MKG (Food Products) Ltd v Sissons [1993] UKEAT 541_92_1612

EAT
MKG (Food Products) Ltd v Sissons
[1993] UKEAT 541_92_1612 · 1993-12-16

JUDGE HARGROVE OBE QC :

This appeal presents in concise form the question of the interpretation of paragraph 1 of Schedule 14 of the 1978 Act. It was a problem which, in the way in which the Industrial Tribunal expressed its decision, presented considerable difficulties.Mr Sissons was one of a number of lorry drivers who were made redundant. The dispute concerns the calculation of redundancy pay, more specifically the calculation of what amounts to weekly pay. Mr Sissons' task was to deliver frozen foods to retail outlets. His contract of employment stated that his hours of work were 40 hours per week or as dictated by the course of business. Once over 40 hours per week Mr Sissons was paid overtime.The Industrial Tribunal found as follows:
"Mr Sissons started in June of 1988. He started off as a class 1 driver, though it is fair to say that the work involved class 2 and 3 driving. He delivered frozen food to various Co-op outlets around the countryside, mainly southwards and westwards (sometimes eastwards). As any lorry driver knows (and anyone with knowledge distribution knows) there is no such thing for a lorry driver when he is on a variable delivery run of [sic as] a fixed working day. The driver will simply have to start in accordance with what was the most logical start time for his delivery run and finish when the delivery was over and done with. Sometimes he might be out for 12-15 hours, other times he might be out for 5 or 6. Mr Sissons was no exception. He made a regular weekly run to the west country. Having emptied one particular lorry a truck driver would then deliver him another lorry and he would carry on his deliveries.
His contract manager made it quite clear to him orally that there was a firm obligation upon him (as he readily accepted) to work over 40 hours if so required to do and that if he did not he would be "down the road". That was seriously meant. This was repeated several times over the employment. The applicant welcomed the overtime.However, as time went on the Company restricted payments, in the sense that he was not paid for waiting time when he was in the west country whereas previously he had been. It does seem from the applicant's overtime worksheet from March 1991 to August 1991, that his overtime above 40 hours varied considerably from 26 hours or 29 hours right down to zero. There never was the same in any one week (except one week when he did 11 1 / 2 and other 11.25 hours). Mr Sissons says that his contract did not demand a fixed amount of hours worked."It seems that the lay members of that Tribunal took the view that the contract was not for a fixed number of hours per week and that there was no normal hours per week worked. The Chairman, whilst acknowledging the approach of the other members of the Tribunal, eventually took the same view.The Act states at Schedule 14:

" PART 1

NORMAL WORKING HOURS

1. For the purposes of this Schedule the cases where there are normal working hours include cases where the employee is entitled to overtime pay when employed for more than a fixed number of hours in a week or other period, and subject to paragraph 2, in those cases that fixed number of hours shall be the normal working hours."In this case Mr Morris and Miss Vale take the view that the decision of the Tribunal was correct. They say it is necessary to consider what is the true meaning of the contract of employment. It should be noted the contract was only entered into some months after the start of employment and at a time when the pattern of employment had been established. It would have been apparent to all parties that where employment was that of a delivery driver making frequent deliveries and at a considerable distance from the base, the concept of fixed hours was untenable to both parties.This is not a factory workshop but it required an open-ended commitment by the employee to carry out his work in conditions where the idea of a fixed hourly contract would be meaningless. As an ex post facto indication of the accuracy of this view, it is right to point out that the undisputed evidence is that it was so rare as to be almost unknown for there to be any 40 hour week. They further find that the expression "40 hours" in the contract, in spite of its use elsewhere in the contract, was designed to indicate a point at which overtime had to be paid but that there was, on the part of the employee, an unlimited liability to work. Further the expression used is "40 hours or as dictated by the course of business" it does not say 40 hours and as dictated by the course of business. It is therefore a permissible interpretation that there were two possible points which would be specified with the employer having an overruling discretion. In these circumstances they are of the view that the Tribunal was correct.I dissent from that view upon these grounds. It will be noted that the contract of appointment appears to be the touchstone for deciding normal working hours. This is set forth in the case of Tarmac Roadstone Holdings v Peakcock [1973] ICR 273 and at 279 Lord Denning M.R., analyses the position (in relation to what is now Schedule 14) as follows:
"First, where there is a fixed number of compulsory working hours, and thereafter overtime is voluntary on both sides - so that the employer is not bound to employ the man for any overtime and the employee is not bound to serve it - then, although the overtime is worked regularly each week, nevertheless, being voluntary, it does not count as part of the normal working hours. Such a situation is covered by paragraph 1(1).
Second, when there is a fixed number of compulsory working hours and in addition a fixed period of overtime which is obligatory on both sides - so that the employer is bound to provide that overtime and the employee bound to serve it - then that fixed period of overtime is added to the fixed period of compulsory working hours so that the total number counts as the normal working hours. Such a situation is covered by paragraph 1(2). In short, "guaranteed overtime" counts as part of normal working hours.Third, where there is a fixed number of compulsory working hours, and overtime is obligatory on the man if asked but not on the employer - so that the employer is entitled to call on the man to work overtime but is not bound to call upon him to do so, then the overtime does not come within the normal working hours. Such a case seems to me to come within paragraph 1(1). It comes within the words "the employee is entitled to overtime pay when employed for more than a fixed number of hours in a week..." It does not come within the words of paragraph 1(2), because the contract of employment does not "fix" the number of hours of employment. The overtime is not fixed but is at the option of the employer."It has been urged before us, and I take the view, that that third category as defined by Lord Denning is precisely what occurs here in this present case. If support were needed for that view it occurs in Lotus Cars Limited v Sutcliffe and Stratton [1982] IRLR 381 and it reflects once more the views of the Tarmac case when it states:
"That case makes it clear that it is not enough for an employee to show that over a period he has regularly or usually worked hours of overtime in order to have them included in a computation of his normal working hours. What has to be shown, in order that what is usually described as "overtime" can be included, is that it is obligatory upon the employer to provide the overtime, that it is obligatory upon the employee to do it and that that obligation on both sides is to be found in the terms of the contract of employment."
In this case, in my view, neither the first or the third of these requirements are met. It is not obligatory upon the employer to provide overtime, nor does any such obligation appear in the contract of service. I go further. Since the contract indicates that in relation, not only to the question of payment of overtime but also in relation to the expression "normal basic salary" which is used, the 40 hour period is also implicitly a requirement.In those circumstances it seems to me that the Tribunal erred in their interpretation of Schedule 14, paragraph 1 and I am of the view that this appeal should be allowed. I dissent with regret, particularly as I join with my colleagues in expressing the view that the schedule in cases such as this, if my own interpretation is correct, operates as a manifest injustice to any man who has spent most of his working life in some cases, but certainly for a considerable period of time, working a very considerable number of hours, but because there is a cut-off point indicated in the contract of service, the additional hours that he has worked over the years count for nothing in the computation of his redundancy. It seems to us that this is an area which is in need of urgent reform, if my view be right. However, as it is a dissenting view the result is that the appeal in this case is dismissed.