MS D BEATTIE v AGE CONCERN [2007] UKEAT 0580_06_0802

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2007] UKEAT 0580_06_0802Case No Appeal No. UKEAT/0580/06Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MS D BEATTIEAPPELLANTAGE CONCERNRESPONDENT
Before
Mr Justice LangstaffDate 8 February 2007
[1]APPEARANCES For the Appellant MS LISA VAUGHAN (Of Counsel) Instructed by: Messrs Mincoffs 4-6 Osborne Road Jesmond Newcastle NE2 2AA For the Respondent MS NAOMI CUNNINGHAM (Of Counsel) Instructed by: Messrs Short Richardson & Forth Solicitors 4 Mosley Street Newcastle upon Tyne NE1 1DE SUMMARY CONTRACT OF EMPLOYMENT Sick Pay and Holiday Pay ET were asked to determine what "pay" meant in the context of the Employers' Sick Pay Scheme. It did so by reference to what it considered were normal hours of work as provided by the contract. Contract provided for minimum of 15 hours paid weekly work "but could be more": C never worked less than 30 for 10 years. Held: ET not entitled to say "pay" meant "15 hours pay per week". THE HONOURABLE MR JUSTICE LANGSTAFF This Appeal from a Chairman Mr Johnson (sitting alone) in the Employment Tribunal at Newcastle delivered on 29 August 2006 raises the issue as to the meaning of a week's pay within the context of the contract between the parties. The basic facts upon which the claim depended are as follows. It may be that at times these basic facts have been lost sight of.[2]The Claimant went off sick on 28 September 2005 from her work for the Respondent as a care worker. She was entitled under her contract of employment to sick pay. The Sickness Payment Scheme as set out in the contractual documentation provides only the bare bones of the entitlement. It provides that for those in their fifth year of service, and I take it thereafter, there will be six months full pay followed by six months half pay.[3]The question that came before the Tribunal raised by the Claimant was whether the sum to which she was entitled during the period that she was absent from work from 28 September 2005 onward until ultimately she left employment should be calculated upon the basis of full pay being at a rate commensurate with 15 hours per week as the employer claimed or a greater number of hours per week as she claimed.[4]This necessarily requires one to examine the contract to which I shall turn after reviewing the way in which the matter was presented to and dealt with by the Tribunal.[5]Prior to the Tribunal the parties agreed in writing what the issues should be. Those were:(1) Is the legal relationship between the parties governed by the terms and conditions set out in the bundle at 234 issued 1 May 1997 and acknowledged for June 1998 (the Terms and Conditions)?(2) What is the meaning of Section 4 of the Terms and Conditions?(3) Have the Terms and Conditions been varied?(4) If yes how?(5) What is the effect of reimbursing the Claimant for the wages during her period of suspension on the basis of an average working week of thirty-three hours?(6) Do provisions in the Working Time Regulations for the calculation of holiday pay have any applicability in the present case?(7) What is the effect of all previous periods of sickness absence being paid on the basis of a 15 hour week?[6]Although the parties agreed that those were the issues the Chairman in his decision said at paragraph 15 that:
"15 The issue in this case is whether the respondent was obliged to calculate a week's pay for sick pay purposes to take into account the claimant's average weekly pay prior to her suspension in accordance with section 221(3), (that is a reference to that section of the Employment Rights Act 1996 which deals with the calculation of a week's pay for the purposes of various statutory entitlements under that Act) or whether the respondent was obliged only to base its calculation on the 15 hour minimum as referred to in the claimant's contract of employment."
It will immediately be obvious that that the question the Chairman posed himself was not an issue as determined by the parties and that neither addressed in terms what it is accepted by the Respondent in argument was the reality here of the claim, which is the meaning that should be given to the words "full pay and half pay" within the context of the Sickness Payment Scheme to which I have already referred.[7]What the Tribunal found, again dealing with the matter in summary, is that the Claimant had consistently worked more than 15 hours per week. For most weeks she would work more than thirty hours. The hours normally worked before January 2005 were such that 34.875 hours per week was the average over the twelve weeks prior to that date. That was typical. She was then suspended for reasons which are not directly relevant to the present claim, upon which suspension she remained before returning to work in September 2005 three weeks before the extended period of sick absence to which her sick pay claim relates.[8]It is common ground that if her claim to entitlement to sick pay is well founded she is entitled to raise a claim in respect of that under the provisions of Section 13 of the Employment Rights Act 1996, for it would represent sums payable to her which have not been paid. The claim therefore depends on what is "payable" under the contract.[9]For the Appellant, Miss Vaughan who appeared below argues that the Chairman's determination, which was that the Respondent was correct in calculating the Claimant's sick pay entitlement on a normal working week of 15 hours, was wrong in law in two respects. First, it misinterpreted the contract. Second, it was perverse. She placed emphasis upon the fact that the Tribunal found that from the very beginning of her work in 1996 for the Respondent the Appellant had worked over thirty hours per week, thus for ten years. Indeed the Tribunal had so found. It was make a nonsense, she submitted, to regard her normal working week as having been one of 15 hours, since that was belied by the facts.[10]The approach which the Chairman took to the interpretation of the contract took account of the case of Investors Compensation Scheme Ltd v West Bromwich Building Society and Others [1998] 1 All ER 98 in which Lord Hoffmann set out his classic summary of the principles to be applied to determine the meaning of a contract. In particular I note the first principle:
"(1) Interpretation is the ascertainment of the meaning which document could convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract. (2) The background was famously referred to by Lord Wilberforce as the 'matrix of fact', but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man."
[11]Approaching the matter in that way and posing the issues as he did the Chairman found as facts that the Claimant had worked consistently more than 15 hours per week since the start of her employment. He found that those hours were not exactly the same every week and although there was a basic regular routine and pattern to them there were obviously times when the Claimant's hours would increase or reduce due to the demands of the elderly people being looked after by the Respondent.[12]He approached the starting point as being that of the contract of employment. It is material to set out the next three paragraphs in full:
"18 …. in particular pages 7 and 9. These provide that there was a guaranteed minimum of 15 hours. The normal working week is 15 hours but the normal working hours are "as agreed". "
As agreed" means between the claimant and the Home Services Manager. The respondent conceded that this would include Elaine Cutts, (the Care at Home Organiser). Elaine Cutts at page 77 clearly believed the claimant was contractually bound to work alternative weekends. This is not mentioned in the claimant's contract. Susan Pearson at page 85 believed the claimant could not refuse work allocated to her. This is not mentioned in the claimant's contract. Susan Ross at page 36 believed the claimant was obliged to undertake the additional work on Christmas day 2004. This is not mentioned in the claimant's contract as the claimant has already worked 15 hours that week. 19 These factors all point towards an acceptance by the respondent that the claimant was obliged to work more than 15 hours each week. However, the claimant clearly did not accept that obligation as she chose to refuse to work the extra hours on Christmas day; she chose not to work every weekend and she did not accept some work which had been allocated to her. 20 The inference from this was that there was no binding contractual obligation on the respondent to offer the claimant more than 15 hours work and no binding contractual obligation on the claimant to accept more than 15 hours work. Regardless of the circumstances in which the claimant found herself working less hours after her suspension it was for the claimant and the respondent to agree the claimant's hours above the guaranteed minimum of 15 as and when required. That is what the contract says." And at 22:
"22 The contractual normal working week was, therefore, 15 hours, even if the hours normally worked by the claimant had over time become more than 30. There was no contractual variation whether express or implied by conduct."
It was on the basis of that view of the contract that the Chairman determined the issue that he had posed to himself as he did. The Contract[13]A contract must be construed as a whole. This principle is not one of those specifically identified by Lord Hoffmann but it is trite. The contractual document which there was leaves unanswered a number of questions which one might normally expect to see answered in a more comprehensively drafted contract. The context is however that of a contract in standard form for the employment of an individual who is going to work for old people in their homes. As it is said in the job description and person specification identifying the post of that of "Home Care Worker, Night and Weekends Service" the (new) post is one of 15 created by the awarding of a two year contract for home care services at night and weekends to Age Concern Newcastle Upon Tyne by the Social Services Department. The post holder is required to work at night, weekends and bank holidays to meet the needs of the service. Under the heading of "Main Duties" are included the duty to receive instructions from the Home Services Manager on the duties and responsibilities to be carried out in each case allocated to the employee. There is no specific reference to the work plan or work pattern being by allocation of cases. But that this is so is plain when one considers the first specific responsibility identified in the same contract, which is to perform tasks which might normally be carried out by a caring relative. It is therefore apparent that the intention of the contract is to provide for a care worker to have the case of an old person allocated to him or her, and to be assigned to that elderly person to provide services upon a regular basis. This has all the advantages of continuity and relationship which a caring relative might be expected to show. The nature of the task and its identification, together with the further specific responsibility mentioned at the bottom of the same page to do any other duties as might be reasonably requested, indicates that inevitably the demands of a particular post might fluctuate although they would fluctuate in particular in accord with the number of cases allocated to the employee concerned. It is also plain that the allocation of cases would be made by the employer.[14]In the heading "Summary of Terms and Conditions of Employment", which appears to be a document intended to comply with the statutory requirement to produce such a statement of Terms and Conditions, the salary is set out at £4.51 per hour plus mileage allowance. There is no salary as such. There is no weekly wage. This is an hourly paid contract. Hours of work are "a guaranteed minimum of 15 hours per week, hours flexible to be agreed but will primarily involve weekend, evening and Bank Holiday work". This leaves open the question of what the "Hours of Work" will actually be. If this clause were looked at on its own what is set out is a minimum. In effect it provides that there will be a minimum payment made in order to maintain the employment of the Claimant with the Respondent. It does not say how many hours will normally be expected to be worked in order to fulfil the job duties and specific responsibilities to which the contract makes reference.[15]The Chairman interpreted the next phrase as meaning that the 15 hours might be flexible and agreed with somebody in authority in the Respondent's service. I do not agree. It seems to me that the natural meaning which that would convey to an employee and employer in the position in which they were at the time of entering the contract is as Miss Cunningham for the Respondent contends. The first question in respect of hours is how many per week. The next question is when are those hours to be worked? That is, at what time of the day or night? Is it a nine to five job etc? That the second sentence under "Hours of Work" in this summary relates to the latter and not the former seems to be clear because of the reference to "primarily involving weekend, evening and Bank Holiday work." This does not deal with "how many?" hours but rather when those hours are to be worked.[16]At Section 4 of the contract, this being the contract itself that was apparently entered into at the same time in 1997 and 1998 as the Statement of Terms and Conditions were issued, there is a section headed "Hours of Work and Working Base". Under the heading "Hours of Work" is said:
"Your normal working week is 15 hours, but could be significantly more. Your normal working hours are as agreed between you and the Home Services Manager."
This provision has on the face of it to be read hand in hand with the way in which the same matters are expressed in the Statement of Terms and Conditions. It, too, seems to me to show the same division between the Hours of Work in terms of number and the Hours of Work in terms of the times at which those hours will be worked. It must be emphasised as to the first that the provision is not for a normal working week of 15 hours. Consistent with the expression "minimum" in the statement it goes on to say it could be significantly more. It gives no help as to how that additional period of time to constitute a normal working week is to be calculated. As a matter of grammar what could be significantly more is the number of hours which comes within the description of normal working week. It does leave it entirely open as to what the normal working week will be.[17]I do not however think that one can approach it entirely like that. Here there was a contract which as I read it was ensuring a minimum guaranteed payment to the Claimant in respect of which she could be obliged by her employer to work at least those hours. The normal working week could well be more than that. The normal working week (if anything turns upon the expression "normal working week") seems to me to be a matter of fact - that is, what was agreed from time to time by the parties. The only way in which "significantly more" could be given any substance would be if it were envisaged by the parties that the Claimant would be allocated a number of cases which would involve her necessarily working regularly more than 15 hours indeed has happened. I cannot accept the Chairman's approach that the wording of the contract provides for a working week of 15 hours because it seems to me that does not take into account the expressed wording of the contract in the five words which qualify the 15 hours provision, and are no doubt responsible for the use of the word "minimum" in the Statement of Terms and Conditions.[18]One asks therefore what it is that the parties might have intended the normal working week to be within this contract. Here the approach which Lord Hoffmann took in his speech in Carmichael v National Power Plc [1999] ICR 1226 is of assistance. Although it seems to me that from first principles of construction the contract envisaged a process by which the employer would request the employee to work hours over and above 15 hours if the service required it, and that those hours that might well become normal (because there is no other way to give scope and force to the additional words I have identified) this is not to take a view which contradicts the contractual provisions. It is to recognise that the contract provides for its amplification in this particular respect rather than the more formal process suggested in argument before me such as "variation". Lord Hoffmann was concerned with a case in which there had been sparse documentation, as a result of which the two Respondents before the House of Lords had accepted engagement as guides to a power station. They had succeeded before the Court of Appeal upon the basis that as a matter of law those letters, brief though they were, were the only material to which the Court could have regard in deciding what the terms of the contract were.[19]At 1233B Lord Hoffmann said this:
"…I think that the Court of Appeal pushed the rule about the construction of documents too far. It applies in cases in which the parties intend all the terms of their contract (apart from any implied by law) to be contained in a document or documents. On the other hand, it does not apply when the intention of the parties objectively ascertained, has to be gathered partly from documents but also from oral exchanges and conduct. In the latter case, the terms of the contract are a question of fact. And of course the question of whether the parties intended a document or documents to be the exclusive record of the terms of their agreement is also a question of fact."
He then illustrated that by referring to the old case of Moore v Garwood in which in particular Pollock C.B. had directed a jury that the nature of a contract into which the parties had entered was rather a question of fact than of law, because it did not consist of one distinct contract between the parties but of a series of acts and things done from which the jury were to determine what was the real intention and meaning of the parties when they entered into the mutual relationship in which they stood. On appeal it was said that that could not have been put in better terms. Applying that approach to the case before him Lord Hoffmann concluded (1234C-D) that:
"…. it was open to the industrial tribunal to find, as a fact, that the parties did not intend the letters to be the sole record of their agreement but intended that it should be contained partly in the letters, partly in oral exchanges at the interviews or elsewhere and partly left to evolve by conduct as time went on. This would not be untypical of agreements by which people are engaged to do work, whether as employees or otherwise."
He held the Tribunal were entitled to take that approach. If that approach can be taken where a contract is silent and does not in its terms envisage oral exchanges which are later to take place as having effect on their relationship then all the more is it appropriate where a contract expressly envisages that there will be some such process. It is open to a Tribunal to take into account what has happened since the contract has been entered into as amplifying the relationship of the parties, or, as it has been put in other cases, enabling a court to derive what the terms of the contract are to be taken as being from the way in which the parties behaved towards each other.[20]In this case, as I have indicated, the words of Section 4 of the Terms and Conditions envisaged such further discussions or relationship. They envisage a process in which the normal hours of work in a week will be identified and may well be more than the 15 hours period for which there is a minimum payment guarantee.. I turn again to the Sick Pay Scheme. There is no detailed provision as to how it is to operate. It is part of a common form agreement. It will therefore operate just as much for those whose normal hours of weekly work are 15 as it will for those whose normal hours of weekly work were by later agreement or arrangement 30 or 40. It is not conceivable, it seems to me, that the expression "Pay" relates to the minimum guarantee rather than the hours actually worked. That would not, it seems to me, be within the contemplation of parties to a contract such as this. The purpose generally understood of a Sickness Payment Scheme is to benefit the employee by enabling him to have a continuation of the money upon the basis on which his liabilities have been contracted and upon which his economic life depends. On the employer's part it ensures that at the conclusion of the period of sickness the employee is obliged and probably willing to return and will not have suffered such deprivation in the meantime as to disable him from so doing.[21]It is natural in my view for "Pay" to be read as a continuation of that "Pay" which has been received thus far. I did not understand Miss Cunningham in her submissions to dissent from that general view of the purposes of a Sick Pay Scheme, although she wished to emphasise that in the context of this particular contract one should regard the 15 hours as being a guarantee, and that since it was the only provision to which one could point which mentioned a specific number of hours, and represented a minimum standard which the contract itself had envisaged as sufficient guarantee in normal life for the employee, it should relate to that. Although her submission has force I do not think that it is the correct way in which to read this particular Sick Pay Scheme in the context of a contract which envisages a wide range of possible working hours and patterns.[22]The Tribunal, in approaching the question of whether the behaviour of the parties after the contract had been made enabled it to decide whether there had been any contractual obligation which provided for the payment of a normal week's pay at a rate in excess of 15 hours such as at the rate of 34.875 hours per week for which the Claimant contended, looked at the evidence which the witnesses called by the Respondent and the Claimant had given, as I have already recited. The conclusion which the Chairman drew at paragraph 20 was that the fact that the employer thought that the employee was obligated to work the additional hours beyond 15 which he had habitually been working, set against what he regarded as the Claimant's behaviour showing that she did not regard herself subject to that obligation, meant that there was no binding contractual obligation upon the Respondent to offer the Claimant more than 15 hours work and no binding obligation upon the Claimant to accept more than 15 hours work. Thus effectively, on the burden of proof, the Claimant had not shown any variation beyond the strict terms of the contract.[23]That was how he came to a conclusion, which might otherwise seem surprising, that the normal working week was 15 hours even although the Claimant normally worked nearly 35. The word "contractual" of course appears before the words "normal working week" in his conclusion. If I am right as to the approach to be taken to sick pay under the Sick Pay provisions within the contract then it is difficult to understand why pay should depend upon a guaranteed contractual minimum rather than on the hours actually being worked, but this may well depend upon the way in which the matter was argued before the Tribunal. However, it does seem to me that the reasoning which the Chairman adopted is faulty.[24]Having concluded that although the Respondent favoured a contractual obligation to work more hours that of the Claimant denied it, the inference the Chairman drew was that there was no binding contractual obligation to offer the Claimant more than 15 hours work. However, what he appears to have ignored in this was the fact that that was what had actually been happening. This can only have been by agreement between the parties. An employer controls his employee. That is an essential aspect of a contract of employment. It is for the employer to provide work if he will, and if so to pay for it. It is inconceivable that the Claimant could have worked for any of the old ladies or men to whom she was assigned other than by agreement with the Respondent. In short, each and every week that she worked there must have been an agreement that she would work more than the 15 hours per week in that particular week. I do not see this as varying the guarantee, but I do see the question of normal working weeks as being a question of fact as to what was normal as opposed to that which was contractual, as to which as I indicate there was a range. I do not see how one can infer, therefore, from what the Chairman said that the obligation should be to offer no more than 15 hours work rather than no more than 20 or no more than the 30 which he had found in fact to be worked, and as I have indicated which could only have been worked by agreement. The Respondent through Miss Cunningham submitted that there was here a set of issues which explain why the Chairman resolved the matter as he did. The agreement made between the parties was as to that which the Chairman had to determine. He was not asked what was the meaning of the contract but rather the questions which I have already identified. It is apparent that the relevant questions are those at 2, 3 and 4 in that issues list but they needed to be related to what was actually in dispute in the case. When the Chairman posed the issue to himself at paragraph 15 it may well have been that he did so because of the way in which the matter was advanced to him then by the parties. I have already noted that he took a different approach from that in the issues list. He posed himself a choice of only one of two possibilities. Since Section 221(3) is irrelevant to this case, relating as it does to statutory rights, there was only effectively one way he could legally answer the question he had posed that was that to base his decision on the 15 hour minimum. In short, the issue which he grappled with was not formulated in the way in which it has been presented to me on appeal.[25]Miss Cunningham was entitled to take her stand on the case of Kumchyk and Derby City Council [1978] ICR 1116 EAT. It is well known that Tribunals and Tribunals on Appeal can deal and deal only with issues put before them for determination. The Tribunal on Appeal is to be restricted to the points taken and argued below except where the law is obvious. It seems to me this complaint by Miss Cunningham has some force. However, having posed the issue as he did to himself at paragraph 15 it is difficult to see quite how the discussion which proceeds then follows from the way in which the Chairman put those issues. It does not reflect those issues nor the issues agreed by the parties in advance. In his decision the Chairman was effectively examining the relationship between the Appellant's main argument (that it could not be right that there was no obligation to work 30 hours per week because she always had done so) and the contractual documentation, which did not refer to any particular period of hours except for 15. I have therefore come to the conclusion that the arguments which have been addressed to me on appeal have been in essence the same as those which had been in discussion before the Tribunal and I do not therefore think that this case can be resolved by the application of the Kumchyk principle. The way in which the matter was dealt with below however may perhaps explain some of the aspects of the way in which the Chairman approached his decision. Conclusions[26]In conclusion, the contract seen in context envisaged that the guaranteed paid minimum hours of work within a week would be 15, but that hours actually worked would normally be those which arose by arrangement between the parties. It is true that no set figure was identified by the contract as Miss Cunningham submits. It would vary from time to time. That inevitably gives problems in assessing what pay should be. If however the expectation of someone going off sick is that the reference in the Sick Pay Scheme to, in this case, six months full pay followed by six months half pay is a reference to the pay which he or she would otherwise have expected to receive (if fit) during the period of sickness, it must naturally bear a relationship to the pay being received before the period of sickness begins. Although there may be difficulties and arguments over computation the principle, it seems to me, is clear, such that the fact that 15 is the only figure mentioned in the contract does not deny the result to which I come by contractual interpretation. Nor, given the approach I have identified, is it necessary for there to be a formal written variation or expressly agreed variation as such of the contract, since it is plain that agreement as to hours from time to time must have been and was reached between the parties. Therefore this appeal, it seems to me, must succeed. I shall hear Counsel as to the appropriate order that this Tribunal should make.