MR J PARKER v NORTHUMBRIAN WATER LTD [2008] UKEAT 0609_07_2205

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2008] UKEAT 0609_07_2205Case No Appeal No. UKEAT/0609/07Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR J PARKERAPPELLANTNORTHUMBRIAN WATER LTDRESPONDENT
Before
Mr Justice EliasDate 22 May 2008
[1]APPEARANCES For the Appellant The Appellant In Person For the Respondent MR PETER EDWARDS (of Counsel) Instructed by: Messrs DLA Piper UK LLP Solicitors 101 Barbirolli Square MANCHESTER M2 3DL SUMMARY Contract of employment Written particulars Implied term/variation/construction of term The claimant sought to establish the terms of his contract. He claimed that the company was operating a banked hours system which it was not entitled to pursue, and that he was being paid in breach of his contractual rights. The Employment Tribunal rejected his claims and the EAT held that they were entitled to do so. THE HONOURABLE MR JUSTICE ELIAS (PRESIDENT) Mr Parker is an engineer, who is employed by Northumbrian Water Ltd. He brought proceedings claiming unlawful deduction from wages, and also sought a declaration of the terms and conditions of his employment in respect of hours of work and remuneration. The unlawful deductions claim related to a period at Christmas 2005.[2]It was initially difficult to identify the important issues in the case. There was apparently a three hour case management discussion before Regional Employment Judge Gay at which the following three questions were identified as encapsulating the issues between the parties:
"(i) If the Claimant is booked to work a day (which could be a field day, a weekend day or a bank holiday) and that day's work is then cancelled and his hours not worked on that day are "banked" by the Respondent, is the Claimant entitled to overtime rates when he works the banked hours on what would otherwise be a rest day? (ii) Is the Claimant entitled to be paid double pay for Sundays and on Saturdays at 1.5 times the ordinary rate, as set out in the Handbook to which his contract dated 4 November 2004 makes reference? (iii) Can the Respondent take or deduct holiday from the Claimant's holiday allowance (now some 25 days a year plus bank holidays or a day off in lieu if a bank holiday is worked) if the Respondent has cancelled work from the Claimant's roster and then does not require him to work the extra banked hours?"
[3]In fact, between the case management discussion and the hearing the employers conceded with regard to question three that they could not take or deduct holiday from the claimant's allowance if they cancelled the claimant from working in accordance with his roster. Accordingly, the Tribunal had to focus on the other two questions.[4]As Mr Edwards, counsel for the respondent employers, observed, question 2 really raises two issues. The first is whether the claimant is entitled to this higher pay for the period when he is working normal hours; and the second is whether he is entitled to this higher pay when he is working overtime hours i.e. hours which are worked in addition to the hours specified in the rota, and not in place of them. We will call those questions 2(a) and 2(b) respectively.[5]In the hearing before us - but more particularly in his skeleton argument - Mr Parker sought to introduce fresh matters not pursued before the Tribunal and which would have involved making findings of fact. We have explained to him that we cannot allow such matters to be pursued now. We are focusing merely on the issues as they were argued and determined before the Tribunal. The findings of fact.[6]The claimant started working for the employers on 19 July 2004. Initially it seems that he signed a Statement of Particulars prior to his engagement. This was, however, replaced by a further Statement signed on 4 November 2004. The document was entitled "Northumbrian Water Ltd. Statement of the terms and conditions of employment: John Parker" and he signed the last page of the statement which was as follows:
"I have read and understood the foregoing statement and I accept the terms and conditions of employment stated in it."
[7]We set out provisions which we consider to be potentially material to this case, some –but not all - of which were expressly identified by the Tribunal: "Clause 2: "Your employment conditions are in accordance with the manual – Essex & Suffolk Water, Terms and Conditions of Employment which forms part of your contract of Employment. An updated copy of this Employment Conditions Manual is available for reference purposes from your manager. In the event of any discrepancy between the Manual and this Statement, the terms of this Statement will prevail." Clause 5.2: "You will be required to work such reasonable hours of overtime as the Company deems necessary for the proper performance of your duties or if the needs of the Business so dictate (including to cover sickness and other absence of members of the Team). However overtime opportunities are not guaranteed by the Company. You will be allowed to take compensatory rest, as appropriate in accordance with the Working Time Regulations. The shift rota incorporates the use of a banked hours system. Hours of work will be in accordance with a 4 days on/2 days off shift pattern (possibly with local modifications) repeating over a 28 week cycle. Core shift times are 6am – 2pm, 2pm – 10pm, and 10pm – 6am, and a field shift will be normally 8am – 4pm. Field shifts may be used to provide cover for absent colleagues, or to carry out other duties as agreed. You will also be required for emergency, urgent or essential reasons to participate in the Company's call-out arrangements on the terms and conditions set out in the Employment Conditions Manual. When requested to attend work at less than 24 hours notice, a call-out payment will be paid. The Company reserves the right to review the necessity for you to work call-out and to review/change the terms and conditions relating to the Scheme from time to time subject to one month's notice." Clause 5.3: "The Company reserves the right after consultation and subject to reasonable notice, to make reasonable alterations to your working hours, including without limitation altering the length of and start and finishing times of any shift (on either a temporary or long term basis) to meet the Company's operational requirements. Such changes may include reviewing and amending the operation of the shift system and the use of the banked hours system ." " We note in passing that the Tribunal placed significant emphasis on this clause and in particular the italicised words.[8]Certain relevant provisions are then found in the Employment Conditions Manual. Section 5 is entitled "Overtime and Shift Working".

(i) is headed 'Payment for Overtime' and provides :

"(i) Payment for overtime shall not be made until the normal hours of work of the employee have been worked or have been accounted for by sickness or approved leave ….."
Clause 3 is headed "Hours paid at time and a half" states :
"All hours from normal finishing time (or locally agreed start/finish time) to midnight, Monday to Friday. ….. Saturday all day from normal start time to midnight …."
Clause 4 is headed "Hours paid at double time":
"All hours worked on Bank Holidays (in addition to the days normal pay and a half/full day off in lieu). All hours worked on Sunday…….."
Clause 12 deals with "Shift Working".

(a) (iii) and 12(a)(iv) provide:

"A rest day is a period of 24 hours which is designated by the employer as a rest day within an employee's normal shift cycle, on which a shift worker is not required to work. Shift arrangements will be set out within the individual's Statement of terms and Conditions of Employment."
Clause 12(c)(iii) and 12(c)(iv) provide: Clause 12(c) "Shift working on public holidays":
"In addition to the compensation provided for in paragraph 2 to 4 above time off shall be allowed for shift work carried out on a public holiday.

(d) "

Shift Working on a Rest Day A Shiftworker shall be paid double time as currently agreed locally for all rest days (Monday to Sunday). Extended shift working will be paid at the rate of time and a half." Finally, by Appendix 8, the Manual sets out the Constitution for the Staff Council whose purpose is stated to be:
"to provide a forum within which union and non-union employees can work in partnership with managers to discuss and resolve matters of common interest."
[9]With respect to the Tribunal, we have not found the structure of the decision very easy to follow. In an effort to clarify and explain the decision, and indeed the issues between the parties, we add some commentary and deal with matters in a different order to the way in which the Tribunal did.[10]The first issue which the Tribunal had to resolve was whether the signed statement of particulars constituted terms of the contract. As is clear from the extracts reproduced above, the statement refers in terms to the system of banked hours. The claimant was seeking to deny that he had ever agreed to any banked hours system at all. He said that the principle of banked hours had only been introduced with effect from October 2004 and then had been unilaterally imposed on a temporary twelve month trial basis only. In addition, there was an important issue whether clause 5 of the statement conferred an effective power to vary the system in the way relied upon by the employer. It could only do so if the document properly reflected the terms of the contract.[11]The Tribunal rejected the claimant's contention that the statement had no contractual effect. They were satisfied that he had in terms agreed that the statement reflected the terms of the contract and there was no justification in denying effect to the banked hours system. The Tribunal did recognise, however, that they had to hear further evidence to analyse precisely how that system worked.[12]They heard evidence about that from the production manager, Mr Aland. They described the position as follows:
"…He explained that if a worker's roster was cut short (ie a day removed) the Respondent could "bank" those hours. The day that was not worked became an ordinary rest day. The day's work that was not worked but banked could then be inserted by the Respondent into any rest day, which would then become an ordinary working day paid at flat rate. We accept Mr Aland's evidence which was not effectively challenged in cross-examination. On the basis of his evidence and the reference to this system of banking hours in the original contract terms and conditions we find that the Claimant's employment was subject to this arrangement."
[13]This effectively determined the answer to the first question. Once it is accepted that there is in place a system of banking hours which has the effect of converting a working day into a rest day and a rest day into a working day, then the payments must be simply those which would be paid for a normal working day, even although the work has been transferred to a rest day. (Question 2(a) covers the question what the payment should be.)[14]The exception to that is found in clause 12(c) which expressly provides for time off in lieu (or double time) shall be allowed for shift work carried out on a public holiday. this means even when it is part of the standard shift. Hence the qualification to the answer given in question one.[15]The Tribunal then focused on the second question, first dealing with 2(a) i.e. whether any overtime pay was payable on a normal shift. Although the Tribunal has only somewhat cryptically spelt out the conflicting arguments, they appear to have been as follows. The claimant was stating that clause 3 of the manual provided for time and a half for all work performed on a Saturday. Similarly clause 4 provided that it should be double time for all time worked on a Sunday. This is so whether the work being performed is overtime or ordinary time. These provisions were clear and should be applied in terms. The employers stated that on a proper reading of the section (which is headed "overtime payments and shift working") and in particular the terms of clause 2(i), it was plain that these higher rates were only for overtime. They were not for normal hours of work which fell on those days. The Tribunal accepted that submission:
"It is also clear (from the 4 November 2004 Statement and Employment Conditions Manual) that the Claimant was entitled to be paid double pay for all rest days worked (Monday to Sunday) [see clause 12(d)]. The Claimant's case is that he was also entitled to overtime if shift work fell on a Saturday (at time and a half) or on a Sunday (double time) [see clauses 3 and 4 of the Employment Conditions Manual]. We do not accept that proposition. In our judgment the shift worker whose rostered duties fell on a Saturday or Sunday was paid at the flat rate. But (to balance that disadvantage) if the shift worker was required to work outside his rostered days (whichever day of the week that was), he was entitled to be paid double time (clause 12(d) of the Manual)."
It is right to say that it is a necessary part of this reasoning that the banking system is part of the contract, and also that the effect of banking hours is to treat the day when the worker is required to work in place of his original rostered day as a normal working day. Once these two premises are accepted the analysis of the Tribunal appears to us to be unimpeachable.[16]The final issue was what the rate should be when the employee worked a rest day as overtime i.e not as part of the banking system when it became part of the working day. Under the rules in the manual, double pay would have been due for all days worked Monday to Sunday. This was the result of clause 12(d) as the Tribunal observed in the extract reproduced in the last paragraph.[17]However the issue then was whether that clause had been altered by the parties after the contract had been entered into. The Tribunal noted that there had been discussions in the Joint Business Negotiation Committee about changes to the shift system, and especially the banking system. The JBNC was set up following an extension of union recognition into the area of collective bargaining in 2005. The JBNC replaced the original Staff Council as the forum for collective consultation. The JBNC conducted a harmonisation exercise designed to bring about common terms and conditions with respect to a number of businesses which had been transferred to the employers. The Tribunal identified the nature of the proposal and its outcome as follows (paras 24-25):
"…One of the harmonisation proposals which was put to ballot was that the Claimant (and his shift worker colleagues in the southern sector) should lose the benefit of being paid double time when required to work a rest day (ie any day of the week), and in place they would not be entitled to any overtime on rest days except on Sundays (and Bank Holidays) when double time would continue to be paid (see p114 trial bundle). In consideration of this unfavourable change, the Claimant and his colleagues would be paid an increased basic wage. The proposal (with others) was put to ballot. Less than half the work force (not just shift workers) voted in the ballot) and the proposals were carried by a bare majority of those who voted. We have to decide whether that procedure (to which the Claimant takes exception, and took exception immediately) has resulted in a change of the Claimant's contractual terms and conditions which is binding upon him."
[18]This was then implemented by the employers and it is not disputed that the claimant was worse off financially as a result of these new arrangements. An issue arose as to whether there had been proper consultation about these proposals. The Tribunal found that there had. Moreover, that the claimant's own union, the GMB, were main players in the JBNC negotiations. The Tribunal summarised its decision as follows (para 28):
"The Respondent conducted extensive consultation with shift workers who made their grievances (to the proposals) well-known (eg see "
Shift Grievance" 12 May 2005). The Claimant's own Union the GMB were main players in the JBNC negotiations. We find that there was consultation over a prolonged period of time, further consideration by the JBNC, and an opportunity to ballot on the proposals. In our judgment there was no other fair way of harmonising the terms and conditions of employees from different sectors. We cannot see how large corporate organisations can deal otherwise with a changing work environment and with an expanding work force following takeovers or amalgamations. If the law prevented the sort of incremental changes to terms and conditions following an exercise of consultation, joint negotiating and balloting as carried out in this case, enterprise would be curtailed. In our judgment the exercise carried out by the respondent (with the agreement of the Trade Unions, including the GMB, the Claimant's own Union, and a majority of balloted workers) was not in breach of the implied term of trust and confidence, and it did result in a lawful change to the Claimant's terms and conditions of employment. Thus (and since 1 July 2005 the day when the change was put into effect, post-ballot) the Claimant has been entitled to double time for working on a rest day only if the rest day is a Sunday or a Bank Holiday, and he has received a modestly enhanced rate of basic pay in return for the change."[19]We observe that in this paragraph the Tribunal do not appear to have made any express finding that the term agreed in the collective negotiations had been specifically incorporated into the contract, either as a result of an express term to the effect, or custom and practice. The Tribunal did note that these were ways in which such terms could have contractual effect (see para 27). Mr Edwards, counsel for the company, submits that the only reason why they did not do so was because the point had been conceded and was not in issue. We return to this issue below.[20]The Tribunal therefore rejected the contention that the amendment to these terms and conditions made as it was, following consultation, negotiation and balloting, involved a breach of the implied term of trust and confidence. Moreover, they concluded that it did effect a lawful change to the claimant's terms and conditions of employment. The conclusion was therefore that the claimant was only entitled to double time for working on a rest day if the rest day is a Sunday or a Bank Holiday, and for time and a half if it is a Saturday.[21]In the light this analysis, the Tribunal then summarised its conclusions on the two outstanding questions as follows (para 31, (i)-(ii)):
"Accordingly, and for the avoidance of doubt we declare (pursuant to sections 1-11 ERA 1996) that:- (i) If the Claimant is booked to work a day and then cancelled, so that his hours are banked by the Respondent he is not entitled to enhanced pay when he works the banked hours on what would otherwise be a rest day; with the provision (by concession made by the Respondent) that if banked hours are worked on a Bank Holiday the Claimant is entitled to double time for that day; (ii) The Claimant is not entitled to any overtime pay on normal shift rotas even if the day worked happens to be a Sunday or a Saturday; but if he is required to work overtime on a rest day which is also a Saturday he is entitled to time and a half; and if a Sunday or a Bank Holiday he is entitled to double time."
As we have said, the answer to the second question in fact identifies the two situations, first where the claimant is working a normal shift (which as the answer to question one makes clear includes a case where it is done as a consequence of working banked hours on what would otherwise be a rest day); and second, where he is working a rest day as overtime. The grounds of appeal.[22]We found it very difficult to identify precisely the nature of Mr Parker's complaints. We do not say that disrespectfully to a litigant in person who was doing his best to explain and present in legal form a number of overlapping areas of complaint. There is no doubt that he feels deeply aggrieved by what he considers is an unjustified unilateral change of his legal rights by his employers. Was the employee bound by the statement?[23]At the heart of his case is the claim that the system of banked hours was never properly accepted at all. He says that it was only ever intended to operate, at least initially, on a trial basis for one year and that thereafter it would not necessarily be continued. However, the attempt to make good his submission has caused him to deny that the agreement he signed on 4 November incorporated any principle of banked hours, and that the JBNC agreement was not binding upon him either.[24]The first ground asserts that the Tribunal were wrong in the way it analysed the status of the document which was signed on 4 November. Mr Parker claimed that he never did sign acceptance that the terms accurately reflected his contract. He only accepted that the terms and conditions of the manual were binding. Moreover, he placed reliance upon the decision of the EAT (Brown Wilkinson P presiding) in Systems Floors (UK) Ltd v Daniel [1981] UKEAT/321/81. This is the well known decision in which the EAT emphasised the statutory statement of particulars of employment is not of itself a contract, although it will be strong prima facie evidence of what are the terms of the contract. He also emphasised that the document was headed a statement of terms and conditions.[25]We do not accept this argument. The Tribunal gave its explanation for not following Daniels : in this case the document specified that the employee had agreed that the terms and conditions stated therein represented the contractual terms, and that was not so in Daniels . The fact that the employer asserts that a statement of terms properly reflects the contractual terms is clearly not conclusive of the terms of the contract; the employee may disagree. However, where the employee in terms states that they do reflect the terms, which is what occurred here, it is plainly open to a tribunal to say that he means what he says. The fact that the document is called a "statement of terms" rather than a contract does not affect that analysis. Indeed, as Mr Parker accepted, he required certain changes to be made to the document before signing it. In our judgment there was ample evidence justifying the Tribunal treating the agreement as properly reflecting the agreed terms.[26]We appreciate that the claimant is saying that he thought that the banking hours had only been introduced on a temporary basis, and was not agreeing to their being adopted permanently. We do not doubt that this was his genuine belief. But we have no evidence to confirm that his understanding was correct. Perhaps more importantly, there was no such qualification in the terms of the contract itself. We have to ask whether the Tribunal arrived at a sustainable decision on the evidence before them. In our view they did. We cannot therefore conclude that the Tribunal erred in deciding that the banked system was part of the contract.[27]There were certain other grounds on which the validity of the contract was challenged, but it is not clear to us that any of them was advanced below. First, it is said that the document was falsified by the employer because the manager who signed the document predated her signature by two months. Second, and a related point, it is said that the new shift arrangements were already in place on the date it was signed. We do not entirely understand this argument. The statement represented what the terms of the contract were. It is no criticism to say that they are already in force. Moreover, it matters not when the agreement was signed by the employer; this did not have the effect of backdating the document or anything of that kind. The operation of the banked hours system.[28]The claimant also sought to challenge Mr Aland's description of how the banked hours operated. He says that he felt intimidated in cross-examining Mr Aland. But he still has not said why the description of the operation is wrong. In any event, the Tribunal accepted Mr Aland's evidence, and that was their prerogative. As they point out, this was not really disputed. Indeed, our impression is that the claimant's real grievance here is that the banked system is being used at all[29]Once the two findings were properly reached - namely that the banked hours were part of the contract, and that they were applied in the manner described by Mr Aland, then in our judgment the answers to question 1 and 2(a) necessarily followed from the operation of the contractual terms.[30]Mr Parker did run an argument that there were others in a similar position who were paid enhanced rates even for normal time i.e for banked hours worked on rest days. We heard no evidence about that. Even if this were true, there may be some plausible explanation for it. We readily recognise that if such different treatment is being meted out, it would offend any sense of fairness. However, we doubt whether it would affect the proper construction of the claimant's contract, and in any event we are not in a position to assess the factual basis of the claim.[31]We should also mention that Mr Edwards submitted that there was an independent basis on which the Tribunal's conclusion with respect to question 2(a) could be justified. He says that the answers given by the application of the contractual terms is made equally clear by the terms of the JBNC agreement. Mr Parker indeed confirmed that if that agreement was binding, then the answer given by the Tribunal was correct and in accordance with the agreement. He challenged whether the agreement was binding, and we turn to that issue. Was the collective agreement incorporated?[32]The JBNC agreement was not relied upon in answering question 1 or question 2(a). However, it is common ground that it is crucial in determining the answer to question 2(b) i.e whether there is an enhanced rate for overtime worked on rest days. It is only if the claimant's contract was changed by the agreement that the answer to question 2(b) can be sustained.[33]Much of the argument of the claimant has centred around the way on which collective agreements can be incorporated into the individual contract of employment. Mr Parker has submitted that there was no evidence here that there was any term in his contract to incorporate the terms of the JBNC. The agreements reached by the social forum were, he accepts, automatically incorporated as a result (we assume) of regular practice, but that principle was never formally extended to the outcome of this different bargaining process, and nor was there an express term in the contract to that effect. Indeed, he signed the statement before the JBNC was even thought of.[34]In our judgment the difficulty with arguing these points now is that it is clear from correspondence preceding the hearing, and indeed evidence given by the claimant at the hearing itself, that the claimant was accepting that had there been a properly agreed collective agreement between the unions and the employer representatives on the JBNC, he would have felt bound by that agreement. The employers reasonably construed his responses to mean that he was not disputing the principle that collectively agreed terms would be incorporated into the contract; rather, his complaint was that there was not a proper determination of the collective process. The rules for ensuring a proper agreement had not been complied with. The process itself was defective. Hence the reason, says Mr Edwards that the Tribunal did not focus on the incorporation issue as such at all. It was not live before the Tribunal.[35]We find explanation convincing, and indeed Mr Parker has confirmed before us that had the process been properly implemented, he would not have been appealing the Tribunal's decision to the EAT. He says that there never was any proper operative agreement in place.[36]His grounds for so asserting were really fourfold. In fairness to Mr Parker we will deal with each of them, although we are not sure whether they were advanced, or at least clearly advanced, before the Tribunal below.[37]First, he was very unhappy about the fact that the ballot had been of the whole of the employees. Only shift workers were adversely affected by these changes, and they alone ought to have been balloted about them. There were only some 25 shift workers and yet they were having their interests determined by colleagues who were differently affected - and some benefited - from the new arrangements.[38]Second, there was no proper representation on the JBNC of workers from the South. They felt inadequately represented by their union officials who were primarily concerned with the impact of the changes on workers from the North.[39]Third, in any event there was never any formally signed off agreement between the two parties, confirming and accepting the outcome of the ballot.[40]Finally, it was said that there could be no proper collective agreement in place because although the balloting had taken place in June, the formal confirmation of the new constitution setting up the JBNC had not been adopted until September.[41]We reject each of these grounds. As to the first two, they really involve criticisms of the fact that the unions accepted that this was an acceptable mechanism to adopt when determining whether or not the terms should be changed. Whether there would be any legal force in a claim against the unions, we rather doubt. But in any event, the question here is whether the employers were entitled to assume that the unions were adopting a procedure acceptable to their membership. The ballot was in fact a further step designed to protect the interests of the employees after the agreement had been reached. It was only if the proposed amendments were found to be acceptable to the workforce, as they were, that they were going to be implemented. We see no legitimate complaint against the employers based on these submissions.[42]The third and fourth grounds are directed at the process as between the parties. We all agree that there is nothing in these points. The lay members, with many years experience in the bargaining arena, confirm that in their view it would not normally be required to have a formal agreement confirming the outcome of the ballot, not at least in circumstances where the parties had put a single agreed proposal to the workforce. Similarly, they are well acquainted with a procedure where the collective parties act in advance of formal confirmation, in the confident expectation that such confirmation will be forthcoming. The lack of formality would not be understood by the parties to throw any doubt upon the agreements reached, at least not where the expected confirmation takes place.[43]It follows that in our view there was an effective agreement entered into which in turn caused a lawful variation of the terms and conditions of employment. As we have said, Mr Parker realistically accepted that if that were the case, then the answers to the question 2(b) posed by the Tribunal was accurate. It accurately reflects one of the terms set out in the collective agreement.[44]A further argument advanced was that the new agreement negotiated by the JBNC did not come into effect on 17 August 2005 when the letter was sent from the employers to the claimant. However, this argument appears to be based on the premise that he had not signed any document to state that he agreed the new overtime rates. The problem with that argument is that if the Tribunal was right that the effect of the process was automatically to bring about changes to his terms and conditions, then his specific consent was no longer necessary. It was enough that the collective parties had agreed the change and it had been confirmed in a ballot.[45]Finally, the claimant submitted that the new shift system was applied capriciously and arbitrarily, but there was no evidence in relation to that. In any event, it does not have a bearing on the issues which the Tribunal had to determine, and does not affect the answers given by the Tribunal. Disposal .[46]Accordingly, notwithstanding the courteous and careful arguments advanced by Mr Parker, we reject this appeal and uphold the findings of the Employment Tribunal.