Appeal No.	EAT/1255/98

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 5 July 1999

Before
THE HONOURABLE MR JUSTICE MORISON (P)
MR D A C LAMBERT
MR J C SHRIGLEY

MR A SPENCE & OTHERS	APPELLANTS

CITY OF SUNDERLAND COUNCIL	RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised  30 July 1999

	APPEARANCES

For the Appellants	MR S CROSS
(Solicitor)
Messrs Thompsons
Percy House
Percy Street
Newcastle Upon Tyne
NE1 4QW	
For the Respondents	MR P CAPE
(of Counsel)
Instructed By:
Miss E Waugh
Solicitor
City of Sunderland Council
Legal Services Dept
PO Box 100 
Civic Centre
Sunderland Tyne & Wear
SR2 7DN

	MR JUSTICE MORISON:	This is an appeal against the unanimous decision of an Employment Tribunal which concluded that the terms and conditions relating to the hours of work, including any terms and conditions relating to any normal working hours of the Applicants, for the purposes of section 1 of the Employment Rights Act 1996, are in the case of each of the Applicants, 39 hours per week namely hours from 8.00am until 5.00pm, working Monday to Saturday with one free day, but that each employee may be required to work up to six hours overtime, paid at overtime rates and not guaranteed.  

1	That decision was given for the reasons stated in a written judgment, copies of which were made available to the parties in the normal way on 26 August 1998.  

2	The relevant statutory provision with which this case is concerned is to be found at section 1(4) of the Employment Rights Act 1996, which provides:

“The statement shall also contain particulars, as at a specified date and not more than seven days before the statement (or the instalment containing them) is given, of –
(a)	the scale or rate of remuneration or the method of calculating remuneration, 
(b)	the intervals at which remuneration is paid (that is, weekly, monthly, or other specified intervals), 
(c)	any terms and conditions relating to hours of work (including any terms and conditions relating to normal working hours).

And section 234 of the same Act, which provides:

“(1) Where an employee is entitled to overtime pay when employed for more than a fixed 	number of hours in a week or other period, there are for the purposes of this act normal 	working hours in his case.
(2)	Subject to subsection (3), the normal working hours in such a case is a fixed number of hours.  
(3)	Where in such a case – 
(a)	the contract of employment fixes the number, or minimum number, of hours of employment in a week or other period (whether or not it also provides for the reduction of that number or minimum in certain circumstances), and 
(b)	that number or minimum number of hours exceeds the number of hours without overtime, 
the normal working hours are that number or minimum number of hours (and not the number of hours without overtime).”
 
3	The Tribunal’s decision can be summarised in this way.  They found that each of the Applicants was a car park attendant employed by their employer, the Respondent to the application and to this appeal, City of Sunderland Council.  The Tribunal noted that their dates of commencement of employment varied, but were referred to in the statement of particulars of employment contained within the bundles.  The statement of written particulars of each employee varied and then they gave an example of the variation to which we will return in a moment.  

4	They found, that since reorganisation of the rosters in early 1986, in practice, the men worked for 45 hours per week, but in offering and retaining the basic hours of 39 hours per week, the Council sought to retain flexibility should the rosters at any time alter.  They were paid their basic wage for 39 hours a week, with overtime rates being paid for the remaining 6 hours.  They said this:

“We are satisfied from the evidence that we have heard in particular from the Respondent’s witnesses which we find borne out by the contractual documents that have been produced to us, that there was no guarantee given to the Applicants that they would work 45 hours per week.  They were simply told that if asked to work the additional 6 hours they would be expected to do so and as a matter of practise this has remained the case since the alteration in the rosters.  Any overtime hours beyond the 6 hours so specified was purely voluntary and the employees could not be required to work if they did not wish to do so.”

5	The Tribunal went on to say that they were satisfied from their findings of fact that the normal working week in terms of the hours of working was clearly specified in each case and comprised 39 hours.  

“We were also satisfied [said the Tribunal] that this had been deliberate and had been explained to the employees either in the particulars of their employment provided or in letters or at interview.  The requirement to be prepared to work an additional six hours, although as a matter of course normally worked since the current shift pattern had been adopted, was something which the Respondent had specifically included in order to ensure that they could enforce those working hours without being bound to them in the event that the shift pattern altered.  This meant that those hours were not guaranteed.  They were paid at overtime rates but could not in any sense said to be fixed within the meaning of section 234 ERA since while they remained at the unilateral option of the Respondent they did not constitute something so definite as to fall within that definition.  This was not a contract which was silent on normal working hours, but specified 39 hours.  The general principle with the only exception (that is where overtime can be counted) is where overtime is obligatory on both sides is clearly set out in the case of Tarmac Roadstone Holdings v Peacock, Gaskell [Gascol] Conversions Ltd v Masser and Lotus Cars Ltd v Sutcliffe and Stratton,”

and whilst the Tribunal indicated that they were ready to admire the Respondent’s solicitors attempt to distinguish the circumstances of those cases from the present one, they were ”in the end unconvinced in the merit of those arguments.”

6	The Appellant’s solicitor, Mr Stephan Cross, has with ability, sought to persuade us that the Employment Tribunal had erred in law.  He accepted that we were bound by the principle set out in the authorities, to which reference was made by the Employment Tribunal, but he noted in passing that in the case of Lotus Cars Ltd v Sutcliffe and Stratton, another division of the Court of Appeal very shortly after the decision in Peacock had been given, said that there might be a need to revisit the principles enunciated by the Master of the Rolls in the Tarmac Roadstone Holdings case, but that that was not the appropriate moment to do so. 

7	However, the Gascol decision was another decision of the Court of Appeal and there is no indication of a reluctance to follow the Peacock decision.  It may be that Lotus, which was decided in 1982, might have been differently decided, had the Court been referred to the Gascol decision. 

8	Thus the issue before us is simply this.  Was there an obligation on the employers to provide the extra five hours of work and on the employees to work it, or was this a different type of arrangement of the sort which one can find as indicated in the Tarmac case?  Essentially, to summarise, it seems to us that there are three situations.  The first case is where overtime is contractual on the part of the employee - to work it if it is made available by the employer.  We will call that case one.  Case two is where there is no contractual obligation either way, but where the working of overtime, if available, is done on a purely voluntary basis.  Case three, is where the employer is under a duty to provide overtime work to the employee and in return the employee is contractually obliged to work it (Tarmac Roadstone Holdings case). 

9	Thus, it is submitted by the Appellants in this appeal that this is a Category 3 case; whereas the Respondents say it is a Category 1 case.  In support of the contention that this is a Category 3 case, Mr Cross makes six points, as we see it.  Firstly, he points out that on the facts of this case, if the employee was off sick or was on holiday, then he was entitled under his contract to be paid as though he had been at work, and the five extra hours were taken into account.  This entitlement stems from a specific agreement which was made between the recognised trade union and the employers under the heading “Holidays and Leave of Absence”.  Paragraph 1 of that section of the agreement provides that for the purposes of that section, pay for leave shall exclude 

“(i)	casual overtime payments 
(ii)	casual standby payments
(iii)	payment of a higher grade rate than an employee’s normal rate of wages”

Paragraph 7 of the same agreement provides:

“(a)	for the purposes of this section, normal earnings are the earnings paid during a period of normal working but excluding: 
(i) casual overtime payments 
(ii) casual standby payments
(iii) payments of a higher grade rate”.

10	It seems to us that that agreement is consistent with either a case 1 or case 3 position, but does not tend to show that it is one or the other.  It would be open to the parties to agree that where an employee regularly works overtime as opposed to working overtime on a casual basis, the amount that he receives by way of overtime pay over the weeks and years, should be taken into account in calculating his entitlement to sick pay or to holiday pay.  However, it is a factor which we note.

11	The second point that is made is that the perception of the employers and their position before the Employment Tribunal was contrary to the position which had been taken up in correspondence in 1982.  It would appear that in 1982 the employer’s representatives were taking the position that the overtime worked by this group, or other groups of employees, was on a voluntary basis – in other words it was a Category 2 case – as opposed to what was described as a contractual overtime situation in which there are mutual obligations.  It does not seem to us that the correspondence in 1982, preceding as it did, the creation of the rota system under which men regularly worked 45 hours per week is of much assistance, and, frankly, the question before the Employment Tribunal was what they made of the contractual documents, rather than the interpretation put on them by a representative of the employers engaged in national negotiations.

12	The third point, which is particularly relied on by Mr Cross, relates to paragraph 4 of the particulars of the terms and conditions of employment, which for convenience, we can take from the case of Mr Ells.  His statutory particulars under the heading “Wages” gave an hourly rate.  They provided that his normal working week was one of 39 hours.  His weekly wage was identified.  His normal working arrangements were described and underneath was written,

“Subject to contractual notice being given by the authority your hours of work may be varied to meet the exigencies of the service.”

13	It was argued by Mr Cross, that those words indicated that this was a Category 3 case, because the giving of contractual notice by the authority to change the hours of work is a good indication that the hours of work were regarded as contractual.  It seems to us that it is right to say that those words probably do indicate that there were contractual hours of work, but what is meant by hours of work?  It seems to us that the hours of work are the 39 hours referred to in the agreement.  But in any event, even if we were wrong about that, there would be nothing incompatible between a Category 1 case and a requirement that an employer would only change the nature of the obligation undertaken by the employee if he gave the employee proper or reasonable notice, which might be defined by reference to the notice which would be required to terminate a contract of employment.  

14	Accordingly, again whilst we note this point, it does not seem to us to be determinative of the issue in question because it is as compatible with a case 1 as a case 3 assuming for the moment, that “hours of work” meant something different than what we believe it to mean.  

15	The fourth point that was made is a perfectly good rhetorical point.  He says that since 1986, that is the last 13 years, all the employees have been working a pattern of hours which has never varied.  He allied it with his fifth point which he said, as a matter of common sense, it is most unlikely that normal working hours could be the number of hours which some people have never worked and which had never been worked since 1986.  It seems to us to be arguable, in certain cases, that what has happened in practice may be sufficient to constitute some kind of custom and practice which itself is sufficient to alter the nature of the contractual obligations that the parties have otherwise previously entered into.  But that is not this case as we understand it.  The question is, what happened when these individuals were employed, having regard to the contractual documents that are available. 

16	The final point is the stress which Mr Cross rightly put on the purpose of the requirement in section 1 to provide particulars namely to give details of the normal working hours.  It was submitted that the particulars which were supplied did not meet that requirement and may have conflicted with the directive.  We have to say that we have not explored the question as to whether there is a conflict between what was provided and the provisions of the directive, but we are not satisfied that the argument has been made good that the employees were not given proper details of their normal working hours.  Their normal working hours were 39 hours per week, as the contract specified, although they were, in practice, required to work the overtime which was made available to them to the extent of 45 hours per week.

17	For the Respondents, they relied upon the decision of the Tribunal.  It was a mixed question of fact and law, which the Tribunal had to resolve.  They heard the evidence and Mr Cape submitted on Sunderland Council’s behalf that the Tribunal had found the facts and had concentrated more on the contractual arrangements between the parties than the statutory particulars which themselves are not the contract.

18	On the analysis carried out by Mr Cross, it can be seen that there were a number of differences in the statutory particulars of the various Applicants.  In the case of Mr Brown, there had been added to the standard form contract words “plus 6 hours (non-contractual) conditional overtime”.  In the case of Mr Ells, it said “plus 6 hours conditional overtime”.  And that also applied to Mr Green and to Mr Reed and in the case of Mr Jenner, it was “plus 6 hours (non-contractual) conditional overtime”.  In relation to Mr Haffey, Mr Nichol, Mr Robinson and Mr Spence the form of the statutory particulars were not added to.  There was no reference to overtime in their particulars.  

19	But that is not the end of the story because in relation to these individuals, there were letters of appointment and as the Tribunal noted, there was evidence given as to what was said on recruitment.  That evidence was accepted by the Tribunal expressly and we cannot go behind their findings, particularly having regard to the fact that there is no contention here that the Tribunal erred in law at arriving at a perverse conclusion.  Having heard all that evidence they were satisfied that the employers had deliberately not committed themselves to providing overtime for the future by way of a contractual obligation.  They had retained for themselves the flexibility to change the shift arrangements if the working conditions themselves changed.  

20	If that was a finding they were entitled to make, and there is no suggestion that it is not, it seems to us not possible for the Appellant to contend that the Tribunal erred in law, because on those findings it seems to us, the Tribunal has answered the question as to whether this was a Category 3 case, by saying that it was not, but that it was, rather, a Category 1 case.  If it was a Category 1 case, then in those circumstances, the decision of the Employment Tribunal was entirely right.  

21	We would wish to add, out of deference to Mr Cross’ point that this was now an important aspect of employment rights and was likely to be much more important in the future, that the statutory provision in question contains language familiar to employment lawyers since 1963 when it was first introduced in schedule 2 to the Contracts of Employment Act 1963.  Its purpose there was to define the rights of parties during the period of notice to which for the first time there were statutory constraints and it has continued since 1963 without effective variation.  

22	Accordingly, it seems to us that there is nothing new about this provision and this is not a case where the Court should look at it with new eyes.  This is an old and familiar concept down a road which is well trodden, and it seems to us, that there are no grounds for thinking that the law has moved, or should move, since the decision in the Tarmac v Roadstone case.  Accordingly, the appeal must be dismissed.