AYTAC MEHMET v LONDON BOROUGH OF HACKNEY [2005] UKEAT 0493_04_1703

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2005] UKEAT 0493_04_1703Case No Appeal No. EAT/0493/04Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
AYTAC MEHMETAPPELLANTLONDON BOROUGH OF HACKNEYRESPONDENT
Before
His Honour Judge J R ReidDate 17 March 2005
[1]APPEARANCES For the Appellant MR MARC GALBERG (of Counsel) Instructed by: Messrs Cooper Whiteman Solicitors 34 Bloomsbury Way London WC1A 2SA For the Respondent MR THOMAS KIBLING (of Counsel) Instructed by: Eversheds LLP 1 Callaghan Square Cardiff CF10 5BT HIS HONOUR JUDGE J R REID QC This is an appeal from a decision of an Employment Tribunal held at Stratford (Mr Q Barry chairman). After a hearing lasting four days and a day of deliberation the Tribunal held that the Respondent ("Hackney") did not make unlawful deductions from the wages of the Appellant ("Mr Mehmet"). The decision was promulgated on 15 April 2004.[2]The case was heard with another case relating to a Mr Coombs. Each of the cases was a test case relating to the entitlement of Hackney's employees to additional payments following changes in their terms of employment consequent on a financial crisis. In Mr Coombs' case the Tribunal held that he continued to be entitled to certain overtime payments after the changes in terms and so there had been unlawful deductions from his wages as a result of Hackney ceasing to pay the overtime. There is no appeal against that decision. In Mr Mehmet's case the Tribunal held that after the change he was no longer entitled to the shift allowance he had previously received and so there had been no unlawful deductions. He appeals against the decision.[3]Mr Mehmet is employed as a Park Ranger for Hackney. His original contract of employment provided for a shift allowance to compensate him for working irregular hours. Until 1 October 2001 he was paid this allowance. The allowance was described as a "plus" or "premium payment". When Hackney ran into financial difficulties it consulted with its employees and their Unions in order to agree savings. The terms and conditions of employment were an area where Hackney thought savings could be made. Between November 2000 and the end of January 2001 negotiations took place between Hackney and its workers and by letter dated 2 February 2001 Mr Mehmet received Hackney's offer to vary the terms of his contract. So far as overtime and plus and premium payments were concerned the letter provided:
"All contractual overtime arrangements to be removed, subject to reviews where it can be demonstrated that this is essential for the cost-effective delivery of best value services," and "all plus payments and premium payments that are not linked to productivity or output will be removed."
The letter also provided for the replacement of the existing comparatively generous redundancy provisions by statutory minimum payments to all staff on redundancy. Mr Mehmet (in common with his colleagues in the TGWU) did not accept this offer and negotiations continued between both sides about overtime payments, redundancy payment terms, and plus and premium payments amongst other matters.[4]By a document dated 26 March 2001 Mr Mehmet received Hackney's final offer to vary his contract of employment. This provided for the retention of the current redundancy provisions. So far as overtime and plus and premium payments were concerned, it provided:
"f) Contractual overtime Contractual overtime to be subject to reviews and removed if not essential for cost effective delivery of best value services. Details of reviews to be provided as soon as possible. g) Plus and Premium Payments The Council wants to eliminate all plus and premium payments which are no longer required. A list of those which will remain in force will be provided as soon as possible."
Several pages further on, in Appendix A to the document, under the heading "Proposed timetable for the implementation of the single status job evaluation scheme" there is the following paragraph:
"3 Evaluate those jobs which attract contractual overtime, plus and premium payments as being essential for the effective delivery of services Housing… Education… The above posts to be evaluated within the first three months following training This list is not exclusive nor exhaustive"
[5]On 9 May 2001, in line with union advice, Mr Mehmet accepted the terms of the final offer which superseded those contained in the first offer and the new terms eventually took effect from 1 October 2001. Since that date he has not been paid a shift allowance. No list of those plus and premium payments to remain in force has ever been produced.[6]The basis of the submission made to the Employment Tribunal on behalf of Mr Mehmet was that Hackney had moved its position between the first and final offers. There was contractual significance in both the change in wording, in relation to plus and premium payments, between the two offers and also in the promise to produce a list following evaluation. These promises formed part of the consideration offered to Mr Mehmet in return for his acceptance of the final offer in circumstances where he had earlier rejected the first offer. In the alternative the promise to produce the list amounted to a condition which was never fulfilled, pending the fulfilment of which his entitlement to shift payments remained.[7]The tribunal dealt with Mr Mehmet's case in paragraph 65(d) of its extended reasons. It said:
"Mr Mehmet's acceptance of 9 May did amount to a variation of his entitlement to shift allowance. The Tribunal finds that the wording of paragraph 6 of the original offer of 2 February 2001 made it plain that all plus payments and premium payments were to be removed and thus linked to productively or output; that the shift allowance was a premium payment; and that a shift allowance is plainly not linked to productivity or output. That offer was superseded by the final management offer of 26 March 2001; although the wording of paragraph (g) in that document is different, the only qualification to the removal of the premium payment is the production of a list of those to be retained, and the non-production to Mr Mehmet or his Union of such a list cannot in the Tribunal's view act to preserve the right to the payment. The Tribunal finds that Mr Mehmet was aware of the terms of the 26 March document and accepted them; and that they amounted to a variation."
[8]Counsel for Mr Mehmet submitted to us that in essence the tribunal decided that there was no real difference between the terms of the first and final offers and that Hackney's promise to provide the list had no contractual significance or was "de minimis". This finding was, he said, in stark contrast to the position of Mr Coombs where the tribunal found that the difference between the two offers did have contractual significance. He submitted that the tribunal made three errors of law in reaching this conclusion: the first was its failure to give any meaning to the evaluation process set out in the final offer at paragraph 3 of the "Proposed timetable"; the second was that the tribunal decided on the adequacy of the consideration; and the third was that the tribunal failed to construe the final offer in the light of the circumstances surrounding its making.[9]As to his first point, counsel submitted that the promise stemming from Hackney was not only the production of a list as the tribunal suggest at paragraph 65 (d): it was the production of the list following an evaluation of the plus and premium payments against defined criteria. The tribunal had to look at all the relevant words of the final offer and give them their natural ordinary meaning. This, he suggested, the tribunal did not do.[10]As to his second point, counsel submitted that consideration must be "something of value in the eyes of the law". The courts will enforce promises so long as some value has been given. In this case part of the consideration for Mr Mehmet's promise to agree to a variation of his contract of employment was the promise by Hackney not just to produce a list; although this would have been sufficient, but to do so, having carried out a job evaluation on agreed criteria. The tribunal at paragraph 65 (d) of their reasons itself decided on the adequacy of consideration, weighing up the consideration contained in paragraph (g) of the final offer and finding it adequate. It was not entitled to do this. Nor was it entitled to substitute its own view that, in effect there was no adequate consideration and by implication that the promise to produce a list was some sort of mere "puff" and or that it did not form a valid condition subsequent.[11]Counsel's third point was that in order to construe the meaning of the written agreement the tribunal had to ascertain the relevant circumstances which existed at the time the agreement was made and which were known to the parties. However, it was said, the tribunal ignored the factual matrix surrounding the final offer. The factual matrix included the negotiation leading up to the making of the first offer and then the further negotiations leading to the final offer. The wording of the two offers was different. The first offer proposed an outright abolition of plus and premium payments save for the excepted category, those "linked to productivity or output". The final offer was more generous and envisages an evaluation process on different criteria and the publication of a "list" Hackney's first offer was not accepted. The purpose of the final offer in the context in which it was put forward suggests that the final offer would be more favourable to employees that the first offer.[12]In our judgment none of the three criticisms is well-founded. It is convenient to deal with them in reverse order.[13]Taking the third first, it is clear that the agreement reached had to be construed in the light of the surrounding circumstances. The surrounding circumstances related to Hackney's financial plight and its perceived need to make savings on wages. The workers had been unwilling to accept the original terms offered and further negotiations with the TGWU had followed. Those negotiations had resulted in a modification of the terms of the offer. In particular the Union clearly achieved a major point in relation to the retention of the existing redundancy payments scheme. It also achieved an improvement in relation to contractual overtime which (as clause (f) made clear) was to be subject to review and might be removed in the future if the review did not find it "essential for cost effective delivery of best value services". It does not follow from this that the very different wording of clause (g) was intended to result, or resulted, in plus and premium payments being retained pending determination of those which were to remain in force. Hackney had modified its offer in relation to redundancy payments and the interim position on contractual overtime. It was also prepared to concede that some plus and premium payments might remain in force after a list had been provided. It does not follow from the history of negotiations that the concession had to be construed as an agreement that all plus and premium payments would remain in place pending the production of the list.[14]In our view the Tribunal clearly had in mind the surrounding circumstances (including the terms of the original offer) and it cannot properly be said that it failed to construe the agreement in its factual matrix.[15]As to the second point, it does not seem to us that there is any substance in it. The tribunal held that the non-production of the list could not preserve the right to payment of plus or premium payments. The claim it had before it was a claim for wrongful deduction of wages and nothing else. It was not concerned with any question whether the failure to produce a list was a breach of contract which sounded in damages. Indeed such a claim would not have been within the jurisdiction of the tribunal. The tribunal was not concerned with whether, for example, the failure to produce a list gave Mr Mehmet a County Court claim for damages to be assessed on the basis of a loss of chance. There was no question of the tribunal holding that the failure to produce a list was not adequate consideration or was "de minimis". All the tribunal held was that as a matter of construction the contract did not provide for the continuation of plus or premium payments (including Mr Mehmet's shift payments) pending production, or because of the non-production, of a list.[16]As to the first of the points taken, in our judgment the tribunal correctly construed the agreement in its context, and did give appropriate weight to the distinction between the words in the original letter of 2 February 2001 and the later offer which was accepted. The original offer provided for the removal of all plus and premium payments not linked to productivity. The later offer in substance reiterated Hackney's position that it wanted to eliminate all plus and premium payments which were no longer required, and added the detail that a list of those to remain in force would be provided as soon as possible. The tribunal were perfectly entitled to hold that the agreement into which Mr Mehmet entered did not provide for the continuation of those payments pending provision of the list.[17]In these circumstances we take the view that none of the grounds upon which the decision of the tribunal was attacked have been made out and the appeal must be dismissed.