Lester v Avon Ambulance Service NHS Trust [1996] UKEAT 208_95_2501

EAT
Lester v Avon Ambulance Service NHS Trust
[1996] UKEAT 208_95_2501 · 1996-01-25

JUDGE SMITH QC :

This is an appeal by the applicant before the Industrial Tribunal, Miss Julie Lester, against a decision of the Industrial Tribunal sitting at Bristol, promulgated on 2 February 1995, when the Industrial Tribunal held that none of the three applicants then in front of the Tribunal, which included the applicant, Miss Lester, had been dismissed and declared with regard to the applicant, Miss Lester, in contradistinction from their conclusion in relation to her two employee colleagues, as follows: that the applicants terms and conditions with the Respondent, the Avon Ambulance National Health Service Trust, were as set out in the statement of terms and conditions accepted by her on 8 May 1992 and - and these are the crucial words which are under challenge in the appeal:

"... as varied by the respondent's letter to her dated 29 December 1993"

It is that part of that declaration, because we interpret the decision as being a declaration in relation to Miss Lester's position, which is sought to be challenged in this appeal by Mr Pullen, who has appeared on behalf of Miss Lester.We have been greatly assisted by very helpful arguments by experienced Counsel on both sides, who have got through a great deal of difficult material in a very short period and presented their arguments with great economy and skill.There is no need, in our judgment, to go into the background in any great detail for the purposes of doing justice to the issues on this appeal. It is apparent from the full reasons that all three applicants before the Industrial Tribunal, including Miss Lester, were and remain employed in the Respondents' control room at Tower Hill in Bristol in very responsible positions, involving receiving requests from the public for ambulance services and processing those requests in conjunction with their colleagues.The history of Miss Lester's employment is quite clearly set out by the Industrial Tribunal in paragraph 5 of their decision and she was in a different situation from the other two applicants because they had imported into their contracts of service the Whitley Council terms and conditions, whereas it is correct to say that because Miss Lester joined later than the other two, she did not have the Whitley terms and conditions. The history in relation to her contract of employment is clearly set out in the documentation as referred to by the Industrial Tribunal. One sees the letter of 3 January 1992, page 1 in the bundle, which was a temporary fixed term contract, which commenced on 13 January 1992 and which terminated on 31 March 1992 and there came a situation after that contract had expired when the offer of a permanent contract came to be made and that is contained in what we regard as being the vital document in this case, which is to be found in the bundles at page 5. We will have to consider that document in more detail a little later on.There is no doubt at all that the offer of the permanent contract that is contained in paragraph 2 of that letter certainly was accepted by Miss Lester, of course, as is perfectly clear since she no doubt commenced work immediately on the basis of it, so by her conduct she accepted it in that way but, additionally, it is clear that she signed acknowledging receipt of that contract, in effect, when she signed the statement of terms and conditions of employment at page 9. There is no need for any closer analysis of that. It is clear that she accepted that permanent contract.What happened thereafter was that by a letter of 29 December 1993 addressed to all these three applicants including Miss Lester, the Respondents put forward their terms for the future contractual position. Those were undoubtedly quite different terms involving a different number of hours per week, different and higher basic rates but the abolition of various supplements which hitherto had been paid. The Industrial Tribunal summarized the effects of that situation arising from that letter of 29 December 1993, in this way:
"The respondent's intention was to make changes whereby a different basic rate was to be paid for the job, but that rate was to take into account certain of the previous supplements, which would no longer be paid. In practical terms, that meant that the basic rates of pay went up, with consequent advantages to all those affected in terms of calculation of sick pay and pension; but that the old Grade 2 assistants [We pause to mention that by this stage it was common ground, of course, that Miss Lester had been promoted to a Grade 2 assistant] would see significant cuts in their overall earnings, through the loss of the various supplements which they had hitherto been paid."
There is no precise evidence before us, nor need there be, as to the extent of those cuts resulting from the loss of those supplements, but it is probably of the order of £2,000 per year, something of that kind, as a reduction in pay resulting from those cuts.What happened thereafter is that that letter was not accepted by any of the applicants and in the case of Miss Lester she wrote to the personnel officer responsible at page 18 of the bundle:
"... I write to you to confirm my position following your letter of 29 December 1993. I would advise that your proposed variation to my contract is unacceptable and in the absence of a lawful termination of my contract of employment I stand by the provisions of the General Whitley Council which set out my legal entitlement."
In fact she was not right in saying that the provisions of the General Whitley Council were, in fact, incorporated within her contract but it is clear that what she was, in substance, saying there was that "I am employed under my old contract with you and I do not agree to your proposed change". That is the plain effect of what she is saying and the present dispute has arisen between the parties and between Miss Lester and the Respondents in particular because the Respondents have taken the view that they were contractually entitled to impose the new conditions of employment as set out in the letter of 29 December 1993. They maintain they were contractually within their rights in setting those requirements whereas, of course, the position of the Applicant before the Industrial Tribunal, and the same position is taken on behalf of the Appellant here before us, is that there was no such contractual right at all. What happened thereafter is that the employees concerned, including the Applicant, have since continued to work under protest pending the resolution of this matter, so that, as the Industrial Tribunal correctly held, there was no question of their ever having accepted the position in any way.That is the background to the matter. There may be an issue as to whether or not on the proper construction of the findings of the Industrial Tribunal, the Industrial Tribunal, in effect, held as a matter of fact, that there was an entitlement, under Miss Lester's permanent contract, to be paid the supplements that relate to weekend working, unsociable shift-working and also bank holiday working, that kind of thing. There may be an issue as to whether they did or did not so determine but we do not find it necessary for the present purposes to resolve that particular issue. The fact is, the Appellant was carrying out such work, week in, week out, and she was being paid for such work under the terms of these various supplements.The Industrial Tribunal held that what we can conveniently call, for the moment, a "reserving provision", in an attempt to use some kind of neutral term, which was contained in the letter of offer to Miss Lester dated 1 April 1992 amounted to a condition which gave rise to a collateral contract between the Respondent employers and Miss Lester, which the Industrial Tribunal held to have been accepted by Miss Lester when she accepted the offer of employment made to her in that letter of 1 April 1992. The Industrial Tribunal held that amounted to a collateral contract.The Industrial Tribunal expressed their decision in paragraphs 15 and 16 particularly but we first of all cite from paragraph 14:
"Nonetheless, the respondent has purported to change her terms and conditions in that it has imposed a different basic rate of pay and different provisions as to the payment of supplements. We have therefore asked ourselves whether the respondent is entitled to make such a change as a matter of contract, and if it is not, what the implications may be.
15. It seemed to us that the answer must lie with the letter of 1 April 1992 ... That made it quite clear, in our view, that in making the offer of the Trust contract the respondent was reserving to itself the right to place the applicant upon a new pay spine, when it was eventually drawn up as a result of the job evaluation exercise; and that in so doing, it might well make a change to the rate of remuneration paid. There is not to be implied into that letter any promise that the remuneration would necessarily be the same as, or greater than, the remuneration currently offered. [There follow the key words.] The applicant accepted the offer of employment subject to that provision in the letter of offer, and in our unanimous view, there therefore arose a collateral contract between the parties whereby the respondent offered the contract subject to that provision, and the applicant accepted it subject to that provision. "In paragraph 16 they went on, in the light of the above finding, and sympathetic though they were to the Appellant's case and noting that she felt keenly the reduction in her earnings, to say they were unanimously satisfied, nevertheless, because of the collateral contract that they found existed, that the Respondents were entitled to act as they had. They then differentiated the positions of the other two Applicants because they had incorporated into their contracts the Whitley Council terms and conditions.In looking at this finding of the Industrial Tribunal, we remind ourselves that an Industrial Tribunal must apply ordinary principles of contract law when they are deciding whether a contract has been made or what its terms are and that applies just as much to a collateral contract to any other kind of contract. That is clear from the case of Hooper v British Railways Board [1988] IRLR 517, paragraphs 42 and 43 . It is unusual, in our judgment, however much the doctrine of collateral contract may have developed over the years, to find a collateral contract of this kind in the sphere of employment law, especially where one of the parties to the putative collateral contract is a substantial employer like a National Health Service Trust. In our judgment and, of course, the lay Members have contributed particularly here with regard to their industrial experience, such an arrangement goes against the grain of normal accepted practice. That is an important consideration, in our judgment.We have listened carefully to the submissions that have been made to us but at the end of the day, with great respect to the Industrial Tribunal, we are of the view that their analysis of the arrangements made in the letter of 1 April 1992 is legally incorrect. In our judgment the statement in the third paragraph, which we have called earlier a "reserving provision" in order to give it some kind of a label, has to be seen and interpreted in a commonsense and reasonable way. The paragraph reads as follows:
"We are currently undertaking an extensive Job Evaluation exercise which will lead to the development of a single pay spine for all employees of the Avon Ambulance Service NHS Trust, when this has been completed, you will be assimilated on to the new pay spine at the most appropriate pay point."
In our judgment that statement cannot be construed in any way as a condition which was accepted by Miss Lester in response to some kind of assurance given by her, which would have the effect of constituting a collateral contract. We note particularly that the offer of the permanent contract is not expressed to be in any way conditional on the acceptance by Miss Lester of the statement that is made in paragraph 3 and we find that we cannot spell out of the arrangements that were made here between Miss Lester and the Trust, any kind of assurance or undertaking having been given by Miss Lester that she was bound by this statement in any way, shape or form, so that, in our judgment, the arrangements cannot be construed as a collateral contract for that reason. We go further than that because, in our judgment, the statement is in any event too vague and imprecise to constitute either an offer or a term of a collateral contract. In our judgment, it amounts to no more than a statement of intent that a job evaluation exercise is going to be carried out by the Respondents. A job evaluation exercise is only one step along the way towards the establishment of new terms and conditions. There is nothing there sufficiently certain as to the amount of pay or whereabouts on the new pay spine will be the most appropriate pay point. There is nothing there said about the number of hours that have to be worked. The whole matter is left vague and imprecise and for that reason, as well, it cannot constitute a binding arrangement.In addition, in our judgment, looked at objectively, it is clear that neither side had the intention that this should be a binding collateral contract or anything of that kind. The statement was not made as a condition or as an offer or anything of that kind, nor was it accepted as such. It was no more nor less than a statement of intention as to how the Trust were intending to proceed for the future.Also, in our judgment, the statement falls to be construed as it would be by a reasonable employee, and we cannot construe this statement as amounting to any agreement on the part of Miss Lester that she would accept whatever the results were of the job evaluation exercise and the steps taken consequent upon the job evaluation exercise by the Respondents as binding upon her. In our judgment, that would be unrealistic.In our judgment, the third paragraph of this letter cannot be interpreted as imposing any sort of contractual obligation. We should add that we have difficulty in seeing how there can have been any legal consideration for such an assurance being given by Miss Lester since, in our judgment, there is nothing to indicate from the terms of this letter that the Respondents were requiring an assurance or undertaking from the Appellant that she would agree to be contractually bound by clause 3 of this letter as a condition of accepting the permanent contract she was then being offered. In the context of employment law one would expect that to be spelled out clearly, if it is now to be relied upon as having contractual effect.For those reasons, we take the view that on this matter the Industrial Tribunal, with respect to them, misinterpreted the effect of this letter.We should add, that if we are wrong about that and if contractual effect must be given, contrary to our judgment, to paragraph 3 of this letter, then in our judgment it is shot through with ambiguity, since it is quite unclear what the result of the job evaluation exercise will be and what the eventual contractual position will be so that we would have taken the view that it should be construed in such a way as to have the result that its meaning is that when the job evaluation exercise had been completed, the Appellant would be put on such a place on the pay spine as to give her exactly the same rights and conditions as she already enjoyed under her previous contract, whether this conclusion is reached by application of the contra proferentum rule or whether it is by application of the principle that the fact that a particular construction leads to a very unreasonable result is that, such an unreasonable result should not be construed as being the effect of such a document.One way or the other, if we are wrong in our finding that there was no collateral contract, that is how we would hold that this document should be construed but for the reasons that we have stated, it is our judgment that the Industrial Tribunal erred in this particular case in finding that there was a collateral contract.Accordingly, we have had to consider what order we should make. We heard submissions from both sides as to the appropriate order. Mr Scott very properly has made the position clear that he does not concede that the correct order is for us to substitute our own declaration for that made by the Industrial Tribunal. Mr Pullen, on behalf of the Appellant, submits that we should substitute our own declaration for that made by the Industrial Tribunal. Mr Scott has not positively submitted that we should not do so. At the end of the day we have concluded here that this is one of those cases where it would be proper, rather exceptionally, for us to substitute a declaration that we regard as appropriate in the light of our conclusion in relation to the document of 1 April 1992.In our judgment, we have all the material in front of us that we need in order to make the appropriate order. This is not a matter, in our judgment, that could turn in any way on new findings of fact that might have to be made by a further hearing before an industrial tribunal. In our judgment, it would be expensive and pointless for the matter to be remitted for a fresh hearing before a fresh industrial tribunal. In those circumstances, we propose to allow the appeal and substitute an order by way of declaration that Miss Lester's terms and conditions of employment are those which she previously enjoyed on acceptance of the letter of 1 April 1992 whatever those terms and conditions may be. Thus, whether or not she had contractual rights to the supplements will have to be either agreed between the parties or decided on some other occasion. We order accordingly.