not expect the union to enter into an open-ended agreement permitting an employer to require any number of working hours. To that general position it has to be added the Regulations considered in the case of Barber provided a maximum number of 48 hours unless an employee agreed otherwise. The law, therefore, provided a cap on working hours at 48 hours.[24]The facts in the case of Barber and the evidence before this court disclose that, at varying times, there has been a need for work in excess of 48 hours and hours of work in excess of 40 hours a week, frequently of the order of 44 to 46 hours a week. Against the background of the statutory cap of 48 hours and the evidence of the customary practice as to the number of hours between 40 and 48 hours which were being worked, there was no pressing practical need for a limit to be set and some practical difficulties in setting a limit when the hours required were bound to vary. Articles 5.1, 5.2 and 5.3 of the collective agreement provide no support for the contention that agreement was reached on the maximum number of hours nor that there was a common intention to set a specific limit. Thus it is the case advanced by the Claimants, by reference to the collective agreement, rests upon Article 5.4. This case, it is said, in connection with Article 5.4, is supported by the similar terms in which the Statement of Terms of Employment was issued under the 1996 Act. I must, therefore, turn to the crux of the argument which has been advanced by reference to the particular words in Article 5.4 and the statutory Terms but, having in mind that the frequent references to an obligation to cover "operational and business needs" do not point to a common intention to place any limit, expressed in hours, upon the obligation of the officials to work. THE CENTRAL ARGUMENT FOR THE CLAIMANTS[25]Mr Langstaff submitted that the expression "normal working week" in Article 5.4 implied regularity. He accepted that the word "normal" implied there could be abnormal circumstances, when officials were obliged to work longer than 40 hours, but the latitude thereby acknowledged, he submitted, did not entitle the Defendant to roster "abnormally" on a regular basis because that would conflict with the obligation to roster on a "normal" basis. On the facts he submitted, the rostering complained of by the Claimants amounts to regular abnormal rostering.[26]Next he submitted that the Statement of Terms of Employment was in the same, if not clearer terms:
"The basis of your normal weekly hours will be as follows: The hours of work will be flexible. The basic attendances, inclusive of holidays, are those required to cover a normal working week of 40 hours, Monday to Friday."
By the introduction of a concept of "normal weekly hours", he submitted, a limit had been agreed. The alternative interpretation, which should be rejected, was that the agreement set 40 hours as the minimum number of hours.[27]Reference was made to the case of Glendale Managed Services v Graham [2003] IRLR 465 and the definition of "normal working hours" in section 234 of the Employment Rights Act 1996. In the case of Glendale the employee had been informed by the statutory Statement that NJC rates would "normally" govern his pay, overtime and other payments. Keene LJ concluded that the term allowed departure from the normal situation, but there was an implied condition that "notice" was required. He stated: "The word "normally" obviously allows for departures from the norm; but at the same time it also suggests that the norm is that the NJC rates will be followed and applied. A departure from those rates is therefore an exception, an abnormal situation, as the employment tribunal described it".[28]I shall not set out section 234 of the 1996 Act. I have not found it of any assistance. It is principally concerned to address the proper approach to the meaning of "normal working hours" where overtime is worked. Conclusion[29]In my judgment, the use of the word "normal" in both the collective agreement and the statutory Statement will not support the weight of the argument which Mr Langstaff has advanced. The Statutory Statement[30]"The basis of "the officials’" working weekly hours" was expressed by reference to each of the points set out in paragraph 1, not simply by reference to the second point:
"The basic attendances, inclusive of holidays, are those required to cover a normal working week of 40 hours, Monday to Friday"
. Further even if this point is to be regarded as the working out of, "the basis of … normal weekly hours", the words "the basic attendances" make it clear that "the basis" encompasses something more than "the basic attendances".[31]The Claimants’ submission has not grappled with the statement:
"working hours will be subject to business operational need and/or safety requirements"
. This cannot be regarded as simply providing an explanation why officials will be required to work. The Defendant is in business as a coal producer and needs to mine coal. The words are words of obligation, expressing the basis and extent of the underlying obligation assumed in connection with "working hours".[32]The paragraph commencing:
"The hours will be worked …" ending in the reference to "
MASHAM and Regulations thereunder", means "the working hours" will be rostered having regard to, amongst other things, "improving efficiency, output and productivity". These objectives reflect "business operational need" which the working hours will be designed to meet. This paragraph also must be read as providing the working out or elaboration of what is meant by "the basis" of the "working weekly hours".[33]In the context of the agreed objectives to which the Defendant and the unions were working, it can be understood that the concept of flexibility, without any qualification being expressed, could give rise to anxiety about the extent of the employers’ rights. Article 5.1 meets the issue. Whilst "operational needs", as required, were to be met, the requirements had to be "reasonable". Further rostering had to be carried out in consultation with the "roster officials and Senior Management". Each individual was to be treated "equitably".[34]Article 5.3 ("shift changes") goes to the same point: consultation between employees and unions is provided for by the Article, as well as a requirement for "notice".[35]Article 5.4 could not be clearer: "Allegations that the roster of duties is operating unfairly or that the amount of time worked by a member is unreasonable or is not reasonably distributed … should be dealt with through the grievance procedure". (emphasis added) I reject the suggestion this was intended to cater for "flexibility" within a maximum of 40 hours a week. These ample and detailed provisions in Article 5 demonstrate that the parties intended and agreed not only that there should be flexibility, but it was a term of the contract that a non-contractual hours basis of employment would apply, whereby the employer was restrained by reasonableness and safety from exploitation of the officials. Further consistently with the Court of Appeal’s observation in Glendale, provision for notice and consultation in connection with rostering was included in the terms.[36]The use of the word "normal" in connection with "working hours" served the purpose of providing a basic framework for the employment which the officials would be required to work, where such a framework was desirable because the concept of being required to work "flexibly" and "according to operational needs" gave no notice of what might be required of them.[37]I have reached the above conclusion upon the basis of the words used in the agreements, construed in the context of the relevant background, including the common objectives of the parties. I am confirmed in my conclusion by what Lord Diplock referred to as "business commonsense". If the officials were only to be required to work for 40 hours, for a guaranteed salary amounting to a sum, which would have required them to work for about 46 hours, if on an hourly rate, the Defendant achieved little or nothing to meet its operational business needs, mobility and flexibility and the officials achieved a significant guaranteed uplift in pay. It is of no relevance to the legal result, but the dispute appears to be attributable to the expectation that hours would be reduced below 46 hours a week. The complaints only arose after the progress towards reduction was perceived as slowing. I have reached my conclusion without the need to consider the post contractual conduct and any questions as to its admissibility.[38]There should be judgment for the Defendant.