Appeal No. UKEAT/0055/04/SM

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 17 May 2004
Judgment delivered on 29 June 2004

Before
HIS HONOUR JUDGE BIRTLES
MR I EZEKIEL
MISS G MILLS

(1) MR K J BROWN	APPELLANTS
(2) MR S J BUTLER
(3) MR G C H LAI
(4) MR R S MACFARLANE

BMI BRITISH MIDLAND	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MS ABIGAIL SCHAEFFER
(Representative)
Instructed by:
Free Representation Unit
4th Floor, Peer House
8-14 Verulam Street
London WC1X 8LZ	
For the Respondent	MR PAUL NICHOLLS
(of Counsel)
Instructed by:
Messrs Kemp Little LLP Solicitors
Saddlers House
Gutter Lane
London EC2V 6BR	

SUMMARY

Unfair Dismissal / Practice and Procedure

Incorporation of redundancy practice and procedure into the written contract of employment and subsequent variation thereof by custom and practice.

HIS HONOUR JUDGE BIRTLES

Introduction

1.	This is an appeal from the decision of an Employment Tribunal sitting at Watford on 16-18 September 2003.  The reserved decision was sent to the parties and entered in the Register on 6 November 2003.  The Chairman was Mr V J Adamson and the members were Mr M J Heron and Mrs B M Fraser.

2.	The Employment Tribunal unanimously decided that:

(i)	Mr Butler’s complaint of breach of contract was dismissed on withdrawal;
(ii)	The Applicants were not unfairly dismissed by the Respondent;
(iii)	Mr Brown and Mr MacFarlane’s complaints of breach of contract in respect of unpaid contractual redundancy payments were not well founded;
(iv)	Mr MacFarlane and the Respondent were invited to consider the complaint of Mr MacFarlane relating to unpaid holiday pay and notify the Tribunal of any outcome.  In default of any agreement within 28 days a Hearing will be fixed to determine that issue.

The Material Facts

3.	The Employment Tribunal made the following relevant findings of fact:

“14.	Kenneth James Brown born on 30 January 1953 began his employment with the Respondent on 14 December 1992, at the end of his employment was employed as an aircraft Licenced Engineer and Supervisor;
15.	Stephen John Butler born on 15 July 1966 began his employment with the Respondent on 21 December 1992, at the end of his employment was employed as an Aircraft Licensed Engineer, Airframe/Engineer Supervisor;
16.	Gordon Chiu Hon Lai born on 7 June 1956 began his employment with the Respondent on 7 February 1992, at the end of his employment was employed as an A & C Maintenance Supervisor (E C Grade);
17.	Ross Stewart MacFarlane born 26 August 1966 began his employment with the Respondent on 26 October 1992, at the end of his employment was employed as a Licensed Aircraft Engineer and Supervisor.
18.	All the employees were A & C Licenced engineers for airframe and engine employed on E C/D grade.
19.	The Respondent is a airline which, amongst other things, provides servicing .and maintenance services not only in respect of its own aircraft but for other companies.  There are two trade unions representing the work force relevant to these proceedings, namely the ALAE and the AEEU.  All the Applicants were in the ALAE trade union which represented the more senior engineering staff and who were subject to "line" terms and conditions of employment.  At the same grade were also 8 licensed engineers for avionics.  There was a difference in the nature of the work of these two types of engineer.  The Applicants had the qualifications to carry out a number of the duties of avionic mechanics who were more junior to the avionics engineers.  Depending on their qualification each type of employee is licenced by the Civil Aviation Authority for discrete types of work.  A number of employees, including the Applicants, held a number of licences thus could carry out many types of work.
20.	At Heathrow Airport there are three areas of work, namely the "line" staff who work adjacent to Terminal 1 and carry out day-to-day maintenance on the Respondent's own aircraft.  Those staff work a rotating day and night shift, two shifts on day followed by two shifts on night followed by four days off.  'line' in this context has a different meaning to that in the previous paragraph.  Another group carried out scheduled maintenance on the Respondent's own aircraft in its hanger which involved permanent night working.  A further group carried out maintenance work for Virgin and Cathay Pacific airlines which involved permanent day working.  This group contained the Applicants.  In addition there was a further group of workers involving five mechanics working permanently at night carrying out work on both the Virgin contract and the Respondent's own aircraft. 
21.	In 1998 the Respondent entered into an agreement with the Applicant's Trade Union entitled "Simplification of the Trade Union Agreements (ALAE grades)".  The opening statement of the agreement on behalf of the Applicant stated that it had been compiled and agreed by both parties.  The ALAE members had approved the agreement.  In addition to a section dealing with self managed teams, the agreement dealt with pay and benefits.  The original agreement, contained amongst others the following provision:- 
"28.	Redundancy
Redundancy payments made to redundant ALAE staff will be calculated at a rate of two weeks pay for each completed year of service with a minimum payment of two weeks.  There is no ceiling on the length of service.  A weeks pay will be as defined for statutory redundancy payments with a ceiling of the statutory maximum.
The full agreement between a company and the ALAE on employment stability and redundancy procedures is detailed in Appendix IX."
22.	Appendix IX was headed an agreement between British Midlands Airways Ltd. and the Association of Licenced Aircraft Engineers on employment stability and redundancy procedures.  The preamble to that agreement provided: -
"The Company fully recognises the importance of creating as secure a working environment as possible for employees and will take steps to achieve this through effective business and manpower planning.  For their part the Unions recognise the Company's responsibility for maintaining the continued profitability of the business, including the responsibility when necessary, to reduce manpower as a result of market, technical, organisational or other changes.  Both parties agree that such changes will be brought about through consultation following the procedures set out in this agreement".
23.	The procedure in that agreement contained a number of provisions including; restriction or freeze on recruitment, consultation with the trade union in accordance with the provisions, of the Employment Protection Act 1975 to commence at the earliest practical opportunity but at the very least when 10 or more employees (but less than 100) were to be made redundant at one establishment or group of related establishments over a period of 30 days or less, at least 30 days before the first dismissal for consultation by the Respondent with the trade union representatives to inform the unions of a Department's jobs and number of people who may be affected; and, to consider volunteers for redundancy.  At paragraph 6 is provided. 
"If the above procedure fails to avert the necessity for redundancy the Company will name the employees who are to become redundant taking the following criteria into account:
•	The skills and abilities of the staff currently employed.
•	Location. 
•	Length of Service
•	Suitability for re-training.”
24.	There were further provisions relating to alternative work and also an inclusion of the provision for redundancy payments to be paid at the rate of 2 weeks pay for each completed year of service replicating paragraph 28 of the main agreement.  That Appendix also provided that any amendment to the procedure would be by way of joint agreement but that agreements would not be negotiated once consultations of redundancies had commenced.  There was provision for termination of the agreement in Appendix be either party on notice.
25.	The majority of the agreement was concerned with pay, allowances, holiday entitlements, uniforms, shift rotas and day to day operational matters.  These provisions were described in precise language so each person would know what their financial entitlement would be in a given circumstance.  The agreement also contained requirements for its workforce, e.g. to wear an airport pass in appropriate places.  The agreement referred to the Respondents reduced rate travel scheme but specified that the scheme was not a contractual entitlement.  The agreement contained in its appendices, grievance an-a disciplinary procedures.
26.	All the Applicants had been provided with terms and conditions of employment, renewed in the case of Mr Brown and Mr MacFarlane when they had been obtained different jobs with the Respondent and which all parties referred to and agreed were their contracts of employment.  In all material respects, the terms were the same for all of the Applicants.  Each employee being entitled, by the date of the end of their employment, to be provided by Respondent with one weeks' notice for each year of service.  The agreements provided for an option by the Respondent to provide pay in lieu of notice.
27.	The contracts between the Respondent and Messrs Brown and MacFarlane provided for their place of work to be Heathrow.  The contracts with the other two Applicants were silent.  All the contracts referred to their being for the purpose of the Employment Protection (Consolidation) Act 1978.  None of the contracts referred to any collective agreement that may have existed.
28.	The Respondent has adopted a practice of selecting people for redundancies based on identifying the specific group of employees affected.  This it did in Glasgow when it closed a hanger leaving a line unaffected and the Respondent alleged at Heathrow in late 2001.  This latter occasion was disputed.  On 10 October that year Mr Scholfield wrote to Tony Shimani informing him of proposed redundancies in a number of locations throughout the UK.  In that memorandum he described as likely that 4 licensed engineers would be affected at Heathrow.  In respect of licenced engineers he referred to what he described as the established procedure/protocol for redundancy selection in respect of licenced engineers as: 
(a)	Shop area where redundancy exists
(b)	Voluntary redundancy 
(c)	Number of licences/approvals held
(d)	Sickness record
(e)	LIFO
29.	Mr Shimani confirmed that it was a procedure that had been adopted on that occasion.  On the evidence we are satisfied that the Respondent, which at that time was affected by the then recent events of September 11th, looked to the area where the work had diminished, i.e. "the line" and selected 4 licensed engineers from that area.  We are satisfied that the reason for their selection, apart from any other, was because of their location on “the line."  Although the memorandum had referred to a redundancy programme affecting approximately 600 employees throughout the U.K, there were to be 28 redundancies only.  This procedure excluded the Applicants and the other engineers working in the other teams in the hanger at Heathrow.
30.	In February 2002, the Respondent agreed with the trade union the following criteria for a redundancy at that time:
(a)	Area affected by redundancy – Cathay/Virgin only (shop 555/557) 
(b)	Qualifications within the two union groups - least qualifications go first.
(c)	If equal qualifications, the sickness record (significant differences).
(d)	If equal sickness, then LIFO.
This was applied and four staff were made redundant.
31.	It had been well known to all, including the Applicants, that Virgin were intending to terminate their contract during 2002.  A hanger was being built adjacent to the Respondent's own hanger for Virgin to carry out its own maintenance in it.  The Respondent kept the union informed who placed notices on its Notice Board from about January/February that year and onwards.  The Respondent was also having in discussion with Cathay Pacific who was reviewing its maintenance requirements.  When information became certain Mr Scholfield notified the union of the staffing requirements to meet its commitment.
32.	The Respondent would have a need for less staff as a result of the cessation of the Virgin contract and the reduction in the Cathay Pacific contract.  This was confirmed to the Applicant's trade union and the other affected union on 9 August.  The foreman prepared shift rosters which omitted the Applicant's positions.  Although those rosters did not mention staff by name it would have been clear to all that as there were no employees of the Applicant's grades rostered that their jobs would be in jeopardy.  There was a formal consultation meeting between the Respondent and the trade unions on 15 August at which we are satisfied Mr Scholfield set out the future needs of the Cathay Pacific contract, including that the Respondent no longer had the need for any employees of the Applicant's grade in their team and the staff reductions in the other teams.  Proposals were made for dealing with this including the making of redundancy payments and the option of deferral of redundancy to 30 April 2003 by carrying out temporary alternative work.  We are satisfied that Mr Scholfield's long hand notes we have seen are an accurate reflection of the discussions which took place that day.
33.	There was a dispute between the parties whether the Applicants could be transferred to any other location at the instruction of the Respondent.  On the evidence we are satisfied that the Respondent treated each part of Heathrow as a separate centre of work, there being different managers, different jobs to be done albeit involving the same professional skills, different budgets and different shifts.  While employees were asked and on many occasions did agree to voluntarily work in other areas there was no compulsion for them to do so.  If employees wished to transfer from one area of work to another they had to formally apply and be considered.  Mr Brown had an informal meeting with Miss Walsh on 15 August when he expressed his concerns.  After that date he wrote four letters to the Respondent, the last of which he hand delivered on 23rd of that month.  That day Mr Brown met with Miss Walsh who sought to discuss his points with him. Mr Brown declined to do so, however, and asked for the matters to be raised at the meetings with the trade union.  The trade union did take his matters up on his behalf until he was dismissed.  After the first of Mr Brown's letters the remainder were on behalf of the other Applicants also.
34.	On 23 August the Applicant was given a letter from the Respondent notifying him of his selection for redundancy which, as well as referring to the changing workload, provided as follows: -
"It is with regret that I have to formally give you notice of redundancy. 
I can, however, confirm that there are three possible options of extended periods of employment available on for a fixed term period, these are as follows: -
(a)	Alternative employment at East Midlands hanger is available for a fixed term period from 5 October until 30 April 2003.  This is for the purpose of working on the BMI baby product. 
(b)	Short term cover for training at Heathrow.  I will confirm the details of this in the forthcoming weeks. 
(c)	It is probable the A320 cockpit door modifications will be carried out at LHR.  If this is the case, a limited number of temporary positions will be available from January - April 2003. 
You will remain on the same terms and conditions of employment in accordance with your Contract of Employment and your redundancy/severance pay as attached will come into effect on 5 October 2002.  Payment in lieu of notice will be paid, from 5 October 2002, the amount of which will depend on your length of service."
35.	The letter made provision for acceptance of these terms but specified that should one of the temporary positions be accepted the pay lieu of notice would not be paid if a temporary position was accepted.  All the Applicants subsequently received letters in like terms.  Mr Brown considered that his position should not be made redundant because of his skills and because of a likely upturn in work. 
36.	The Respondent received a letter from the Applicant's union on 27 August referring to various legal matters and, as a result, postponed further consultation with the work-force until their trade union representative, who was at that time absent, returned to work.  Mr Scholfield arranged for meetings to take place between himself, and with any member of the work force affected on 30 April and 4 September.  Only Mr Butler attended, Mr Lai was on holiday on both dates.  Between 13 September and the end of the App1icant's employment were meetings involving the trade union and the Respondent's management.  All the Applicants received copies of the minutes of those meetings or were aware of their contents shortly after the meetings had taken place.  At the meeting between the Respondent and the union on 13 September a number of matters relating to the Applicants were considered the minutes of that meeting state:
"the selection criteria as used before was agreed to be the best way of filling the vacancy (Qual's & LIFO).  The list was established and agreed who would be offered the vacancy list.  S Butler was first on the list". 
Mr Brown was aware that Mr Butler was to be offered a vacancy of an A & C licenced engineer working on the line.  Mr Butler was offered but subsequently rejected the offer.  At a meeting on 26 September 2002 the fact of Mr Butler having declined the offer was minuted.  As a consequence the vacancy was offered to Mr Lai.
37.	On 2 October 2002 the last date of the Applicant's work was extended to 15 October 2002. 
38.	Mr Lai subsequently declined the position of line engineer and on 8 October it was offered to Mr Brown.  By this time Mr Brown had negotiated employment with Virgin, albeit he had not entered into a formal contract.  Mr Brown considered his position with regard to the Respondent, the job offer he had to work for Virgin and decided to accept the Virgin offer.  Mr Brown's last day of work was 15 October 2002.
39.	On 28 August Mr Butler received his letter notifying him of his redundancy selection.  Mr Butler declined the offer of a' permanent job on "the line" and also the temporary work on the basis that he would lose his pay in lieu of notice and considered that he could gain more income if he obtained work contracting.  He was also in discussion with Virgin in late September ultimately obtaining work with them.  His last day of employment was 5 October 2002. 
40.	Mr Lai received his redundancy notification letter on 9 September 2002.  Mr Lai declined the permanent job on the line having being informed that he could not, do so on a trial basis because of the difficulty this would cause him dramatically and in the extra travelling time to and from home and work.  The predominant reason for rejecting the temporary work was that he would lose his pay in lieu of notice.
41.	Mr MacFarlane received his letter in like terms to Mr Brown on 2 September 2002.  Mr MacFarlane was prepared to carry out some of the temporary work, namely the cockpit door modifications and was trained by the Respondent to enable him to do so.  The other temporary work he rejected.  During this period Mr MacFarlane obtained alternative work with a company closer to his home.  Mr MacFarlane ultimately did not work a temporary extension to his contract and he left the Respondent's employment on 17 October 2002. 
42.	Mr MacFarlane had been a trade union representative of another other union involved with the Respondent some years before and had always understood that he had to work to the agreement between the union and the Respondent albeit he had not been involved in any redundancies.
43.	All the Applicants received their notice pay.
44.	Having regard to these facts we find that the effective date of termination of the employments of Messrs Brown, Butler, Lai and MacFarlane were 15 October, 5 October, 15 October and 17 October 2002 respectively.  The Applicants were entitled to 9, 9, 10 and 9 weeks notice respectively.  This means, that had the notice which by virtue of section 86 Employment Rights Act 1996 been given it would have expired, especially, on 17 December 2002, 7 December 2002.”

The Employment Tribunal Decision

4.	The Employment Tribunal begin by setting out the nature of the Appellants’ claims: decision paragraph 1; noted that there was no dispute between the parties that the Appellants had been dismissed and that the reason for that dismissal was redundancy.  It then set out the issues as follows:

(i)	whether the selection criteria was fair, in particular whether there was a contractual procedure which the Respondent had breached;
(ii)	whether the pool of selection was fair;
(iii)	whether the Applicants were warned and consulted;
(iv)	what were the terms and conditions of the Applicants’ employment relating to redundancy and other payments relevant to the complaints of breach of contract;
(v)	were there any monies outstanding at the termination of the contract pursuant to those terms to Mr Butler and Mr MacFarlane: Decision paragraph 3.

5.	The Employment Tribunal specifically noted there was no dispute between the parties, that had the Respondent pooled the Applicants with all the other engineers of their grade at London Heathrow airport they would not have been selected for redundancy.

6.	The Tribunal went on to refer to the written and oral evidence it took into account: decision paragraphs 4-5; recorded the submissions made by the parties: decision paragraphs 7-11; set out the law: decision paragraph 13 and specifically found that it would apply the contra proferentem rule in favour of the Applicants in respect of any ambiguity in the terms of the letters informing them of their redundancy.  It found the facts (as set out above): decision paragraphs 14-44.  Finally, it set out its conclusions: decision paragraphs 45-51.  Those conclusions were as follows:

“45.	The period of notice which is required to be given is calculated as at the date it is given and where that notice is given the employment continues until that notice expires.  In the situation here where there was provision for pay in lieu of notice, this amounts to a contractual provision for the Respondent to compensate the Applicants for breach of their rights to notice.  Other benefits which would accrue during that period should also be compensated for.  There are two claims before us in respect of redundancy payment which are of a higher amount than that which has been paid, namely submitted by Mr Brown and Mr MacFarlane and one for unpaid holiday pay. 
46.	The statutory scheme for redundancy pay in overall terms is less favourable than the terms in agreement between the Respondent and the respective trade unions.  The Respondent accepted that these payments would always be paid, in accordance with that agreement, and did not dispute that through custom and practice there was a contractual position to make payments in accordance with the scheme.  On the evidence before us the calculation period for an employee's entitlement to a payment under the scheme was the period between the date the employee began work for the Respondent and his last day of actual work with the Respondent.  There was no dispute between the parties that the Applicants had received this sum.  We did not accept the proposition made by, the Applicants that the scheme in the agreement should be interpreted in the same light as the statutory scheme, there being no basis on which to do so.  It follows that all employees received the contractual redundancy payments in accordance with the scheme and that their claims for breach of contract in that regard must fail. 
47.	We considered whether the agreement between the union and the Respondent relating to redundancy consultation and selection procedure was a contractual one.  Mr Brown's evidence was that when he had begun his employment with the Respondent he considered he had been told that there were "terms and conditions and everyone had to work to them and similarly Mr MacFarlane considered that everyone had to work to those conditions.  The Respondent's position was that the agreement was between itself and the unions only, albeit as referred to before, it accepted that there was a contractual provision based on custom and practice for the redundancy payments in accordance with the scheme as referred to.  Neither the Applicant's terms and conditions of employment nor the agreement between the Respondent and the Union referred to each other.
48.	The terms of the redundancy consultation arid selection procedure are expressed in terms of an agreement between the company and the unions.  Insofar as they relate to selection criteria they are imprecise, inexhaustive and, contrary to Mr Brown's assertion, do not provide for a sequence of application, nor for that matter, for any weighting to be given to any particular criteria.  Mr Shimani considered the Simplification and the original agreement which the Union had agreed to had been complied with.  Mr Shimani also considered that the method of selection of employees for redundancy had been agreed before the Respondent and the union within the scope of the agreement.  The criteria which had been adopted in this and the previous two occasions was the procedure he considered to be the correct procedure.  Both, Mr Scholfield and Mr Shimani did not consider there to be any difference between the scheme as applied and that in the composite scheme.  We consider that the redundancy procedure in the appendix to the composite agreement to lack the certainty that is necessary for a contractual agreement.  In any event the appendix ix is written as an agreement between the Respondent and the trade unions who had entered into it.  The agreement is different in character to the main part of the agreement (which relates to matters of pay and benefits).  While it is possible for agreements between unions and employers to become incorporated into contract of employment, we are not persuaded that that happened here in respect of the appendix ix.  We find that that agreement in respect of redundancy selection as procedure was one between the Respondent and the union which agreement had been varied by agreement between those parties.  We further find that it was reasonable for the Respondent to rely on the trade unions' agreement to the selection procedure particularly that procedure having been used on previous occasions in the comparatively recent past.  In this situation we consider that the Respondent acted reasonably in limiting its pool of selection as it did. 
49.	There was no doubt in Mr Shimani's or the Respondent's minds that the Respondent considered that the procedure which it had adopted was the same as that contained in the agreement between itself and the Union, we are not satisfied that it was.  We consider that there were sufficient differences of detail as could make a difference.  We consider, however, that the Applicant's Union and the Management had in effect by agreement, amplified the criteria and expressed them in a different and more structured manner.  We do not consider that there is any reason for us to find that the agreement had contained any order of precedence between the various criteria.  We did not hear that there had been any objection to the criteria when it was used before and we are satisfied that the Respondent acted reasonably in acting as it did.  There is no evidence before us to conclude that the union acted under any form of duress. 
50.	We find that there was no work for the Applicants to do of the type which they had been employed in the part of the Respondent's undertaking where they had been employed, we find they had been fairly selected in accordance with the criteria for potential dismissal on the ground of redundancy.  We further find that the Respondent made efforts to find alternative work for each of the Applicants, which to some extent met Mr Brown's concern, expressed during consultation, of remaining in employment to see what further work might be acquired by the Respondent.  While one can have sympathy for the situation the Applicants found themselves in, we do not consider the Respondent's actions in the manner in which they offered the Applicants alternative work, to be in any way unreasonable.
51.	This was not a large scale redundancy as defined in the Trade Union Relations (Consolidation) Act 1992.  We are satisfied that having been selected, the Respondent gave as much warning as possible to the trade union, consulted with the trade union, consulted with and considered all representations from the Applicants which they made.  Having offered such alternative work as was available to them we find that the Respondent did not act unfairly in dismissing the Applicants.  We find that the Applicant's complaints of unfair dismissal fail.”

The Notice of Appeal

7.	The Notice of Appeal was drafted by the First Appellant, Mr K J Brown.  It has been expanded upon in an extremely impressive Skeleton Argument drafted by Ms Abigail Schaeffer who has appeared on behalf of all four Appellants.  We are grateful to her and to Mr Paul Nicholls for their able and cogent submissions to us.

8.	We will take the grounds of appeal in the order in which they were made to us.

Ground 1: Incorporation

9.	Ms Schaeffer submits that the Employment Tribunal erred in law in finding that the redundancy criteria in Appendix IX of the 1996 Agreement were incorporated into the Appellants’ employment contracts.  She supported this submission by detailed written submissions set out in her Skeleton Argument as well as oral submissions.  She referred us to the principles set out in Alexander v Standard Telephones and Cables Ltd (No. 2) [1991] IRLR 286 at paragraph 31 and the more recent decision of Griffiths & Moore v Salisbury District Council [2004] EWCA Civ. 162.  The latter case was concerned with the National Joint Council for Local Government Services National Agreement on Pay and Conditions of Service.  Both Counsel took us through a detailed analysis of similarities and dissimilarities between that agreement and the collective agreement between the employers and the trade unions in this case.

10.	Mr Nicholls submitted that we should uphold the Employment Tribunal decision that Appendix IX was not susceptible to incorporation into the Appellants’ individual contracts of employment.
EAT Decision

11.	There is no dispute between the parties about what the correct legal principles are.  The dispute between them is the application of those principles to the facts of this case and the Employment Tribunal’s reasoning.  In Alexander (above) at paragraph 31 Hobhouse J (as he then was) said this:

“31.	The principles to be applied can therefore be summarised.  The relevant contract is that between the individual employee and his employer; it is the contractual intention of those two parties which must be ascertained.  In so far as that intention is to be found in a written document, that document must be construed on ordinary contractual principles.  In so far as there is no such document or that document is not complete or conclusive, their contractual intention has to be ascertained by inference from the other available material including collective agreements.  The fact that another document is not itself contractual does not prevent it from being incorporated into the contract if that intention is shown as between the employer and the individual employee.  Where a document is expressly incorporated by general words it is still necessary to consider, in conjunction with the words of incorporation, whether any particular part of that document is apt to be a term of the contract; if it is inapt, the correct construction of the contract may be that it is not a term of the contract.  Where it is not a case of express incorporation, but a matter of inferring the contractual intent, the character of the document and the relevant part of it and whether it is apt to form part of the individual contract is central to the decision whether or not the inference should be drawn.”

12.	That key passage was adopted and applied by the Court of Appeal in Griffiths & Moore (above) at paragraph 12.  In Alexander Hobhouse J found that the wording of the only document directly applicable to the individual plaintiffs, the statements of written particulars issued under the Employment Protection (Consolidation) Act 1978 (now Employment Protection Act 1996) was not sufficient to affect an express incorporation of the provisions relating to redundancy in the collective agreements since the statutory statement did not itself deal with redundancy matters.  Neither was it possible to infer, as a matter of contractual intent, the selection procedures on the principle of seniority were incorporated into the individual contracts of employment.  Where none of the other clauses of the collective agreement are apt to be incorporated into the individual contract of employment, it would require some cogent indication that a particular clause was to have a different character and to be incorporated.  In that case, the clauses in question, when considered within the context of the joint consultation scheme of the procedure agreements as a whole, were not sufficiently cogently worded to support the inference of incorporation into individual contracts of employment.

13.	In Griffiths & Moore the Court of Appeal held that what was called the Implementation Agreement at the beginning of the National Joint Council for Local Government Services Scheme of Conditions of Service (commonly known as the Green Book) was incorporated into the individual contracts of employment of the two Appellants.  We have looked closely at the facts of those two decisions, but at the end of the day the issue for the Tribunal and us is the precise wording of the collective agreement here and in particular Appendix IX.

14.	In our judgment the Employment Tribunal erred in law in finding that Appendix IX was not incorporated into the individual Appellants’ contracts of employment.  It is correct that there is no reference in the individual contracts of employment to any collective agreement between the employer and the trade union.  It is also correct that there is no reference at all in the individual contracts of employment to redundancy procedures: see the terms and conditions of employment for Mr Brown: EAT bundle pages 71-74; Mr Butler: EAT bundle pages 75-79; Mr Lai: EAT bundle pages 80-84; and Mr MacFarlane: EAT bundle pages 85-88.  Neither is there any reference to any other document about redundancy procedures.  In effect there is a complete absence in the individual contracts of employment of redundancy procedure.

15.	The Employment Tribunal analyse the agreement as a whole: decision paragraph 25, as well as Appendix IX: decision paragraphs 22-24.  Although it was not necessary to do so, it is quite clear that the Employment Tribunal took the view that the majority of the collective agreement was incorporated into the individual contracts of employment when it said:

48.	“…  We consider that the redundancy procedure in the appendix to the composite agreement to lack the certainty that is necessary for a contractual agreement.  In any event the appendix ix is written as an agreement between the Respondent and the trade unions who had entered into it.  The agreement is different in character to the main part of the agreement (which relates to matters of pay and benefits).  While it is possible for agreements between unions and employers to become incorporated into contract of employment, we are not persuaded that that happened here in respect of the appendix ix.”

16.	In our judgment the Employment Tribunal failed to apply the reasoning of Hobhouse J in Alexander to the facts of this case, in particular (i) having taken the view that the main part of the agreement was capable of incorporation gave no cogent indication that Appendix IX had a different character and therefore could not be incorporated.  In our judgment it is not different in character to the main part of the agreement.  Neither is it any less certain when one considers the subsequent amendments made by custom and practice and which are referred to in paragraphs 28-30 of its decision.  This is particularly the case in the absence of any reference to redundancy procedures in the individual contracts of employment.  The Employment Tribunal does not refer itself to the decision in Alexander and it is not clear how focused the Tribunal were on that decision.  We emphasise that we are not substituting our view of the facts for that of the Employment Tribunal, but finding that there was an error of law on the part of the Employment Tribunal in not applying or misapplying the Alexander case.  Of course Griffiths & Moore had not been decided at the date when the Employment Tribunal gave its decision.

Ground 2: Variation of Appendix IX

17.	Ms Schaeffer next submitted that if we were to find that Appendix IX was incorporated into the Appellants’ individual contracts of employment then it must be the original Appendix IX and there can have been no variation of it by any subsequent agreement between the employer and the trade union.

18.	Mr Nicholls argued against that proposition and relied on Robertson & Jackson v British Gas Corporation [1983] IRLR 302 and in particular (i) the headnote and (ii) paragraphs 23-24 per Kerr LJ.  The actual amendments are, as we have already pointed out in this judgment, contained in the Employment Tribunal’s decision at paragraphs 28-30 (2001 and 2002) as well as the procedure adopted with the concurrence of the trade unions in this case: decision paragraphs 48-49.  There is no evidence about and indeed it is not suggested that any of the individual Appellants sought to resile from the collective agreement or any subsequent amendment to it.  In our judgment there had been amendments to Appendix IX by custom and practice which have been agreed with the trade unions.  The practice adopted in the present case was agreed with the trade unions.  In our judgment the subsequent amendments were a valid variation of Appendix IX binding upon the individual Appellants as incorporated into their contract of employment.

Ground 3: Unfair Dismissal

19.	Ms Schaeffer submitted that while a dismissal in breach of contract is not necessarily unfair an employer is required to comply with its own procedures in a redundancy exercise, otherwise it is not behaving fairly: Russell v London Borough of Haringey (unreported, A1/1999/0755).  At paragraph 25 of that Court of Appeal decision Mummery LJ said this:

“25	In my view the legal position is that the Council was under an obligation to comply with its own procedures.  If it did not do so, it would not be behaving fairly in the conduct of the redundancy exercise.  The procedures involved the Council having to consider whether Mr Russell’s post was interchangeable with other posts in the organisation.  Only if it was not interchangeable could Mr Russell be declared redundant without further selection.”

However, strictly speaking, that comment is obiter because in the next paragraph Mummery LJ found that the procedure was in fact complied with.  Mr Nicholls relies on Westminster City Council v Cabaj [1996] IRLR 399 as authority the other way.
20.	Ms Schaeffer goes on to criticise the actual selection procedure in this case on the grounds set out in paragraph 53 of her Skeleton Argument.

EAT Decision

21.	In our judgment it is always necessary to go back to the language of section 98 (4) of the Employment Rights Act 1996.  That is what the Employment Tribunal did here: decision paragraph 12.  Furthermore, it had in mind the leading authority of Williams v Compair Maxam Ltd [1982] IRLR 83 to which it was specifically referred by the Respondent: decision paragraph 9.  It properly set out the guidance contained in that decision.  The Employment Tribunal then addressed questions raised by the Williams case and reached the conclusion that the dismissal was a fair one: decision paragraphs 49-51.  That of course was on the basis that the Employment Tribunal had earlier found that Appendix IX was not incorporated into the contract of employment.  However, despite our decision that the Employment Tribunal were wrong on this point we have gone on to find that there was a subsequent amendment to Appendix IX as a result of custom and practice, in other words the agreement with the trade unions about the correct procedure to follow.  That does not vitiate, in any way, the Tribunal’s findings on the substance of the procedure followed by the employer in this case.  The Tribunal were fully entitled to find that the procedure was a fair one and it had been fairly applied to each of these individual Appellants.

Conclusion

22.	For these reasons this appeal is dismissed.