Appeal No. UKEAT/0159/10/SM

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 14 January 2011

Before
HIS HONOUR JUDGE PETER CLARK
(SITTING ALONE)

MR T MORGAN	APPELLANT

NETWORK EUROPE GROUP LTD	RESPONDENTS

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MS G WITHERINGTON
(of Counsel)
Direct Access
	
For the Respondent	No appearance or representation by or on behalf of the Respondent	

SUMMARY
CONTRACT OF EMPLOYMENT – Implied term/variation/construction of term

Whether variation of contractual terms to permit lay-off without pay other than statutory guaranteed pay.  Consideration of EAT decisions in Jones [1981] IRLR 477 and Solectron [2004] IRLR 4.

Held: No agreed variation.  Appeal by Claimant allowed.  Declaration made as to unauthorised deductions from wages.

HIS HONOUR JUDGE PETER CLARK
Introduction
1.	This is an appeal by Mr Morgan, the Claimant before the Stratford Employment Tribunal against the judgment of Employment Judge Jones, promulgated with Reasons on 27 July 2009, dismissing his complaint of unauthorised deductions from wages brought against his employer, the Respondent, Network Europe Group Ltd.  Before the Tribunal the Claimant appeared in person, the Respondent was represented by its Group Financial Controller, Mrs Mack.  

2.	The appeal having been put through to a full hearing by Underhill J (President) at a preliminary hearing.  The Claimant is today represented by counsel, Ms Witherington, who prepared a helpful skeleton argument which I read in advance of the hearing.  The Respondent has indicated that it relies upon the Judge’s reasons and has not attended today.  I have also taken into account the Respondent’s written representations at pages 8 and 12 to 13 of the EAT bundle.

The Employment Tribunal Decision
3.	The Claimant commenced employment with the Respondent as a storekeeper on 1 November 2005.  On 29 November 2005 he signed a statement of terms and conditions of employment, agreeing to be bound by the conditions there set out.  He also acknowledged receipt of the company handbook.  Neither that statement of terms of conditions nor the handbook made any provision for payment during lay-off.

4.	On 20 March 2008 the Claimant was issued with a new handbook for which he signed.  The Respondent contended below that at the same time he was issued with a new statement of terms and conditions.  The Claimant denied receiving that document.  The Employment Judge made no finding as to whether or not he received the new statement of terms, but at all events, no signed copy of the new statement was produced in evidence.

5.	The new handbook at paragraph 25 sets out the relevant provision for lay-off without pay other than the statutory guaranteed pay.  The new handbook began with these words:

“This Handbook has been drawn up by the Company to provide you with information on policies and procedures.  It is important for you to read the Handbook carefully as this, together with your Contract of Employment, sets out your main terms and conditions of employment.”

6.	The Employment Judge found that whether or not he received the new statement of terms, he did receive the new handbook and was bound by it, having continued to work under its terms and accepting remuneration for so doing.

7.	She further found at paragraph 14 that the Respondent did put quite an important change to the contract in the new handbook - the lay-off term - and did not draw it to the attention of employees at the time.  The Claimant did not read the new handbook when he received it.  The Employment Judge adds that it, the handbook, also quite properly advises staff to read it carefully and ensure they agree to it before they sign it.  The Claimant did actually sign for it. 

8.	Pausing there, that statement appears to conflate the rubric at the end of the statement of terms, which on the original statement signed by the Claimant, said this: “I have read, understood and am willing to abide by the terms and conditions laid down in the Employee Handbook and accept that they form an integral part of this Contract of Employment.”  The Employment Judge, as I have indicated, made no finding that the Claimant received the second statement of terms and conditions; certainly no signed copy was produced by the Respondent in evidence.  The fact that the Claimant signed a document - bundle page 49 - merely stating that he had received the new handbook is a different matter from signing the rubric at the end of a new statement of terms and conditions. 

9.	Against that factual background the Judge concluded that the Claimant was bound by the new handbook insofar as it amends his original contract.  The Respondent therefore had the contractual right to lay off the Claimant without full pay and his claim for unauthorised deductions during a period of lay-off between 27 February and 22 May 2009 when his employment ended, failed and was dismissed. 

The Appeal
10.	The appeal is advanced on two grounds.  First, it is contended that, on the facts found, the Judge was wrong to conclude that an agreed variation of the contract had taken place.  Secondly, it is said that, in breach of clause 22 of the original written contract, the Respondent failed to give one month’s notice of the change.

Variation
11.	Had the Claimant received and signed the new statement of terms and conditions agreeing to the terms and conditions laid down in the new handbook, particularly paragraph 25 as well as those in the statement, I have no doubt - and Ms Witherington properly accepts - that the Employment Judge’s conclusion in this case would be the correct one.  There would then have been an express contractual agreed variation, drawing on the approach of Lord Denning MR in Gascol Conversions Ltd v Mercer [1974] ICR 420.  However, he did not sign the new statement of terms and conditions and the old statement, which he did sign, referred to the terms and conditions in the then current handbook which did not contain the lay-off provision first introduced at paragraph 25 of the new handbook.

12.	The Employment Judge, who did not have the advantage of legal representation on either side below, does not refer to the learning on deemed acceptance of a unilateral variation by acquiescence, particularly where the new term is not immediately relevant to the ongoing employment, see Jones v Associated Tunnelling Co Ltd [1981] IRLR 477.

13.	Ms Witherington has drawn my attention to the observations of Elias J in Solectron Scotland Ltd v Roper [2004] IRLR 4, paragraph 30, where he said this:

“30	The fundamental question is this: is the employee’s conduct, by continuing to work, only referable to his having accepted the new terms imposed by the employer?  That may sometimes be the case.  For example, if an employer varies the contractual terms by, for example, changing the wage or perhaps altering job duties and the employees go along with that without protest,  then in those circumstances it may be possible to infer that they have by their conduct after a period of time accepted the change in terms and conditions.  If they reject the change they must either refuse to implement it or make it plain that by acceding to it, they are doing so without prejudice to their contractual rights.  But sometimes the alleged variation does not require any response from the employee at all.  In such a case if the employee does nothing, his conduct is entirely consistent with the original contract containing; it is not only referable to his having accepted the new terms.  Accordingly, he cannot be taken to have accepted the variation by conduct.”

14.	Applying those principles, based on the approach of Browne-Wilkinson J (President) in Jones in the passage cited by Elias J at paragraph 32 of Solectron, I accept Ms Witherington’s submission that on the facts found in the present case the Employment Tribunal was wrong to conclude that, as a matter of law, the Claimant is deemed to have agreed to the new lay-off term.  That term was not specifically drawn to his attention by the Respondent; in the absence of a signed second statement of terms and conditions, incorporating the new handbook, there was no express agreed variation.  

15.	The new layoff provision was not one which affected the Claimant until he was laid off on 27 February 2009.  Having been laid off without full pay the Claimant promptly raised a grievance with his manager.  That grievance was rejected by Mr Hughes, a director, by letter dated 21 April 2009, following a grievance meeting held on 2 April.  The Claimant’s action in raising a grievance is consistent only with his not accepting the lay-off variation proposed by the Respondent; see Rigby v Ferodo [1988] ICR 29 HL.

16.	In these circumstances it is unnecessary to consider the second (notification) ground of appeal, which in my view adds nothing to the variation point in the Claimant’s favour and is not relied on by the Respondent in opposing the appeal.

Disposal
17.	For these reasons I shall allow this appeal, reverse the Employment Tribunal decision and substitute a finding that the Respondent made unauthorised deductions from the Claimant’s wages in respect of his normal pay for the period 27 February - 22 May 2009, less the guaranteed pay which he received during that period.  I note that he quantified his claim at £4,246.92.  The parties should attempt to agree the amount underpaid and notify the EAT of any such agreement within 21 days, failing which the question of remedy must return to the Employment Tribunal before a different Employment Judge.