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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Howell v. Consignia Plc [2001] UKEAT 0847_00_1112 (11 December 2001) URL: http://www.bailii.org/uk/cases/UKEAT/2001/0847_00_1112.html Cite as: [2001] UKEAT 847__1112, [2001] UKEAT 0847_00_1112

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APPEARANCES

 

For the Appellant	MR IAN SCOTT (Of Counsel) Messrs Pattinson & Brewer Solicitors 71 Kingsway London WC2B 6ST
For the Respondent	MR ANDREW BURNS (Of Counsel) Instructed by: Consignia Plc Impact House 2 Edridge Road Croydon CR9 1PJ


 


JUDGE D PUGSLEY

1. This is a case that has to be seen in the context of the climate that prevailed in 1995. At that time the Royal Mail were considering whether to contract out cleaning services. The Respondents were concerned to reduce the costs of cleaning services. The staff were understandably concerned that that part of the undertaking, the Post Office, should not contract out cleaning services. Although we have not heard any background argument we are not so naïve as to not know what the concerns of the staff would be. Instead of the security of working for a Public sector undertaking which had the advantage of a pension, which was related to salary, and relative job security and stability, the prospect of it being contracted out was not one, we suspect, would have appealed to the membership of the Union or, indeed, the Union itself.
2. The Tribunal set out their reasoning in paragraph (vi) onwards where they say it was against this background that the Tribunal were considering the negotiations

vi) "The Respondents agreed a moratorium on contracting out the cleaning pending the result of a ballot to be held by the Union in June 1995.

vii) There were discussions between the Trade Union and the Respondents and an agreement was reached to the effect that (inter alia) the EX-IWM supplement would no longer apply [that was a sum of £11.40] but would be added to and included in the basic rate per week for every cleaner and made pensionable."

3. We say as an aside that the Applicant in this case who was nearing retirement, having been born in 1936, would have a particular benefit from that being incorporated into his pension pay, as we suspect, although we have not heard that the Post Office operated a final salary scheme.
4. The Tribunal found at (viii)

"At page 43 is a copy of the Trade Union document which was sent to members prior to the ballot. It records the "(the £11.40) will not apply for the calculation of NDA [which acronym stands for Night Duty Allowance] and overtime". On the same page later in that document under the heading "Overtime", we see "overtime rates will have a new figure for calculation as follows:

Monday to Friday

Ordinary rate overtime

1.3 equals £4.484 per hour

Schedule attendance rate overtime

1.5 equals £5.85 per hour

Saturday

1.8 equals £6.70 per hour

Sunday remaining at the current rate"

5. What happened is quite simply this. It is quite clear that what was of concern to the employer was the cost of overtime. By putting premium rates for overtime the wage bill is considerably increased.. The reality of the situation is that Bank Holiday overtime was of very little significance and overall very little was worked. We note that the negotiations retained overtime at the current rate on a Sunday, but in all the other cases there was a reduction in the cash rates which were now agreed as a figure, rather than as an assessment of the premium over the weekly wage.
6. So very simply what was agreed was that the supplement of £11.40 would not be regarded as part of the hourly rate in the calculations that took place on overtime. Overtime was converted into a cash figure but, save for Sunday, in effect, there was less paid for overtime. One of our number has spent considerable hours, as was clear from his opening remarks to Counsel, working out the exact position in terms of assessed rises..
7. In the context of fighting off the desire of the Post Office to contract out the cleaning services, what was negotiated in this collective agreement was an increase in the basic pay, the advantage of that being that it would enhance the pension of members, especially of those nearing retirement age, if it were, as we assume it to be, a final salary scheme. The trade off, as far as the Post Office was concerned, was instead of having a high payroll cost by numbers of hours of overtime being assessed at premium rates, there were some reductions in overtime payments. All those applied and were specifically referred to as far as ordinary week-day overtime, Saturday overtime and Sunday overtime.
8. At paragraph (ix) of its decision, the Tribunal indicated

ix) "There is no calculation shown for overtime rates for Bank Holidays and Public Holidays for the simple reason that neither party, the Respondents or the union thought about those matters in their negotiations, and the matter was not raised prior to the ballot. The Union balloted and there was a small majority in favour of accepting the proposals. As is normal the Respondents then prepared a pay directive which reflected the agreement reached and this was sent to the Trade Union for their information. The Directive, copy at 50-68 in the bundle, is accompanied by pages 48 and 49 instructions to the Personnel Department as to the implementation of the Pay Directive.

x) The Pay Directive comprises various schedules Part A to Part N which deals with the specific details relating to pay due to individual classes of workers. The appropriate schedule for the purposes of this case being Schedule J, copy at page 60 which is headed 'Overtime Multipliers and Hours of Work'. The schedule is in column form and opposite the word "cleaners" is set out the rates per day for Monday to Friday, Saturday, Sunday and for Bank and Public Holidays. The latter overtime pay for Bank/Public Holidays being shown as Day plus £5.59 per hour or £9.31 per hour. That document was sent to the Trade Union prior to being sent to the various pay departments. The Trade Union did not raise any queries on that schedule. Another such schedule with updated rates of pay was sent in a similar fashion after October 1995 and October 1996 pay rounds.

xi) The note to personnel department, copy at page 48 at paragraph 2, refers to the formal agreement (pages 77-78) which should be referred for the authoritative guide.

xii) In Schedule J, copy at 60, the Respondents have calculated the Bank/Public Holiday overtime on the same basis as they have calculated all the overtime i.e. that have used the basic without taking into account the [enhanced payment of £14.60] which has been consolidated into the basic pay and become pensionable but is had been agreed that it would not be included in the overtime calculation.

xiii) The finalising of the detail of the negotiation occurred in July 1995 and all of the witnesses recollections were hazy. Mr Bond was sure that the matter would have been raised with Mr Percival, the Respondents evidence is that quite often after negotiations there are peripheral matters that need tidying up and that these would be discussed informally, usually over the telephone, when it comes to finally reducing the terms of the agreement to black and white. Mr Bond cannot recall specific conversations although there were many. Mr Percival on the other hand from the trade union does not recall any conversations at all during that period in July 1995.

xiv) It appears that what happened was when the Respondent's staff were preparing the new Schedule J, no doubt working from a previous draft and amending the various columns calculated the Bank Holiday and Public Holiday overtime on the same basis as had been agreed for the other overtime rates.

xv) It is not possible for the Tribunal to say whether this matter was discussed over the telephone, but what is clear is that there was a draft directive and a final directive which was sent to the Applicant's trade union prior to August 1995 and on two subsequent occasions. Mr Hayes and Mr Percival [from the Trade Union] told the Tribunal that they would not in the ordinary course of events check the schedules as they would assume that they would have reflected the agreement that they had negotiated, they would pass them on to their research department. [The Tribunal expressed surprise at that evidence] as the Tribunal would have thought that they would have checked the instructions being given by the Respondents to their pay department to ensure that the instructions being given corresponded with the agreement that had been negotiated by the unions.

xvi) Notification of the changes as a result of the negotiations were notified to the employees by advertisement in the Post Office Gazette of the 13^th September 1995, copy at page 80 and 81. On page 80, is set out the basis of the bulk of the changes and on page 81 at the end of the article relating to revision of pay we see the words "Details of the changes are contained in RMPD6/95" i.e. the copy directive at page 50-68 and Schedule J in particular.

xvii) The Respondents then implement the payment structure as is set out in the Schedules which forms part of The Royal Mail Personnel Manual, and therefore part of the Applicant's contract of employment.

xviii) It is unfortunate that the Respondents, having noticed when preparing Schedule J that Bank and Public Holiday overtime rates had not been specifically spelt out in the documentation, that that point was not raised in writing with the Applicant's union instead of proceeding in the way they did on the basis of the same multiplier as before and on the same basis for the hourly rate as Sunday and other overtime. Had that simple course have been taken then this case would not have needed to have been brought.

xix) The Applicant worked overtime after the 1^st August 1995 and the Respondents paid the Applicant for his Bank Holiday overtime on the basis of an hourly rate calculated omitting the UP AP supplement which after the 1^st August formed part of the basic pay, (and London Weighting also) and then multiplying it by 2.5 [ the same multiplier that we are concerned].

xx) The Applicant worked a number of Bank Holidays and was paid on this basis. It was sometime in April 1997 when the Applicant's attention was drawn to his Bank Holiday overtime pay by a union official who suggested that he may have been underpaid. Mr Hayes then raised the matter by letter dated 21^st April 1997 p.187 with Mr Bennett (it was not raise in relation to Mr Howell specifically) neither did Mr Howell ever raised his concerns with the Respondents. Mr Bennett's response is at page 188. In the response Mr Bennett makes the point after explaining the Respondent's understanding of the basis of calculation of Bank Holiday overtime " I understand that on each occasion Royal Mail Strategic Headquarters Personnel Department followed its normal procedure or sending the draft pay directive to the union for check (sic) and comment prior to issue and Publication in the Post Office Gazette". [The Tribunal then reviewed the correspondence that took place].

9. The Tribunal, having briefly revisited the area of Section 13 of the Employment Rights Act 1996 went on to make certain findings.

7 "The Applicant's contract comprises his letter of appointment (pages 10-12 of the bundle) and the Royal Mail Personnel Manual as amended from time to time.

8 At paragraph 8 of the letter of appointment it provides for variations to the conditions of service following discussions or negotiations between the Post Office and the appropriate trade unions. There is no provision that there can be no variation without prior agreement with the trade union. Neither is any Collective Agreement expressly incorporated into the contract of employment. In this case the Post Office gave notice of a change to the terms and condition following discussion with the trade unions of variations to various matters relating to the contract including overtime rates. Notice of such change was given to employees including Mr Howell by Publication in the Post Office Gazette of 13th September 1995 which in return referred to RMPD6/95. PMPD 6/95 contains Schedule J in particular which clearly sets out the Bank and Public Holiday overtime rates as of the 1 st August 1995 and they are those amounts set out opposite "cleaner" and under the heading "Public and Bank Holiday", namely the rate of Day plus £5.59 per hour or £9.31 per hour. That was the notification of the change in the contract term. It confirms that the overtime was calculated as before but without taking into account the £11.40 UPAP addition which had been added as a result of negotiations to the basic pensionable pay but which was excluded from the overtime calculation.

9 Mr Howell continued to work overtime on Bank Holidays and the rate was calculated [by the old multiplier of 2½ which excluded the inclusion of the increment which was incorporated into his pensionable pay]

The Tribunal went on to say that would have been obvious to Mr Howell or should have been obvious to him and then went on to hold that he had affirmed the contract.

10. Before us the Applicant has argued that the Respondents had not lawfully varied the terms of the employment contract. The argument was that as the collective agreement which was reached made no mention of Bank Holiday overtime, then the same rule should pertain as had applied before the changes. It is pointed out that the Pay Directive did not reflect the agreement reached.
11. The argument was that a changed method of calculating Public and Bank Holiday were not covered by the agreement, and therefore the Pay Directive should have been interpreted in the light of the agreement and the Applicant was entitled to a declaration that he had been underpaid and that he should have received £9.99 per hour as opposed to £9.31. The Applicant says that any proper interpretation of the Pay Directive should have included the reference to, what they say, is a clear import of the collective agreement, namely that Bank Holiday overtime should be paid at the old rate.
12. The Respondent's argument is summarised in their skeleton argument in these terms:-

"The sub-text to this case is that the union wish to achieve a finding that collective agreements are incorporated by some mechanism into the postman's contract of employment.

The contractual position is essentially fairly simple. The Appellant's letter of appointment provides that variations to the conditions of service can be made following 'discussion or negotiation' with the appropriate trade unions. Agreement is therefore unnecessary before a variation is made. The letter also incorporates by reference the Staff Contract Manual, replaced by the Royal Mail Personnel Manual. The Post Office varies the terms and conditions of employees by giving notice to them in the Post Office Gazette.

In 1995 new pay rates were negotiated. A collective agreement dated 18th August 1995 was entered into by the Respondent and the CWU. This did not affect the Appellant's contract, as it was not incorporated into it.

The Appellant is paid and has always been paid according to the rates set out in the Royal Mail Personnel Manual (and its forerunner the Staff Contract Manual); specifically the Pay Directive.

Before any of the alleged deductions the Appellant's contract was varied again. The contract as at February 1996 is set out in the 'Revision of pay and allowances' in the Personnel Manual published in the Gazette. It was varied again and as at February 1997 . . . The Appellant was properly paid in accordance with those pay rates as were all cleaners. He worked Bank Holidays and accepted these payments without complaint, having been formally notified of the variations in the Post Office Gazette. By his conduct, he accepted each of the variations to his contract."

13. The argument is put by the Respondents that there is no basis for saying the Tribunal's decision was perverse. There was a note to the personnel department that the collective agreement was the authoritative guide. The note to personnel, it is argued, is clearly parol evidence and inadmissible in the construction of the Appellant's written contract of employment. It is pointed out that as a matter of fact, the Tribunal suggested there was no factual foundation for the assertion that the collective agreement had changed his pay to allow him to now have a multiplier of the enhanced basic sum.
14. The central thrust of the Respondent's case is that the reality of the situation is that it was the collective agreement that was in error not the Appellant's contract. By seeking to argue that the collective agreement takes precedence over the conditions of service documents, the Appellant is arguing for an unexpected and unintended pay rise for cleaners working Bank Holiday overtime. The argument is that although the common intention was to exclude the old UP AP supplement from overtime rates, because reference to Bank Holiday overtime was omitted from the collective agreement, Bank Holiday overtime pay ought to include the old UPAP supplement",
15. As far as we are concerned we start with the basic proposition that employment law accepts there is a wisdom and knowledge that is found in the workplace experience. The reality is that the underlying need to contain the cost of overtime was the basis upon which this collective agreement was negotiated. The gain in the supplement was incorporated into the pensionable pay. As we have noted that might have been of particular significance to this Applicant because of his proximity to his own retirement.
16. Quite simply, those negotiating the agreement overlooked the issue of Bank Holiday payment because it formed, in the context of the matter they were having to consider, a matter of relative insignificance. The reality is that the collective agreement has more the flavour of heads of agreement rather than the exhaustively setting out of the various legal entitlements between employer and employee. For example, it does not include references to London weighting, and there may well be other terms such as holiday entitlement and the like, which are not enshrined within the collective agreement.
17. We have found the Appellant's arguments, though fascinating, inappropriate in that it seems to suggest we should ignore the context and purpose for which there was a collective agreement at that stage. We cannot accept that the failure to deal in the collective agreement with Bank Holiday overtime provides the basis for an exception to the general agreement as far as overtime payments were concerned.
18. As the Tribunal noted at paragraph 8 of its decision, the Union Publication commended the acceptance of these proposals to its members and it said in terms that overtime payment would not any longer be based on and include the £11.40 payment for the calculation of overtime. We accept that the fact of the matter is this was a relatively insignificant matter in the issue that the parties were considering which at that stage involved the employment rights of a considerable number of the cleaners who were anxious, understandably, that they should no be contracted out.
19. We have come to the view that this collective agreement, on any proper contractual basis, cannot be incorporated into the individual contract of employment. We consider there is no warrant for that. Moreover, we do not consider that, viewed in the proper context and bearing in mind the purpose in which the collective agreement was negotiated, we can accept the suggestion made by the Applicant that the collective agreement entitles us to ignore the reality of what was happening and to say that it could lead to an enhancement of overtime rates in the case of a Bank Holiday employee working which were not the case in the case of other employment worked as overtime.
20. The reality is that though Sunday seems to be excluded because, as we have been told, it was not a problem with overtime working, all other overtime rates, which were turned into cash sums, were done so on a lesser multiplier than had previously existed and were done so by expressly deleting the reference to the fact that the £11.40 was incorporated into basic pay.
21. We have come to the overriding view that in this case the collective agreement was not an enforceable contractual document as between employer and employee and the Tribunal correctly analysed what was the contractual position. Even if that were not the case, we have come to the view that the collective agreement cannot, by its silence, be construed as making an exception to the general position as far as overtime is concerned in the case of Bank Holiday overtime. It should be seen, as it was, that the present position was maintained to the extent that, as before, it was by a multiplier but a multiplier that excluded the supplement. The variation of including the supplement as basic pay did not mean that the Applicant was entitled to a higher overtime payment for Bank Holiday work.
22. At the end of the day in industrial relations there is a real division, noted and observed by employers and Trade Union officials, between good industrial practice and what is legally enforceable. Employers often feel an obligation to consult a negotiator. Sometimes that obligation to consult a negotiator may be enshrined in a legally binding document. At the end of the day there is not, in this case, a requirement to agree a pay increase with the Trade Union before determining and promulgating the same. There was a duty to consult; there was a duty to negotiate but there was no legal obligation to agree pay increases. We, therefore, decide that the appeal is dismissed.
23. One final matter, which is not strictly relevant to our decision now, is the argument about affirmation. With the greatest respect to Mr Burns, to whose arguments we have been greatly indebted, this is not a Western Excavating v Sharp [1978] QB 761 case because there is no question in this case of Mr Howell walking out. This is a case of someone who continues to receive the benefits of payment and what we would go as far as to say, though we do not intend to expand on the matter at length, we do not consider that we would necessarily share the view of the Tribunal that he was held to have affirmed the contract. We only deal with the issue very briefly, but we note the decision of the House of Lords in Rigby v Ferrado [1987] IRLR 516, and question whether the issue of affirmation is quite as straightforward as the Tribunal decision suggests.
24. We want to make it quite clear we have not developed argument on this matter and have not encouraged it. We have a heavy list, we still have another case to deal with. We consider it is inappropriate to consider an issue which is not going to affect or determine the result. The outcome of this case is that the appeal is dismissed. In our view there was no enforceable right to the enhanced payment which the Applicant claimed.