Glasgow City Council v Cunningham (Contract of Employment : Implied Term or Variation or Construction of Term) [2007] UKEAT 0024_06_1801

EAT
Glasgow City Council v Cunningham (Contract of Employment : Implied Term or Variation or Construction of Term)
[2007] UKEAT 0024_06_1801 · 2007-01-18
[1]The claimant had been employed by the appellants, to whom we will refer as respondents, as a gardener in their Land Services Department, since 1980. He made an application to the Tribunal in respect of a claim that he had suffered an unlawful deduction in wages arising from the non- implementation of an agreement entered into between his Union, the GMB, and the respondents. He is one of some 590 employees who are in the same position.[2]An Employment Tribunal sitting at Glasgow, Chairman Mr C S Watt found that, at a meeting which took place between representatives of the respondents and of the GMB on 28 March 2000, agreement had been reached regarding the effecting of a change to the terms and conditions of employment of ground maintenance staff (which included the claimant) and that the most reliable evidence of what had been agreed was to be found in a memorandum dated 3 April 2000 which was delivered by the respondents’ Mr Kelly to Mr Lennox of the GMB so that he had the information available to pass on to shop stewards. The Tribunal pronounced an order which was in the following terms:
“The unanimous judgment of the Tribunal is that the respondents have made an unlawful deduction from the claimant. The unlawful deduction relates to the saved hours incentive bonus. The Tribunal are satisfied that, in April 2000, there was a variation in the terms and conditions of the claimant. The Tribunal are satisfied that the claimant , from April 2000, should have been paid a saved hours incentive bonus calculated on reduced programmes , as per memo of Steve Kelly dated 3 April 2000 and from April 2002, should have been paid a saved hours incentive bonus calculated on pre- 1995 programmes .”
Background[3]The issue between parties on appeal related to something called a “saved hours incentive bonus”. We are indebted to Mr Miller for having explained this apparently impenetrable concept to us. For present purposes it is sufficient to note that it was and is something which the claimant can earn as an element of pay; he becomes entitled to it if he finishes a measured job in less hours than the number of hours that it had been measured by the respondents as being likely to require to take. We note also that, in addition to his basic wage, the claimant can earn overtime and a completion bonus, the latter being payable if he completes the schedule of work that has been set for the week within the week.[4]As found by the Tribunal, in May 1995, a local Working Time Agreement was entered into between the respondents and the GMB. The object of that agreement was to reduce the average working week of manual workers from a basic 39 hours to 37 hours. That reduction in hours was achieved through three concessions being made by the GMB, which were as recorded by the Tribunal in paragraph 9:
“ 1. A reduction in the completion bonus from £15 per week to £14 per week. 2. An increase in the bonus targets for the saved hours incentive bonus, effectively meaning that less bonus would be earned by the average worker. 3. That there would be no overtime for the first two hours of work over the 37 hours worked.”
[5]Whilst as at 1995 it was also an aspiration of the union to achieve a national Single Status Agreement, no such agreement had been reached at that time. Further, the Tribunal was not persuaded that there was any agreement between parties that those concessions made by the GMB in the 1995 agreement would cease on the conclusion and implementation of any national Single Status Agreement. They were urged, on behalf of the claimant, to take the view that there was such an agreement but it is clear that they were not satisfied that it was any part of the 1995 agreement that it provided what was to happen in the event of a Single Status Agreement being reached.[6]Subsequently a Single Status Agreement was reached between all Scottish local authorities and various trade unions including the GMB and, on 1 July 1998, it came into effect. The Tribunal refer to it as being “extremely aspirational in its terms”. It involved achieving a reduction in average weekly working hours for all manual employees from 39 hours to 38 hours from April 2000 and a further reduction from 38 to 37 hours in April 2002. The Tribunal explains that there required to be meetings at local level to discuss the implications of the Single Status Agreement pertaining to the working week and to put it into effect. Such a meeting took place on 28 March 2000. The Tribunal found that an agreement was reached at that meeting. The Issue[7]The central issue which the Tribunal had to determine was what had been agreed between the respondents and the GMB at the meeting on 28 March 2000. The Tribunal heard evidence from three of the four persons present at the meeting but plainly found their oral accounts of what was agreed to have been unsatisfactory. They noted particular difficulties in that none of them agreed with each other about what was agreed, no detailed minutes of the meeting had been kept and the meeting had taken place some five years earlier; it was very difficult for them to remember what had been said. They did, however, have the benefit of a memorandum written by one the respondents’ representatives who had been present at the meeting. They thus found, at paragraphs 18-20, as follows: “However, what the Tribunal do have is a memorandum dated 3 April 2000 from Mr Stephen Kelly to Mr Lennox about the discussions on 28 March 2000. This memorandum reads as follows: ‘SINGLE STATUS AGREEMENT – REDUCTION OF ONE HOUR I refer to our recent discussions and negotiations regarding the above matter and would confirm the outcome of our discussions as follows:- In respect of the Grounds Maintenance Staff, the agreement is that:- 1. The practice whereby the first 2 hours of overtime were paid at plain time will be replaced by a new agreement where only the first hour is paid at plain time. 2. The practice whereby employees bought back hours in terms of bonus allocation will cease in respect of the one hour reduction with employees receiving an extra ½ hour in the summer and ¼ hours in the winter. In respect of all other Parks and Open Spaces staff the Single Status Agreement will be implemented following local negotiations with the Parks Operations Manager and the Corporate Services Manager. I attach for your information a copy of the recent paper approved by the Personnel & Administration Services Committee and a copy of a letter which I am forwarding to all Council employees. I trust this information is sufficient for your meeting. Should you require any additional information please do not hesitate to contact me. Steve Kelly Corporate Services Manager’ Mr Kelly delivered this memo to Mr Lennox so that he could have information to pass on to his shop stewards. This was in order that the relevant information about what had been agreed could be passed on to all appropriate employees, including Mr Cunningham. This memo is, in the view of the Tribunal, the most reliable evidence available in view of the length of time that has passed since April 2000, to ascertain exactly what was agreed at the 28 March 2000 meeting”.[8]Reference to the memorandum being “the most reliable evidence” is also made by the Tribunal, in the discussion part of their judgment, in paragraph 27, at page 8 lines 19-21.[9]It is thus evident that this issue was resolved by the Tribunal by them finding that the terms of the agreement were as set out in Mr Kelly’s memorandum.[10]The issue arose in the context of the respondents having, from April 2000 adjusted the overtime rates so that only the first hour was paid at plain time and from April 2002 so that all hours of overtime were paid at overtime rates, but having made no adjustment to the saved hours incentive bonus. The Tribunal’s Judgment[11]One of the arguments before the Tribunal had been to the effect that paragraph 2 of the memorandum did not relate to the saved hours incentive bonus. Having noted that the memorandum was the most reliable evidence of what was agreed, they deal with this question of what paragraph 2 of it meant in their paragraph 27 (page 8 from line 30 onwards) :
“The terminology of ‘buying back hours’ is unfortunate. The Tribunal considers these words can only make sense in terms of the previous Working Time Agreement. When the Tribunal looked at page 86 of the joint bundle it is clear that the terminology used by Mr Kelly must relate to the saved hours incentive bonus, effectively meaning that the targets in the saved hours incentive bonus would be adjusted.”
[12]They then carry on:
“The Tribunal are, therefore, satisfied that it was agreed between the parties at the meeting on 28 March 2000 that the saved hours incentive bonus would be adjusted to the pre-1995 position in 2002 but that there would be a step towards that in 2000, since the bonus programme would decrease by ½ hour in the summer and ¼ hour in the winter, effective from April 2000. The Tribunal are satisfied that this was agreed. There is, however, no mention in Mr Kelly’s memo of the completion bonus. It is the claimant’s position that there was an amendment to the completion bonus, since the completion bonus would increase from £14 to £14.50 in April 2000 and to £15 in April 2002. There is no mention of that in the memo given by Mr Kelly to Mr Lennox. The purpose of this memo was that Mr Lennox could go back to his shop stewards and his members to advise them what had been agreed. The Tribunal do not think that this could have been missed if in fact it had been agreed.”
[13]They pronounced an order in the terms which we have set out. The Appeal[14]The respondents advanced a single ground of appeal which was that the Tribunal had erred in law in that having concluded that the most reliable source of evidence for what was agreed at the meeting on 28 March 2000 was Mr Kelly’s memorandum, they departed from the terms of that memorandum and appeared to infer an agreement regarding what was to happen in April 2002. Whilst it was accepted that the agreement set out what was to happen as from April 2000 as regards the saved hours incentive bonus, the language used did not justify any conclusion being reached as to what was to happen in April 2002. In these circumstances the Tribunal had misapprehended, misconstrued and misapplied the evidence so as to amount to an error of law.[15]In support of the argument, reference was made to the Tribunal having limited their findings in fact to the terms of the memorandum and to passages in the case of British Telecommunications v Sheridan [1990] IRLR 27 which, it was said, indicated that it was an error of law to proceed as the Tribunal had done in this case.[16]Mr Miller submitted that we should, in these circumstances quash the Tribunal’s judgment insofar as it declared that the claimant should have been paid a saved hours incentive bonus calculated on pre-995 programmes as from April 2002. Claimant’s Response to the Appeal[17]For the claimant, Mr Legard submitted that Mr Kelly’s memorandum did not preclude a finding that what was agreed in April 2000 was going to be implemented in two stages. It was perfectly logical for the Tribunal to conclude that the whole point behind it was to demonstrate, clearly and unequivocally, that it was to be consistent with the Singe Status Agreement. It was inconceivable that the GMB would have agreed to only half measures and it was inconceivable that matters would have been left in the balance. It was absurd and illogical to suggest that only a half-way house had been reached. Further, it may have been that the Tribunal were influenced in their findings by the fact that overtime rates had been adjusted by the respondents not only in April 2000 but also in April 2002.[18]Further, in his submission, regard should be had to the Tribunal having rejected Mr Kelly’s interpretation of the memorandum regarding the saved hours incentive bonus. That showed that the respondents had made the concession for which the claimant contended regarding that bonus.[19]The respondents’ appeal amounted, it was said, to an appeal on grounds of perversity and the high test set out in Yeboah v Crofton [2002] IRLR 684 had not been met. Discussion[20]The majority of us were satisfied that the appeal was well founded.[21]The task for the Tribunal was to determine what had been agreed at the meeting on 28 March 2000. They rejected the suggestion that they required to do so against a background of there being any prior agreement that the pre 1995 position, absent the concessions made by the GMB at that time, would revive in the event of a Single Status Agreement being achieved. That meant that whilst what prompted the meeting was the need to see what, if anything, could be agreed by way of amendment to the relevant employees’ terms and conditions given that the Single Status Agreement had come into effect, the starting point was, to use a colloquialism, a “blank sheet”. As a matter of the law of contract, its outcome could have been some agreement about some of the matters that arose in the light of the Single Status Agreement, total agreement about all of the matters that arose in the light of that agreement or no agreement at all. In the event that some or total agreement was reached, the details of the terms in respect of those matters would have required to be specifically agreed.[22]The GMB evidently sought agreement to the wholesale restoration of the pre 1995 position, something which they saw as being in line with the implementation of the Single Status Agreement. However, on the findings of the Tribunal, they did not achieve that. As regards overtime, the Tribunal found only that there was agreement that the practice whereby the first two hours of overtime were paid at plain time would be replaced by agreement as from April 2000 whereby only the first hour would be paid at plain time (page 9 lines 11-3) and as regards the completion bonus, the concession made in 1995 was found by them to remain unaltered. Those findings alone are clearly indicative of the parties’ agreement having been limited to the express terms set out in Mr Kelly’s memorandum and, in the view of the majority of this Tribunal, of it not being possible to infer that the parties had agreed all that could have been agreed in the light of the Single Status Agreement or that all three matters that had been the subject of the 1995 concessions would be varied in step with the Single Status Agreement.[23]We note from the Tribunal’s judgment that they do not suggest that their conclusion that a staged approach to change in the saved hours incentive bonus so as to restore matters to the pre 1995 position was agreed was influenced by the fact that the respondents altered the basis of overtime payments both in 2000 and 2002 . We can see that that may have been because they did not in fact find that there was any agreement on 28 March 2000 beyond the first stage or it may have been because when the weekly average hours reduced by a further hour in 2002, it would have been obvious that the 38 th hour worked in a week was overtime. The reason for their approach does not, however, matter. The Tribunal do not suggest that the respondents’ approach to overtime payments two years later, in 2002, had any bearing on their determination of what had been agreed in March 2000.[24]Most importantly, however, the Tribunal make it plain that they rely on one and only one source of evidence for the content of the parties’ agreement, namely Mr Kelly’s memorandum. That being so, they were bound to apply that evidence when formulating the order contained in the judgment. It followed that the basis for the order had to be found within the four corners of that memorandum. It provided, however, no basis for making any order about anything that was to happen in 2002. It was as wrong for them to make such an order as they were satisfied that it would have been wrong for them to make any finding or order relating to the completion bonus on account of it not having been mentioned in the memorandum. We are readily satisfied that, in the order that they formulated, the Tribunal misapplied their own findings in fact and that in doing so, made an error of law. They required, as discussed in the case of BT v Sheridan , to consider and decide the case in accordance with their own findings.[25]We should add that we do not see how the Tribunal can be read as having made any separate finding that the parties agreed to a staged change for the saved hours incentive bonus (as has been reflected in their order) since that would conflict with their central position that the one source of evidence on which they relied for the content of the agreement was the memorandum.[26]It will also be evident that we reject the submission that the fact that the Tribunal did not accept Mr Kelly’s evidence as to the interpretation of the memorandum meant that the claimant’s version required to be accepted. The rejection of one piece of evidence can never be taken to prove the opposite. It simply causes it to be left out of account. Further, we note that the claimant’s approach was, in essence, to say that what was contained in the order must have been agreed because it would have been logical for parties so to agree and because that was what the GMB would have wanted. Neither though, amount to the proper test in law for ascertaining the terms of parties’ agreement. Parties may make bad agreements. They may make agreements which amount, when objectively tested on whatever evidence is available, to something other than they had intended or wanted. Such outcomes do not, though, mean that the agreement was in fact what one party wanted it to be.[27]The minority member considered that this case involved a dispute about the interpretation of a local agreement in respect of the implementation of a national agreement and its effect on working hours, overtime and bonus payments. This in his view was the kind of case ideally suited to be decided by an industrial jury i.e. an employment tribunal, as constituted by Parliament. The Tribunal Chairman refers to both Lay Members’ experience of bonus schemes. The Employment Tribunal heard four days of evidence and reviewed their decision on a further day. It is Mr Thomson’s opinion as detailed below that they have found sufficient findings in fact and properly addressed what constitutes a contract. In his view the decision complies with case law as stated in Meek v City of Birmingham District Council . He has also taken into account the admonitions of Lord Justice Mummery in Yeboah v Crofton regarding overturning employment tribunals’ findings in fact.[28]While the Employment Tribunal stated Mr Kelly’s memorandum was the most reliable evidence they and, it was not the only evidence they accepted as can clearly be seen from other finds in fact. In particular at paragraph 27(3) they state:
“The Tribunal are, therefore, satisfied that it was agreed between the parties at the meeting on 28 March 2000 that the saved hours incentive bonus would be adjusted to the pre-1995 position in 2002, but that there would be a step towards that in 2000, since the bonus programme would decrease by ½ hour in summer and ¼ hour in winter effective from April 2000. The Tribunal are satisfied this was agreed.”
[29]The Tribunal made further findings in fact in respect of individual recollections which were more fully expressed in their Review Judgement and in particular para.19Q where they find:
“Against that, Mr Conway, when shown paragraph 2 of the memo, had no hesitation in coming to the conclusion that the only meaning of that paragraph was that there had been a concession by management on the standard hours bonus by reducing targets. The Tribunal came to the conclusion that this was the real meaning of paragraph 2 of that memo.”
[30]For these reasons Mr Thomson would have refused the appeal. Disposal[31]In the foregoing circumstances, we will pronounce an order recalling the Tribunal’s order and substituting for it an order in the same terms but under exception of the phrase “and from April 2002 should have been paid a saved hours incentive bonus calculated on pre-1995 programmes.”