GORDON STENSON, BRIAN TORRIE AND GORDON MARSHALL v WEST DUNBARTONSHIRE COUNCIL [2007] UKEAT 0089_06_0908

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2007] UKEAT 0089_06_0908Case No Appeal No. UKEATS/0089/06/MT, UKEATS/0090/06/MT, UKEATS/0091/06/MTVenue 52 MELVILLE STREET, EDINBURGH, EH3 7HF
Between
GORDON STENSON, BRIAN TORRIE AND GORDON MARSHALLAPPELLANTSWEST DUNBARTONSHIRE COUNCILRESPONDENT
Before
Lady SmithDate 9 August 2007
[1]APPEARANCES For the Appellant MR N GARDINER (of Counsel) Instructed by: Messrs Allan McDougall & Co Solicitors 3 Coates Crescent Edinburgh EH3 7AL For the Respondent MR R LYNCH (Solicitor) West Dunbartonshire Council Council Offices Garshake Road Dunbarton Dunbartonshire G82 3PU SUMMARY Contract of Employment – Incorporation into Contract The Claimants were employed as anti-social behaviour wardens under contracts which provided that salary and conditions were "in accordance with" a particular collective agreement. Issue was whether or not a statement in the collective agreement regarding allowances payable in respect of weekend and night working had been incorporated into their contracts of employment. The Tribunal held that it had not. The Claimants appealed against that determination without success. THE HONOURABLE LADY SMITH Introduction This case, which was advanced as a claim in respect of unlawful deductions, concerns the issue of whether or not the appellants, to whom I will refer as Claimants, were entitled to be paid weekend and night allowances in addition to their normal salary. They claimed that they were. The Respondents denied that they had any such entitlement under the contract.[2]An Employment Tribunal sitting in Glasgow, Chairman Mr Murphy, sitting alone, determined in a judgment registered on 25 August 2006, that the Respondents had not made any unlawful deductions. They were not entitled to the allowances sought.[3]Before the Tribunal, the Claimants were represented by Mr Foley, of their trade union and the Respondents were represented by Mr Lynch, who also appeared before me. The Claimants were represented by Mr Gardiner, advocate, before me. Background[4]The weekend and night allowances claimed by the Claimants are those set out in a section of a document entitled "NATIONAL AGREEMENT ON PAY AND CONDITIONS OF SERVICE" commonly known as the "Red Book". Insofar as that document records agreement (and it is not clear in all respects just what exactly of its content has been agreed) it was an agreement entered into between trade unions including that of which the Claimants are members, and an employers' association of which the Respondents are members.[5]Three separate documents are relevant to the issue between parties: 1. a document entitled "PRINCIPAL STATEMENT OF TERMS AND CONDITIONS OF EMPLOYMENT"("TCE"); 2. a document entitled SCHEDULE OF TERMS AND CONDITIONS OF EMPLOYMENT ("the Schedule"); and 3. the Red Book[6]The TCE and the Schedule were sent to the Claimants. Each TCE commenced by naming the relevant claimant, detailed the post to which the claimant was being appointed and the date of commencement of their employment and its terms included:
" National Negotiating Body: The salary and conditions of service attached to this post are in accordance with agreement reached by SJC for Local Government Employees. … Salary Scale: The salary scale attached to this post is £12,789 - £15,204 p.a. (SCP 10 – 18). Your commencing salary will be £12,789 p.a. … Incremental Progression: Subject to satisfactory service your salary will rise within the scale by annual increments up to the maximum of the scale payable in accordance with the general conditions of service referred to in paragraph 1 of the attached Schedule … Allowances: 7.5% irregular hours payment … Sickness Allowances: Details of entitlement to sickness allowance are contained within the attached Schedule of Terms of Conditions of Employment …"
[7]The reference beside "National Negotiating Body" to an "agreement reached by SJC" is a reference to the Red Book. The reference beside "Sickness Allowances" to a Schedule of Terms and Conditions is a reference to the Schedule.[8]Paragraph 1 of the Schedule provides:
"1. Conditions of Service Your terms and conditions of employment are in accordance with:- (a) the collective agreements of the Scottish Joint Council for Local Government Employees as adopted and applied by the Council. (b) certain additional terms and conditions determined by the Council as contained in Circulars issued by the Head of Personnel Services, and (c) any special conditions referred to in the covering letter. Full details of the terms and conditions at (a) and (b) above are available from your Section Head, Departmental Personnel or from Corporate Personnel."
[9]Paragraph 6 of the Schedule is entitled "Sickness Allowances" and, in its last two lines, provides "Full details of the Sickness Allowances Scheme are available as outlined in paragraph 1 above."[10]Similarly, in paragraph 21, which is entitled "Maternity Leave", it is provided:
"The rights of pregnant women to maternity leave and pay are in accordance with the Scheme referred to in paragraph 1 above."
[11]At page 14 - 18 of the Red Book, there is a section entitled:
" SICKNESS PROVISIONS" and there then follow detailed terms and conditions relating to entitlement to and qualification for sick pay. Those provisions are immediately followed by a section in the Red Book entitled: "
MATERNITY SCHEME" which contains detailed provisions regarding entitlement to and qualification for maternity leave, maternity pay and the right to return to work.[12]The sickness and maternity provisions are within a section of the Red Book entitled:
"PART 2 – KEY SCOTTISH PROVISIONS"
[13]There is an appendix in the Red Book and it contains a section which begins at page 37 and is entitled:
" EXTRACT FROM SCHEME OF CONDITIONS FOR APT & c STAFF RELATING TO ENHANCEMENTS"
[14]The appendix is not referred to in the main part of the document. In particular, it is not referred to in the part of the "Key Scottish Provision" section which deals with pay. It is not, accordingly, at all clear what, if any agreement was entered into between the trade unions and the employers about enhancements. There is, however, no doubt that the extract which begins on page 37 contains a statement of allowance rates for inter alia weekend, night time, and irregular hours working. "Irregular hours" are referred to in part (f) on p.38 and it is evident from what is there set out that an "irregular hour" is one which a worker has to work as part of his normal working week and is: "…outside the period 1 ½ hours before and/or 1 ½ hours after the authority's normal working hours in the period Monday to Friday..".[15]In terms of the Red Book provisions, the allowance for irregular hours working is not payable to a worker who is in receipt of a night work allowance. It could, though, in terms of those provisions, be paid in addition to a weekend allowance.[16]The allowances stated on p.37 for weekend and night working are time and half and time and a third respectively. The Tribunal's Decision[17]The Claimants' position before the Tribunal was that they were not entitled to an irregular hours payment; they should instead be receiving weekend and night allowances, referred to as "enhancements" in the judgment.[18]That that was so is clear from what is recorded by the Tribunal at paragraphs 12 and 15 of the judgment:
"12. Parties were also agreed that an employee in receipt of an irregular payment could not qualify for both an irregular payment allowance and the enhancements payable in connection with night and weekend work in the sense that entitlement to an irregular payment ousted the right to these enhanced payments … 15. Mr Foley conceded that his clients were not entitled to an irregular hours payment. "
[19]That was in the context of an argument that the provisions of the Red Book relating to weekend and night work allowances had been incorporated into the Claimants' contracts of employment. That, though, was an argument to which the Tribunal did not accede. Its reasons for refusing to do so can be summarised as follows.[20]Firstly, the Red Book itself confers no rights on individual employees. Such a document, being an agreement between a trade union and employers is not automatically incorporated into employees' contracts of employment: Alexander v Standard Telephones & Cables Ltd ( No 2) [1991] IRLR 286.[21]Secondly, the TCE was a "bespoke" document, drafted by reference to the Claimants' particular circumstances and if it conflicted in any way with the Red Book then its terms should rule.[22]Thirdly, it was plain that the TCE provided that the Claimants would receive an irregular hours payment. It was "reasonably clear" that the entitlement to an irregular hours payment excluded entitlement to both of the enhanced payments sought. The Chairman does not explain the basis on which he takes that view but it seems that he may have had the provisions of the Red Book in mind. It also seems likely that he was influenced by the concessions recorded at paragraphs 12 and 18 to which I have already referred.[23]Fourthly, in respect that the Respondents had argued that the Red Book had not been incorporated into the Claimants' contracts except to the extent that in the TCE and the Schedule it was specifically referred to, the Chairman took the view that he did not need to resolve the issue. That was because even if the Red Book had been incorporated, the right to irregular hours payments specifically provided for "ousted" any entitlement to the enhancements sought.[24]Fifthly, the Chairman then adds:
"If I am wrong in this assumption, a fortiori I am of the opinion that the contract does not confer on the Claimants the rights that they seek to enforce: the Principal Statement and Schedule read together suggest that it was the intention of the Respondents to adopt and apply the terms and conditions of the Red Book to the extent that they are specifically referred to in the Principal Statement. It is also quite clear that the Schedule reflects the Red Book and does not reproduce it applying its provisions to the particular circumstances of the Respondents circumstances. The fact that the Schedule reflects certain of the provisions of the Red Book, but says nothing concerning the enhancements suggests strongly that it was never the intention of the parties that these enhancements be paid."
[25]This last part of his discussion does not appear to turn on any view as to whether the right to an irregular hours payment "ousts" any right to the enhancements sought by the Claimants. Rather, he seems to be looking at the question of incorporation of the Red Book and expressing the view that even if it was incorporated, it was to a limited extent only and did not include incorporation of the provisions regarding the enhancements sought. The Appeal[26]The argument advanced in the Notice of Appeal was, essentially, that the Claimants were contractually entitled to the benefit of the provisions in the Red Book regarding weekend and night work allowances. Paragraphs 6(iv) and (vii) encapsulate the argument as being that:
"(iv) There is ambiguity within the principal Statement of Terms and Conditions of Employment to the extent that it states "
The salary and Conditions of Service attached to this post are in accordance with agreement reached by SJC for Local Government Employees". Later on it states that the Appellants are to receive a 7.5% irregular hours payment. The two statements are mutually exclusive. … (vii) On a proper construction of the employment contract between the parties in order for it to make sense and be in accordance with the agreement reached by the Scottish Joint Council for Local Government Employees, the Appellants must be entitled to enhancements for weekend working and night working…."[27]Before me, Mr Gardiner for the Claimants submitted that the use of the words "in accordance with" beside "National Negotiating Body" in the TCE showed an intention to incorporate the terms of the Red Book into the Claimants' contracts. The terms of paragraph 1(a) of the Schedule did not show that the intention was limit the extent to which the Red Book was incorporated as it was perhaps referring to what was going to happen in the future. Conversely, he relied strongly on the use of the words "determined by" in paragraph 1(b) of the Schedule as being indicative of incorporation because that was, he said, the language of a condition.[28]The Tribunal had erred in respect that it was wrong to conclude that an irregular hours payment "ousted" both the night work and weekend allowances; it only "ousted" the night work allowance according to the wording in the Red Book. In respect that it had been conceded and agreed on behalf of the Claimants, at the hearing before the Tribunal, that they could not be entitled to an irregular payment if they received a weekend allowance, he sought, about an hour and a half into the appeal hearing, to withdraw that concession. No prior notice had been given of that application. There may, he said, have been a misunderstanding but that was speculation on his part; he had not been present at the hearing before the Tribunal and he had not discussed the matter with those who had. He had been instructed late in the day.[29]Mr Gardiner also submitted that the Tribunal had erred in respect that it had approached matters on the basis that if there was a conflict between what he referred to as the written document and the incorporated document, then the former should prevail. That was not an absolute rule.[30]Overall, the whole approach of the Tribunal was flawed. If it was accepted that the Red Book was incorporated then the provisions contained within it relating to the enhancements sought sat perfectly well with the express reference to "Allowances" in the TCE. At the very least, the Claimants should be found entitled to irregular hours and weekend allowances. The last submission was a departure from the position advanced on behalf of the Claimants at the hearing before the Tribunal.[31]Mr Gardiner referred to the following authorities: Alexander v Standard Telephones and Cables Ltd (No. 2) [1991] IRLR 286, Sabah Flour and Feedmills , SDN BHD v Comfez Ltd [1988] 1 Lloyds Law Rep 18, and DM Wells v Northeast Lincolnshire Council EAT/839/00. He submitted that the words of reference to a collective agreement in Alexander were similar to those in the present case. Sabah was authority for the proposition that whilst where an incorporated document contains provisions which conflict with the provisions of the written document into which it is incorporated, the terms of the latter will ordinarily prevail, that is but a rule of construction; it is not paramount and other rules may apply. He sought to distinguish the present case from the circumstances in Wells .[32]For the Respondents, Mr Lynch firmly opposed the Claimants' application to withdraw the concession made before the Tribunal. It came far too late in the day. If it was a line that they sought to take, it could and should have been flagged up long before now. In particular, it should have been referred to in the Notice of Appeal. The Respondents had had no notice of their intention to change approach. Until in the course of the appeal hearing, they had thought that they were facing a claim for weekend and night work allowances, against which the Claimants accepted there could be set the irregular hours payments that had been made to date. The concession made at the Tribunal hearing had been specific and made in answer to direct questioning on the matter by the Chairman.[33]In response to the Claimants' appeal, Mr Lynch submitted that the Tribunal had not erred and sought to support the reasoning of the Tribunal. The position was clear. There was no conflict in the provisions. The employees can have been left in no doubt as to what allowances they were entitled to if the contract was looked at as a whole and the question was asked: what was the meaning of what parties had said rather than what did parties mean to say? Relevant Law[34]The task for the Tribunal was to interpret the contracts of employment between the Claimants and the Respondents. In particular, it required to ask whether, on a proper interpretation, the Claimants were contractually entitled to the enhancements sought. The key question that it required to bear in mind was: what were the parties' intentions insofar as capable of being ascertained from the relevant documents? A question arises in this case as to whether or not the Red Book, or, at least, the whole of the Red Book, was a relevant document. I will return to that issue in due course. There is, though, no doubt that the TCE and at least those parts of the Schedule to which it refers are relevant.[35]So far as the applicable law is concerned, it is plain that the documents that form the contract between the employer and employee require to be read together. Further, such contractual documents may import the whole or part of another document. Whether or not they do is a matter of construction of the contractual documents. A collective agreement will not necessarily be imported into an individual employee's contract. As was commented by Hobhouse J in Alexander , at paragraph 27:
"… serious difficulties still arise because the principle still has to be one of incorporation into the individual contracts of employment and the extraction of a recognisable contractual intent as between the individual employee and his employer. The mere existence of collective agreements which are relevant to the employee and his employment does not include a contractual intent (see for example per Ackner LJ, Robertson v British Gas [1983] IRLR 302 ). The contractual intent has to be found in the individual contract of employment and very often the evidence will not be sufficient to establish such an intent in a manner which satisfies accepted contractual criteria and satisfied ordinary criteria of certainty." and also at paragraph 31: "
The principles to be applied can therefore be summarised. The relevant contract is that between the individual employee and his employer; it is the contractual intention of those two parties which must be ascertained. In so far as that intention is to found in a written document, that document must be construed on ordinary contractual principles. In so far as there is no such document or that document is not complete or conclusive, their contractual intention has to be ascertained by inference from the other available material including collective agreements. The fact that another document is not itself contractual does not prevent it from being incorporated into the contract if that intention is shown as between employer and the individual employee. Where a document is expressly incorporated by general words it is still necessary to consider, in conjunction with the words of incorporation, whether any particular part of that document is apt to be a term of the contract; if it is inapt, the correct construction of the contract may be that it is not a term of the contract. Where it is not a case of express incorporation, but a matter of inferring the contractual intent, the character of the document and the relevant part of it and whether it is apt to form part of the individual contract is central to the decision whether or not the inference should be drawn."[36]Whilst at first blush it may be thought that it is there being suggested that there is an additional test of "aptness" of the proposed term, it seems plain to me that all that is being said there is that one of the things the decision maker should ask himself is whether, if a proposed term would not be "apt" in the context of a particular contract, parties can have intended that it be included? Thus read, the passage would be wholly in accordance with the well established and simple rule that the only relevant issue is: what were the parties' intentions?[37]If there is importation of a collective agreement then it will fall to be read together with the other documents for the purposes of construction as the contract requires to be read as a whole. If there is a conflict between the terms of the collective agreement and the terms of the original documents, it may be that the latter will prevail, particularly if it is more specific, but that will not necessarily be so. It will depend on the facts and circumstances of the individual case and will always be subject to the overriding principle that what must be ascertained is what it was that parties intended.[38]The determination of parties' contractual intention may turn on a close examination of the nature of the documents, of particular words used or of the way a document or set of documents is structured in an effort to decide what exactly it was that parties agreed. It will all depend on the circumstances of the individual case. In Alexander , for instance, it was found that there had been some incorporation of a collective agreement since, in a statutory statement of terms and conditions of employment, it was said that:
"The basic terms and conditions for your employment by this company are in accordance with and subject to the provisions of the relevant agreements"
. Hobhouse J saying that: "The additional words 'and subject to' indicate that in at least some respects the collective agreements are to apply to the individual contract of employment."(para 25)[39]That, however, was not enough for wholesale incorporation of all the terms of the collective agreement. In particular, terms regarding selection for redundancy being on the basis of seniority were not incorporated because a statutory statement did not require to deal with redundancy matters, there was no express incorporation of the part of the collective agreement that covered such redundancy matters and there was no basis on which to infer incorporation looking at matters from the point of view of seeking to ascertain the parties' intentions and of whether it would have been apt to include the provision in the individual contract.[40]In DM Wells , a case which had a striking similarity to the present case on its facts, the Employment Appeal Tribunal scrutinised the precise wording used and looked at it in the light of the terms of a collective agreement the terms of which the claimant relied on. She was seeking a shift allowance, something which was provided for in the collective agreement. Her contract provided:
"This post carries the following allowance(s) at present: 5 days cycle allowance"
[41]The Employment Appeal Tribunal considered it relevant that the definite article was used – " the allowance …" and that the contract of employment did not make reference to any other allowance or to the collective agreement. They were not satisfied that the collective agreement conferred any direct rights. They looked at the contract as a whole and were not persuaded that Mrs Wells" entitlement to allowances went beyond the 5 days cycle allowance provided for. At paragraph 22 they state:
"Mr Randall concedes that if clause 13 had said 'This post carries only the following allowances', the Employment Tribunal's construction would have been correct. For our part, we see the provision of clause 13 as clear enough, even without the word "only"
. It sets out to say what allowances are carried by the post, it was not left blank."[42]The task in this case is very similar to that which the EAT had to carry out in Wells though, as ever, the particular facts and circumstances of the case in hand require to be borne in mind. Decision[43]I am not satisfied that the Tribunal was correct to approach this case on the basis that there was a conflict in the contractual provisions which it required to resolve although it does seem that it reached the right result, namely that the Claimants were not and are not contractually entitled to the enhancements sought.[44]It seems to me that on a proper reading of the TCE and the Schedule, the Red Book is incorporated but only to a limited extent. That that may, in an individual case, be so, is made clear by the terms of paragraph 1(a) of the Schedule – the Council may agree to "adopt" and "apply" the Red book or parts of it. Whether it has agreed to do so in any particular contract will depend on its precise terms. In these contracts, the parts of the Red Book relating to Incremental Progression have evidently been incorporated by the provisions relating to that matter (quoted above) contained in the CTE which in referring to the conditions referred to in paragraph 1 of the Schedule refer, in effect, to the Red Book. Similarly, the parts of the Red Book relating to sickness allowances have evidently been incorporated if the section of the CTE relating to sickness allowances is read together with the paragraph 6 of the Schedule (the CTE and relevant Schedule provisions on this matter are quoted above). Conversely, although there are provisions in the Schedule and the Red Book about maternity rights (again, quoted above), there is no reference to maternity rights in the CTE so the part of the Schedule relating to maternity rights does not form part of the contract and nor does the part of the Red Book that covers them; that, of course, makes sense. These are contracts for male employees. They do not require to include details of benefits not available to men so that part of the Red Book that deals with maternity rights has not been adopted.[45]I would add that I wholly reject the suggestion that somehow the use of the words "determined by" in paragraph 1(b) of the Schedule indicates that the Red Book was incorporated wholesale into the contract. 1(b) has nothing to do with the Red Book. It allows for the possibility of the Council setting out some of the terms on which they are prepared to employ persons in circulars. I also reject the suggestion that 1(a) is only concerned with what might happen in the future against a background of there already having been wholesale incorporation of the Red Book. To accede to that proposition would be a far cry from giving the words their ordinary meaning.[46]What then of the matter of the enhancements sought? Firstly, I would observe that as regards the part of the CTE that deals with "Allowances" unlike, for instance, the part dealing with sickness, there is no reference in the CTE to the Schedule or the Red Book and thus no reference to any part of the Schedule that refers to the part of the Red Book that covers the enhancements sought. What the CTE provides is that the Claimants will receive "Irregular Hours" payments and the rate at which they will receive them will be 7½%. Whilst "Irregular Hours" are not defined in the CTE or the Schedule, it is evident that it was readily understood between parties what they were; there was no suggestion that the clause was void for uncertainty. Indeed, I understand the Claimants to have received an irregular hours uplift in respect of every hour worked thus far and there seemed to be no dispute between the parties that each such hour was indeed an irregular hour.[47]I note further that as a matter of fact, all the hours worked by the Claimants would have come within the definition of irregular hours set out in the Red Book. However, had the Claimants been receiving a "Red Book" irregular hours payment, given the number of the irregular hours worked, they would have qualified for a higher uplift, namely 10%. They did not, of course, claim that in this case. What they sought was a result whereby they received a weekend and night work allowance instead of an irregular hours allowance.[48]I fully appreciate the point made by Mr Gardiner that the Chairman was wrong to think that in terms of the Red Book, an irregular hours payment "ousted" both the night and weekend allowances. It is plain from the terms of the relevant section of the Red Book that an irregular hours payment only ousts a night allowance. That is, though, beside the point, in my view. It is plain from the CTE that there was no wholesale incorporation of the Red Book. The reference to it against "National Negotiating Body", which does not, for instance, suggest that the contract is "subject to" the Red Book reads as an assertion that the terms of the CTE and the applicable terms of the Schedule, do not conflict with the Red Book. As I have noted, it is evident that there are parts of the Red Book that are clearly not incorporated such as those relating to maternity pay. It is plain that there is a structure and scheme to the contract whereby if the Red Book is being incorporated that is made plain by reference to part of the Schedule which in turn refers to the relevant part of the Red Book. There is no such system of reference when it comes to the matter of allowances.[49]Then, as regards the matter of allowances, if one asks what is it that parties have provided about allowances, it is plain that they have agreed that the employees will receive an allowance, namely a 7½% allowance in respect that they are to be working irregular hours. That parties did not intend that the Red Book be referred to for the allowances payable is reinforced by the fact that the irregular hours allowance payable under the TCE term is not in line with what would be payable for irregular hours if the Red Book provisions applied. It follows also that there is no room for importing any entitlement to other allowances even if, under the Red Book, one of the enhancements sought could have been payable in addition to an allowance for irregular hours.[50]In these circumstances, the appeal fails and I will pronounce an order refusing the appeal and upholding the decision of the Tribunal.[51]As will be evident, the decision that I have reached is not dependent on the concession made on behalf of the Claimants before the Tribunal or on any withdrawal thereof. I would only add, by way of postscript, that had I required to rule on the matter, I would have been very reluctant to allow the withdrawal of the concession at such a late stage. It seemed to me that there was a real risk of prejudice to the Respondents in that they would have been faced with, in effect, a shifting of the "goalposts" so far as the nature of the claim that they thought they were facing was concerned and no satisfactory explanation had been given of how the change in approach had come about so very late in the day.