Appeal No. EAT/1033/99

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 14 December 1999

Before
HIS HONOUR JUDGE PETER CLARK
MRS D M PALMER
MR G H WRIGHT MBE

GLENDALE INDUSTRIES LTD	APPELLANT

MR T J CUSACK & OTHERS	RESPONDENT

Transcript of Proceedings

PRELIMINARY HEARING

Revised

	APPEARANCES

For the Appellant	MR F TIZZANO 
(of Counsel)
Messrs Parker Arrenberg Dawson & Cobb Solicitors
77-79 Rushey Green
Catford
London
SE6 4AF	

HIS HONOUR JUDGE PETER CLARK

1.	The material facts are these.  The Applicants were employed by Manchester City Council, (the Council) on ground maintenance work.  That function was put out to competitive tender in February 1997 and Glendale were the successful tenders.  A relevant transfer took place for the purpose of the 1981 regulations, so an Employment Tribunal sitting at Manchester held in a decision dated 18th March 1999.  The Applicants continued working in the employment of Glendale, post transfer.  Each Applicant was employed by the Council under a contract of employment, which contained the following term

“During your employment your terms and conditions of employment will be in accordance with collective agreements negotiated from time to time by the National Joint Council for local government services as set out in the scheme of conditions of service (the Green Book) and also other variations that result from local collective agreements reached with recognised trade unions”

2.	In April 1998 Glendale refused to put into effect a 3% pay award agreed within the National Joint Council.  As a result the Applicants presented complaints to the Employment Tribunal in October 1998 complaining of unauthorised deductions from their wages.  The claim was resisted by Glendale on this basis.  Under the terms of the National Joint Council agreements the parties to those agreements being local authorities on one side and recognised Trade Unions on the other, the collective agreement applied only to local authority staff.  Since, following the transfer to Glendale, the Applicants were no longer local authority employees, the product of collective agreements reached as to wages through the National Joint Council negotiating machinery, could not apply to them.  Although Mr Tizzano accepts that the relevant clause in the individual contracts of employment remains in force following the transfer, he submitted it was of no effect because it applied only to wage agreements covering local authority employees.

3.	That argument was put before an Employment Tribunal sitting at Manchester on 25th June 1999.  It was rejected.  Directing themselves in accordance with the reasoning of the Employment Appeal Tribunal in Whent –v- Cartledge Ltd (Judge Hicks QC) (1997) IRLR 153, they held, in a decision promulgated with extended reasons on 14th July 1999, that the Applicants were contractually entitled to the annual determinations on wage rates reached through the National Joint Council machinery.  The Applicants’ complaints succeeded.

4.	Against that decision Glendale now appealed.  Mr Tizzano lodged a skeleton argument effectively repeating the submissions which he advanced before the Employment Tribunal.  We similarly reject those arguments.  It seems to us that the fallacy lies in equating the terms of the collective agreement between employers and unions with the term of the individual employees contracts of employment.  The focus here is on the individual contract.  The relevant term has been set out above.  It matters not, it seems to us, who is covered by the terms of the collective agreements or whether the new employer is a party to that collective agreement.  What matters is that the fruits of that collective bargaining procedure are directly incorporated into the contracts of employment of these individual employees.  Nor is this virgin territory.  We respectfully agree with the reasoning and conclusions of Judge Hicks in Whent; and we have drawn Mr Tizzano’s attention to an unreported decision of this Appeal Tribunal (Mr Justice Lindsay presiding), which was not put before the Employment Tribunal below.  It is the case of BET Catering Services Ltd –v- Ball and others, [EAT/637/96-28th November 1996].  

5.	That was a case concerning the contracting out of the school meal service by Richmond Council.  The Applicants in that case were cooks or dinner ladies.  Their terms and conditions of service, whilst in the employment of the Council, include as a side note, expressions such as “NJC for LA’s – manual workers”.  That cryptic note indicated that their terms and conditions as to pay in particular would be subject to agreement reached in the appropriate “NJC”.  To that extent the case is factually identical to the present case.  When the new employer, BET, declined to implement a pay increase determined by the NJC following the transfer, the Applicants, as in this case, brought complaints of unauthorised deductions from wages.  In resisting those claims it was argued on behalf of the transferee, BET, that the term in the contract prior to transfer, “NJC for LA’s – manual workers”, could no longer apply in circumstances where the Applicants had become private sector employees.  In rejecting that argument on appeal, Mr Justice Lindsay said this at page 14 of the transcript:

“Turning from the general to the more particular, we see no conceptual or legal difficulty in an employer agreeing (or being treated as if having agreed) a system under which he agrees to pay his own employees wages which are determined, directly or indirectly, by some third party or by a reference to the awards of the third parties purporting to be directed to categories other than his own employees.

And a little later he said:

“We have been unable to see any reason, either, why a private sector employer should not be able to bind himself or to be taken to have bound himself to pay public sector rates, nor any reason why Regulation 5(1) should not operate so as to have the effect that he had so bound himself.  Nor can we see any reason why National Joint Council rates should not be payable by BET simply because the rates are addressed to a category – public sector employees – within which, after the transfer, the Employees, of course, ceased to be included”.

6.	Mr Tizzano has realistically recognised that it is not possible for him to distinguish the facts of this case from the facts in BET.  The question then arises as to whether or not we are prepared to rule that an arguable point of law arises in this case and in effect to invite a further division of this Tribunal to reconsider the reasoning in BET and indeed Judge Hicks’ reasoning in Whent.  In the interests of comity we shall follow those two cases in the present case, but we should add that in the Judgment of all three of us, those cases were plainly and obviously correctly decided and free of authority we should have shared the view of this Employment Tribunal that the point advance on behalf of Glendale is unarguable.  In these circumstances we must dismiss this appeal.