DEPARTMENT FOR EDUCATION AND SKILLS v (1) MR D J HOGG (2) MR J E MASON (3) DR D R PICKERSGILL [2003] UKEAT 0884_02_2005

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2003] UKEAT 0884_02_2005Case No Appeal No. EAT/0884/02Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
DEPARTMENT FOR EDUCATION AND SKILLSAPPELLANT(1) MR D J HOGG (2) MR J E MASON (3) DR D R PICKERSGILLRESPONDENTS
Before
His Honour Judge Peter Clark Mr P R A JacquesDate 20 May 2003
[1]APPEARANCES For the Appellant MR B CARR (of Counsel) The Treasury Solicitor Queen Anne's Chambers 28 Broadway London SW1H 9JS For the Respondent MR T BRENNAN QC (of Counsel) Instructed by: Association of Teachers & Lecturers Legal Services Department 7 Northumberland Street London WC2N 5DA HIS HONOUR JUDGE PETER CLARK This appeal, brought by the Department for Education and Skills ("The Department") against a decision of the London (South) Employment Tribunal, upholding the Applicants', Mr Hogg, Mr Mason and Dr Pickersgill's, complaints of breach of contract, raises a point of construction of written terms and conditions of employment of the Applicant teachers employed by the Department at European Schools. The Employment Tribunal's decision was promulgated with Extended Reasons on 28 June 2002. The Applicants[2]Mr Hogg was employed at the European School in Brussels under a series of fixed-term contracts between 1 September 1987 and 31 August 2001. His final contract consisted of a letter dated 16 June 2000 from Richard Hoy of the Department's European Schools Team, signed by Mr Hogg on 28 June.[3]Dr Pickersgill was employed at the European School in Bergen between September 1983 and 31 August 2001. His final letter was dated 4 July 2000 and signed by him on 10 August.[4]The terms and conditions of employment of both Mr Hogg and Dr Pickersgill were, for all material purposes, in identical terms. Accordingly, there is no distinction between their two cases for present purposes.[5]Mr Mason was employed at the European School in Munich from 1 January 1994 until 31 August 2001. His terms and conditions of employment were contained in a letter from Mr Hoy dated 13 July 1998. There are differences between the wording of that letter and those signed by Mr Hogg and Dr Pickersgill, to which we return below. A copy of Mr Hoy's letter, signed by Mr Mason, was returned by Mr Mason under cover of his letter dated 7 September 1998. To that letter and Mr Hoy's subsequent reply dated 9 November 1998, we shall also return. The Applicants' Terms and Conditions of Employment[6]Taking first Mr Hogg and Dr Pickersgill; they were employed on full-time contracts of respectively 4 years and 2 years, commencing on 1 September 2000. During their service in their respective European Schools their employer was the Department.[7]The provisions as to salary were set out at clauses 9 and 10 of the contract in these terms:
"SALARY 9 Your total remuneration will be determined in accordance with Title V, Chapter I of the Regulations for Members of the Seconded Staff of the European Schools, as amended from time to time. Decisions on the application of the Regulations are for the School. 10 Your national salary will be paid to you monthly in arrears by the Department in accordance with the provisions of the School Teachers' Pay and Conditions Documents for England and Wales (this part is referred to hereafter as the national salary). Annual pay increases will be paid as they fall due. Where appropriate, a one-off incremental increase in national salary is awarded on appointment. Thereafter, no incremental increases are payable as an addition to national salary. The national salary is subject to UK income tax and social security deductions at the appropriate rates. The balance of allowance needed to bring it to the total payable under the Regulations, and any other special allowances, are paid by the School."
[8]As to pension entitlement, clause 11 provides that "service in a European School is permissible under the Teacher's Superannuation Scheme for England and Wales". Contributions to the Scheme were based on 'National Salary' only and the eventual pension payable was based on a proportion of National Salary only, depending on the years of pensionable service completed.[9]In the case of Mr Mason, clause 10 of his contract differed from those of his two colleagues in two respects. First, the words 'when appropriate' do not appear; secondly, the sentence 'Thereafter no incremental increases are payable as an addition to national salary' is omitted.[10]In his letter to Mr Hoy dated 7 September 1998 Mr Mason said:
"I do have a small question with respect to the new wording – on which, I am sure, should not be a impedance [sic] to me agreeing with the contract. It refers to para. 10, where the new sentence is inserted "
A one-off incremental increase in national salary is awarded on appointment". Will this be implemented on the commencement of the new contract? Could you also briefly explain the rationale behind this change?"[11]In his reply of 9 November 1998 Mr Hoy said:
"You raise a number of questions about the "one-off incremental increase" in salary referred to in paragraph ten of the contract document. This increase is awarded in certain circumstances to teachers when they are first appointed to a European Schools post. Aside from allowance for posts in social priority areas, responsibility allowances etc, the pay structure for teachers in British schools provides for a usual maximum of nine incremental points on the salary scale, and the possibility of up to three further increments for excellent performance. The award of performance-based increments is generally underpinned by an appropriate system of performance appraisal. Setting up a performance appraisal system for British teachers in the European Schools would entail the introduction of annual performance reports for all teachers, similar to arrangements we have for mainstream DfEE staff. The administrative complexities and costs of introducing a system of this kind for our teachers in the European Schools are prohibitive, and this option has been ruled out. To compensate teachers for the possible loss of performance-based salary increments during their period of assignment to the European Schools, we award a one-off incremental increase in national salary on appointment. At the same time, we deduct from national salary any allowances (such as those for posts in social priority areas, London weighting and responsibility (increments) that are specific to the post previously held by the teacher. In some cases, the initial one-off incremental award is balanced by the deduction. In others, no incremental increase is payable because the teacher has already reached the appropriate scale maximum."
[12]Pausing there, what happened in practice was that the Applicants' overall salary contained two elements; the National Salary, paid by the Department, and the balance of their salary entitlement under the Regulations for Members of the Seconded Staff of European Schools (contract, clause 9), paid out of a European fund.[13]Thus, in the case of Mr Hogg, by way of example, his final salary at the time when he lodged his Originating Application with the Employment Tribunal on 23 November 2001, was given as £2,329.50 per month gross plus £2,482.70 per month 'European Supplement.' The former amount was paid by the Department; the latter out of the European fund. Teachers Pay in England and Wales[14]Section 2 of the School Teachers Pay and Conditions Act 1991 provides for the Secretary of State to make a pay and conditions order setting out the remuneration of teachers in England and Wales. The levels of remuneration so ordered are to be found in annual Pay and Conditions Documents. In this case we are concerned with the 1999 and 2000 Pay Documents. The 1999 Document[15]Paragraph 17.2 of the 1999 Document sets out a pay spine increasing by half points from 1-17. Against each half point the appropriate annual salary appears.[16]A teacher's position on that pay spine depended on various criteria; in particular a good honours degree led to up to 2 points; experience, that is years of service in teaching, attracted a maximum of 7 points; responsibility attracted up to 5 additional points; excellence, that is excellent performance in the job, led to an award of up to 3 additional points. Further points might be awarded under the headings of Recruitment and Retention and Special Educational Needs Teaching.[17]There was some uncertainty before us as to the respective positions on that pay spine of the individual Applicants. There is no finding by the Employment Tribunal.[18]Initially, in the course of opening the Department's appeal, Mr Carr told us that each of the Applicants was fixed at point 9 on the 1999 scale. That represented 2 points for good honours degree and the maximum of 7 points for experience. Later he told us that whilst each Applicant was 'frozen' at point 9 whilst teaching at his European School, Mr Hogg had left his English school to take up his European appointment as a Deputy Head Teacher, which had entitled him to a further 2 responsibility points. Whilst losing those points when he took up the European post he was entitled to re-enter the English system at point 11 on that scale.[19]Mr Brennan QC told us, on instructions, that Mr Hogg was at point 11, Dr Pickersgill at point 13 and Mr Mason at point 9.[20]This uncertainty on the facts does not, however, materially affect the point of construction with which we are concerned, as we shall explain. The 2000 Document[21]The 2000 Document, taking effect from 1 September 2000, introduced changes to the previous pay structure. In particular a scale of 1-9 points was introduced. Each Applicant was at the maximum point on that scale, attracting a salary of £23,958 per annum, based on their qualifications and experience. Responsibility points became a responsibility allowance. The excellence criterion was deleted; instead the concept of 'post-threshold teacher' was introduced. By paragraph 19 of the 2000 Document a post-threshold teacher was one who had passed the performance threshold, assessed on their performance by their Head Teacher, and had acquired the maximum 9 points for qualifications and experience (as had each of the Applicants). Post-threshold teachers then joined a pay scale in the range 1-5. When first qualifying as a post-threshold teacher he was paid on scale point 1 (a salary higher than a teacher at point 9 on the basis scale) and could then rise up the scale annually, subject to continual assessment and passing the threshold. The Issue[22]The question in these appeals is whether the Applicants were entitled to apply for post-threshold teacher status whilst serving in European Schools. The Department took the position that they were not, the Applicants and their trade union that they were. The debate, in Parliament and elsewhere, is recorded in the Tribunal's Reasons, going back to February 2000. It is of passing interest but does not assist in deciding whether, as a matter of contract, the Applicants were so entitled. The Claims[23]By their Originating Applications the Applicants asked the Employment Tribunal to answer two principal questions; what were the relevant terms of their contracts of employment and was the Department in breach of contract? Put simply, was it a term of each Applicant's contract that he was entitled to apply for post-threshold teacher assessment, leading to his acquiring that status and access to the post-threshold pay scale? In the 2000 Document point 9 on the basic salary scale translated into an annual salary of £23,958; point 1 on the pay scale for post-threshold teachers led to a salary of £25,959, rising by steps to point 5, a salary of £30,018. The Employment Tribunal Decision[24]It is common ground between Counsel that since the question on appeal requires a construction of the relevant express term of each Applicant's contract we are well placed to decide the point as was the Employment Tribunal. Nevertheless, we should first set out the Employment Tribunal's approach.[25]Beginning with the case of Mr Mason (reasons, paragraph 20), they concluded that his 'national salary' for the purposes of clause 10 of his contract was governed by the 2000 Document, which entitled him to make an application for post-threshold status and the benefits attached thereto (the post-threshold salary scale). Nothing within that Pay Document excluded him from applying, nor in his contract letter. Properly, they excluded from their consideration statements of intent made by and on behalf of the Department. The Department could have excluded European School teachers from the 2000 Document but did not do so.[26]Next, Mr Hogg. Here, the Tribunal, having found that clause 10 of his contract letter was poorly drafted, then dissected that clause. They found (reasons, paragraph 23):(a) that national salary was payable in accordance with the 2000 Pay Document and that included the post-threshold teacher pay scale. Absent any exclusion later in clause 10 he was entitled under national salary to apply for post-threshold status and consequent benefits under that pay scale.(b) that the reference to annual inflationary rises in the pay rates was superfluous, since such rises were contained within each annual Pay Document.(c) the reference to a one-off increase in national salary awarded on appointment had no relevance to a veteran such as Mr Hogg, since it is paid only on first appointment.(d) the expression 'no incremental increases are payable as an addition to national salary' did not, as the Department contended, exclude Mr Hogg from the post-threshold teacher salary scale. National Salary equated to that paid under the 2000 Document; that Document included the post-threshold teacher pay scale. Incremental increases additional to National Salary were excluded; the post-threshold teacher pay scale was included within National Salary. Therefore, Mr Hogg was not excluded by the terms of the contract from applying for post-threshold teacher status and pay.[27]Since the terms of Dr Pickersgill's contract were, in all material respects, identical to those of Mr Hogg, by the same reasoning he too was entitled to apply for post-threshold teacher status.[28]Accordingly, all three claims for breach of contract succeeded. The Appeals Mr Hogg and Dr Pickersgill[29]Mr Carr submits that it is necessary to read clause 10 of their contract as a whole. Even if, as the Employment Tribunal did, it is permissible to break down that provision into its constituent parts, it is nevertheless essential to read the clause as a whole. Further, having broken it down, the Employment Tribunal then treated as irrelevant parts which are material to the overall construction.[30]He argues that the reference to a one-off incremental increase in National Salary on appointment is not irrelevant. It shows that on first appointment to a European School the teacher's then position on the pay spine may be increased once and for all because, as clause 10 makes clear in these cases, thereafter no incremental increases are payable as an addition to the National Salary. He gives this useful example, based on the 1999 Pay Document. Suppose, on appointment to a European School on a 4-year fixed-term contract a teacher, with a good honours degree, has completed only 6 years service as a teacher in England and Wales. Under the freezing provision (no incremental increases are payable as an addition to National Salary) he would not acquire a further experience point on passing his 7 th year of service. In these circumstances a one-off increase taking him to point 9 on the 1999 Pay Scale may be made on appointment. Thereafter he will be frozen at 9 points during the course of his fixed-term contract at the European School.[31]The point, submits Mr Carr, is that once appointed to a European School a teacher cannot improve his position on the National Salary scale, e.g. by acquiring responsibility or excellence points. The quid pro quo is that he receives what Mr Hogg called the European Supplement, which roughly doubled these Applicants' National Salary, frozen at the point of entry to the European structure.[32]Viewed in this way National Salary meant the point in the national scale at which the teacher enters his European School contract, which salary would increase only in line with inflation. The fact that such inflationary increases are built into each annual Pay Document does not render the reference to annual pay increases in clause 10 superfluous, as the Tribunal held, it is of a piece with the critical distinction drawn in that provision between incremental increases, that is points up the salary scale, and annual pay increases, that is inflationary increases paid each year on each point in the scale.[33]The expression 'National Salary' merely differentiates between that element of the Applicant's overall pay attributable to the Department as opposed to the balance of salary entitlement under the Regulations (see clause 9), payable out of the European fund. 'The European Supplement.'[34]Mr Brennan submits that the new post-threshold teacher status was just that; a difference in professional status between the ordinary class room teacher and one who had passed the threshold.[35]The key passage, 'no incremental increases are payable in addition to national salary' cannot refer to movement onto the post-threshold teacher pay scale in the 2000 Document because the National Salary is defined by reference to that Document which itself incorporates, for the first time, the post-threshold teacher pay scale. Thus, payment to these Applicants on that scale falls within the definition of National Salary.[36]Incremental increase relates to movement on a particular pay scale, not a change from one pay scale to another laid down in the national pay Document.[37]He invites us to construe clause 10 as meaning that any increase in the total salary payable to teachers at European Schools which is greater than the increase effected by annual changes in the Pay Document, would have to be met from the European fund, not by way of an increase in the National Salary.[38]On this part of the case we prefer the construction contended for by Mr Carr. Our reasoning is as follows. The expression 'thereafter no incremental increases are payable as an addition to national salary' means, in our judgment, that the National Salary element of overall pay is frozen on appointment, subject to any initial one-off incremental increase in that element where appropriate. Otherwise it will increase only in line with inflation. It is not open to the teacher to progress up the pay scale. The replacement of the 1999 scale, points 1-17, by a two-tier structure involved no alteration in principle, so far as these contracts were concerned. Each step up the pay scale represents an incremental increase, whether under the 1999 structure or the 2000 structure.[39]Prior to the 2000 Document we are quite satisfied that a teacher on a European contract could not add points on the scale by taking on responsibilities, under the excellence criterion or otherwise. His position was frozen.[40]Under the 2000 Document regime acquiring post-threshold status necessarily involved an incremental increase in pay, apart from the annual pay increase (a distinction which we regard as material).[41]Under that regime a teacher on point 9 of the basic teacher's scale then earned £23,958 per annum. At point 1 on the post-threshold teacher's scale he earned £25,959 per annum. To move from the former to the latter plainly involved an incremental increase within the meaning of the exclusion relied upon by the Department.[42]As to Mr Brennan's submission that an incremental increase payable as an addition to national salary necessarily excluded any provision within the 2000 Document, we are satisfied that that involves a misconstruction of that sentence. What it means, in the overall context of clause 10, is that the teacher's National Salary element (as opposed to the European supplement) is frozen at the teacher's point on the national scale throughout the duration of the European teacher's contract (subject to the one-off incremental increase, where appropriate; an expression which informs the meaning of incremental increase in the relevant exclusion). The teacher cannot improve his position on the pay scale from time to time laid down in succeeding pay documents.[43]Both these Applicants were effectively frozen at point 9 on the 1999 scale (additional points for responsibility or otherwise are immaterial for this purpose); that position was replicated by point 9 on the basic teacher's scale in the 2000 Document. To acquire post-threshold teacher status and pay on a higher scale would have involved an incremental increase expressly forbidden by the terms of clause 10 in these two cases.[44]It follows that we reject the Employment Tribunal's construction of clause 10 in the contracts of Mr Hogg and Dr Pickersgill. We accept Mr Carr's submission that their approach to that exercise was flawed. Their claims for breach of contract are not made out. They had no contractual entitlement to apply for post-threshold teacher status and pay. Mr Mason[45]Here, we find that the omission of the sentence 'thereafter no incremental increases are payable as an addition to national salary' is critical.[46]Shorn of that express exclusion we hold that the construction contended for by Mr Brennan must be accepted. The National Salary element of this Applicant's pay was to be in accordance with the provisions of the 2000 Pay Document from 1 September 2000. That document provides for a salary scale for post-threshold teachers. Nothing in Mr Mason's contract prevented him from applying for that status as was the case with teachers in England and Wales. The reference to a one-off incremental increase in National Salary on appointment does not assist one way or the other in construing the express National Salary on the wording of clause 10 in Mr Mason's contract, in contrast with the assistance which it gives in construing what we have found to be the relevant exclusion provision in the other two cases.[47]Mr Carr has advanced an argument to the effect that by his letter dated 7 September 1998 to Mr Hoy, enclosing a signed copy of Mr Hoy's letter of 13 July, Mr Mason's acceptance of the terms contained in that letter was conditional. We reject that submission. Clause 14 of the contract letter makes it clear that signature by the teacher amounts to clear and unequivocal acceptance of the terms there set out. Secondly, the letter of 7 September 1998 does not impose any conditions on acceptance, it merely raises a general enquiry, subsequently addressed by Mr Hoy in his reply of 9 November 1998. In our view both those letters post-date the formation of the contract on the terms set out in Mr Hoy's letter of 13 July.[48]It follows, in our judgment, that Mr Mason's claim for breach of contract was made out. The Tribunal was correct so to find, although we do not agree with their observation (reasons, paragraph 20) that the Department had ample opportunity within the 2000 Pay Document to exclude British teachers in European Schools. That Document was concerned only with Teachers in England and Wales. It was incorporated into the European Teachers contracts for the purposes and to the extent discussed above. Conclusion[49]For these reasons we shall allow the Department's appeal in the cases of Mr Hogg and Dr Pickersgill. Their claims are dismissed. The appeal in the case of Mr Mason fails and is dismissed.