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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Department for Transport v Sparks & Ors  EWCA Civ 360 (14 April 2016)
Cite as:  ICR 695,  IRLR 519,  WLR(D) 188,  EWCA Civ 360
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Mr Justice Globe
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE McCOMBE
LORD JUSTICE DAVID RICHARDS
| DEPARTMENT FOR TRANSPORT
|- and -
|MAUREEN SPARKS & ORS.
Mathew Purchase (instructed by Slater & Gordon) for the Respondents
Hearing date: 16 February 2016
Crown Copyright ©
Lord Justice McCombe:
"Where in any 12 month period you have taken a number of short-term absences as sick leave which together exceed 21 working days, your line manager will discuss your attendance record with you. Only if you have exceeded these "trigger points" and, consequently, your line manager acknowledges that there is a problem with your attendance will he or she take the matter forward in accordance the procedures [sic] set out in Annex A – Maintaining satisfactory standards of attendance."
The judge made broadly similar declarations in respect of the contracts between the Department and the six other respondents where the precise terms of the relevant provision were somewhat different, but not materially different for present purposes. The issue between the parties was and is whether the provisions in question, in each case to be found in a version or versions of the Department's staff handbook ("the Handbook"), were legally enforceable contractual terms or were mere notes of guidance and good practice of no legal force.
(B) The Employment Documents
"Cumulative short-term absences
10.1.18 Where in any 12 month period you have taken a number of short term absences as sick leave which together exceed 21 working days, your line manager will discuss your attendance record with you. Only if you have exceeded these 'trigger points' and, consequently, your line manager perceives a problem with your attendance will he or she take the matter forward in accordance the procedures set out in Annex A, Maintaining satisfactory standards of attendance."
"At some unspecified date prior to July 2012 "Chapter A10 Annex A, Maintaining satisfactory standards of attendance" was replaced by "Chapter A10 Annex, Disciplinary Procedures", which contained a disciplinary procedure dealing with conduct, performance and attendance issues. Pursuant to paragraph 10.1.18, the procedure in relation to cumulative short absences only applied where there had been "trigger points" of over 21 working days absences as sick leave in any 12 month period. If the procedure applied, it provided first of all for an "informal stage" involving a quiet word and a copy of any notes taken during the course of the discussion being handed to the employee. If there were any continuing attendance issues, there was provision for "formal stages". Stage one could lead to a formal written warning. Stage two could lead to a final written warning. Stage three could lead to dismissal."
"1.1 Contract of employment
1.1.1 You are a Crown employee working within the Department for Transport (DfT). Your terms and conditions of employment include those set out in
(2) the DfT Department Staff Handbook which contains terms and conditions and procedures and guidance applying specifically to you as a Crown employee (there are variations between different bargaining units – see Annex A …)
1.2 The Department Handbook
1.2.1 The Departmental Staff Handbook, as applying to you, sets out many of your terms and conditions. It is the intention of the recognised trade unions … and of the Crown that all of the provisions of the Departmental Staff Handbook which apply to you and are apt for incorporation should be incorporated into your contract of employment.
1.2.2 The Departmental Staff Handbook is in two parts:
- Part A contains terms and conditions. Without prejudice to the generality of paragraph 1.2.1 above, all of Part A and all annexes of Part A which apply to you and which are apt for incorporation, will be incorporated into your contract of employment; and
- Part B contains procedures and guidance relevant to your employment relationship with the Crown. Those procedures and guidance can be relevant to the operation of your contractual terms and conditions set out in Part A, but in the event of inconsistency between Part A and Part B it is Part A which prevails. …"
"Chapter A10: Ill Health
- sets out your terms and conditions of employment relating to sick leave;
- sets out your terms and conditions of employment relating to the management of poor attendance …
A10.1 Sick Leave
10.1.1 Paragraphs 10.1.2 to 10.1.23 inclusive set out your terms and conditions of employment relating to sick leave. In addition:
a. Annex A: Maintaining satisfactory standards of attendance … sets out the procedures that can be invoked whenever your line managers believe that your attendance is unsatisfactory.
c. Chapter A10.3 … sets out guidance and procedures for helping you and your line managers to address sickness absence.
Cumulative short absences
10.1.18 Where in any 12 month period you have taken a number of short-term absences as sick leave which together exceed 21 working days, your line manager will discuss your attendance record with you. Only if you have exceeded these 'trigger points' and, consequently, your line manager perceives a problem with your attendance will he or she take the matter forward in accordance [with] the procedures set out is Annex A, Maintaining satisfactory standards of attendance."
Using our document at pages 18 of the bundle and following as "Annex A" for these purposes, there is the three stage disciplinary procedure that the judge describes, leading sequentially to a first written warning, a final warning and potential dismissal. In contrast, in 10.3 of the Handbook one finds the provisions referred to in 10.1.1 c above, described as "Management of sick absence – policy". In this section there are three clauses of relevance as follows:
10.3.8 There are two sickness absence trigger points. The first trigger point is when absence reaches four occasions or a cumulative total of eight working days absence in the preceding twelve months. When the member of staff returns to work, the line manager must meet with the member of staff to establish the reasons for the absence, and determine whether there are actions the Department and the member of staff can take to improve attendance. Only if misconduct issues (eg. malingering) appear to be the cause of absence could the member of staff be referred to the discipline procedure at this stage.
10.3.9 The second trigger point will be after more than 21 working days sickness absence has been reached in the preceding twelve months (either cumulative or a single occurrence). If the absence is a single instance the line manager must deal with it as a long-term absence. Otherwise the line manager must hold a trigger point discussion and invoke the procedures for maintaining satisfactory attendance if there are grounds to do so. See letter template – Reached 21 – day trigger point multiple absence.
10.3.10 In all cases of single absences lasting more than 21 working days, there is a presumption that medical advice should be obtained. Line managers must make the judgment but, unless it is clear that no medical advice is required, line managers must refer the individual to the Occupational Health and Safety Unit for medical advice and consider a support plan in the light of medical advice."
(C) The parties' cases in outline and the Judge's decision
"44. The above matters need to be contrasted with the fact that paragraph 10.1.18 was intended to be contractual if its contents were apt for incorporation. The contents of paragraph 10.1.18 were clearly and precisely set out. Simply stated, an employee had the right not to have the procedures in Annex A implemented until there had been more than 21 days in short-term absences as sick leave in any 12 month period. The procedures in Annex A that would then be triggered had originally been called "Maintaining satisfactory standards of attendance". The defendant had changed the title of the Annex to "Disciplinary Procedures". Whichever title was used (and the name of the Annex varies between the agencies) the potential consequences of the procedures were serious. They were capable of leading to formal processes that could have resulted in written warnings and dismissal. In the words of Lord Woolf in Wandsworth "what was being triggered was a disciplinary … procedure".
45. In Wandsworth terms, the terminology of the handbook was not couched in framework terms or solely mere guidance, nor was it dealing with initial stages. It was dealing with processes at a later stage of the process than that. Chapter 1 expressly stated that the handbook contained terms and conditions which would be incorporated into an employee's contract of employment if they were apt to be so incorporated. The trigger points in paragraph 10.1.18 were precise and Annex A set out what was proposed to happen if it applied.
46. In Keeley terms, read on its own, it read as if it was contractual. Notwithstanding many of the provisions surrounding it were not apt for incorporation, paragraph 10.1.18 was capable of having a life of its own.
47. In my judgment, paragraph 10.1.18 did have a life of its own. It was apt to be incorporated. The answer to the first question is yes."
For the Department, Mr Tolley argues that the judge's conclusions in these paragraphs were wrong.
(D) The Law
"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."
"It is, we believe, from our industrial tribunal experience eminently desirable that an employer's approach to dealing with ill health absence should not run the risk of being viewed by management and staff in the same manner as misconduct disciplinary procedures. It is very much an area which we as a tribunal would wish to see covered by negotiated codes and policy statements and staff agreements with that kind of spirit and effect than by being treated as part of the contractually binding obligations of the employer and employee. As a matter of good industrial practice we believe that ill health absence should be treated with much more flexibility compassion and common sense than many other aspects of the employment relationship. There is a case for saying that a young man who takes one day off allegedly for a cold but is seen shopping in the town centre should be treated much more severely than, say, someone with long-term asthma difficulties and a number of days' absence."
The court held that the tribunal had erred in holding that provisions in the code relating to the level at which sickness absence would be reviewed were contractually binding. The court said that the outcome on the issue turned on
"…whether, on the proper interpretation of the code, the relevant paragraphs are to be construed as conferring rights on the employees or as setting out no more than good practice which the council's officers were intended to follow".
The court held that in that case the relevant provisions fell into the latter category. However, Lord Woolf MR also observed that:
"If what was being triggered was a disciplinary or an appeal procedure, the position would probably be different. Both in the case of the short- and the long-term absentees, the code is doing no more than providing guidance for both the supervisors and the employees as to what is expected to happen. The code does not set out what is contractually required to happen. The whole process in the initial stages is sensibly designed to be flexible and informal in a way which is inconsistent with contractual rights being created. At later stages of the process proposed the employees' arguments would have much more force."
"33. … the fact that the staff handbook was presented as a collection of 'policies' does not preclude their having contractual effect if, by their nature and language they are apt to be contractual terms, as clearly many were in the 'Employee benefits and rights' part of the handbook, incorporating in that way by reference what was not expressly referred to or detailed in the statement of employment terms.
34. Highly relevant, in any consideration, contextual or otherwise, of an 'incorporated' provision in an employment contract, is the importance of the provision to the overall bargain, here, the employee's remuneration package – what he undertook to work for. A provision of that sort, even if couched in terms of information or explanation, or expressed in discretionary terms, may be still be apt for construction as a term of his contract (providing it is not in conflict with other contractual provisions); see e.g. Horkulak; and cf. Briscoe v Lubrizol  IRLR 607, per Potter LJ at paragraph 14, as he then was, and with whom on this point Ward LJ and Bodey J agreed. Provision for redundancy, notwithstanding statutory entitlement, is now a widely accepted feature of an employee's remuneration package and as such, is particularly apt for incorporation by reference, as the judge recognised in the following passage in paragraph 45 of his judgment:
'The payment of enhanced redundancy payments was a well-known fact of employment life in the group and, given the frequency with which redundancy exercises were conducted, clearly an important factor in particular to higher-paid and longer-serving employees.'.
35. Equally, if not more important, is the wording of a provision under question in an incorporated document containing contractual terms. If put in clear terms of entitlement, it may have a life of its own, not to be snubbed out by context immediate or distant in the document of which it forms part. Where the wording of the provision, read on its own, is clearly of a contractual nature and not contradicted by any other provision in the documentary material constituting the contract, context is not all."
Auld LJ also commented:
"As Dyson LJ noted in the course of Mr Brennan's submissions, a good way of testing Fosroc's case and the judge's reasoning on construction, is to ask whether, and subject to the issue of certainty, if the redundancy policy had been set out in identical terms in Mr Keeley's statement of employment terms, it could seriously have been argued as a matter of construction that it was not apt for a contractual term and, on that account, not part of the contract."
It was said further that the fact that the provisions in question were contained in the "employee benefits and rights" section of the handbook was of relevance. They were, therefore, to be treated differently from "procedural, aspirational or discretionary matters in the section going to the selection of employees for redundancy".
"Wherever possible, any issues relating to conduct, competence and behaviour should be identified and resolved without recourse to formal procedures. However, should we consider that your conduct or behaviour may be in breach of normal standards of behaviour, or that your professional competence has been called into question, we will resolve the matter through our disciplinary or capability procedures, subject to the appeal arrangements set out in those procedures."
In reaching his conclusion, the judge identified certain "indicia" that a provision is taken to have contractual status in the following passage at paragraph 168 of the judgment:
"There is no single test as to whether an employer and employee intended to agree that provisions of an agreement such as the Practitioners Disciplinary Procedure should be contractual between them (rather than advisory or hortatory or an expression of aspiration), and if so which provisions. The indicia that a provision is to be taken to have contractual status which are, I think, of some relevance to this case include these:
(i) The importance of the provision to the contractual working relationship between the employer and the employee and its relationship to the contractual arrangements between them: as I understand it, it is common ground in this case that, because parts of the Practitioners Disciplinary Procedure are contractual, in some circumstances the Trust might exclude Dr Hussain or bring disciplinary proceedings for misconduct against her. The implication of this, as it seems to me, is that provisions important to implementing the agreement about exclusion and about conduct hearings are also apt to be contractual: the more important the provision to the structure of the procedures, the more likely it is that the parties intended it to be contractual. …
(ii) The level of detail prescribed by the provision: as Penry-Davey J said in Kulkarni v Milton Keynes Hospital NHS Trust  IRLR 949 at para. 25, the courts should not "become involved in the micro-management of conduct hearings", and the parties to the contract of employment are not to be taken to have intended that they should be. (In the Court of Appeal in Kulkarni, (loc cit) at para 22, Smith LJ endorsed this observation of Penry-Davey J.)
(iii) The certainty of what the provision requires: as Swift J observed (in Hameed (loc cit) at para. 68), if a provision is vague or discursive, it is the less apt to have contractual status.
(iv) The context of the provision: a provision included amongst other provisions that are contractual is itself more likely to have been intended to have contractual status than one included among other provisions which provide guidance or are otherwise not apt to be contractual.
(v) Whether the provision is workable, or would be if it were taken to have contractual status; the parties are not to be taken to have intended to introduce into their contract of employment terms which, if enforced, would not to be workable or make business sense: see Malone v British Airways plc  EWCA Civ 1225 at para 62."
The judge then quoted paragraph 34 of Auld LJ's judgment in Keeley (quoted above) as to the relevance of the importance of the provision in the overall bargain between the parties.
(E) The Appeal
(F) My Conclusions
"whether the relevant paragraphs are to be construed as conferring rights on the employee or as setting out no more than good practice which the [employer's managers] were intended to follow" (paragraph 22)
" whether the code should properly be regarded as conferring a right on the employees not to have the short- or long-term procedures contained in the code invoked without the triggering event having happened" (paragraph 28).
"… you will notice a change to the way the staff handbook looks as we'll be removing the contractual highlighting from Part A. In response to feedback that the highlighting can be confusing and makes the handbook less user-friendly, we've decided to remove it. This means that the whole of Part A of the handbook will be contractual, not just the highlighted part."
Later, in July 2014 in response to a Freedom of Information Request it said this:
"The removal of the contractual highlighting took effect from 13 August 2012 … . The HR rationale for its removal was due to the confusion it was creating in relation to the text in Part A of the staff handbook. Part A was intended to have contractual effect. There was therefore lack of clarity on the effect of the non-highlighted text contained in Part A. The bulletin article which informed staff about the removal of the contractual highlighting from Part A of the staff handbook was contained in the bulletin dated 25 July 2012 … . The Department's position is that all of Part A of the staff handbook is apt for incorporation."
"A study of all the provisions of Part A demonstrates that it could never have been the situation that the whole of it was contractual or that all of it was apt for incorporation. By way of example, it is obvious that certain parts of paragraph 10.2 in relation to sick pay that appear to be highlighted were never meant to be contractual. The same applies to the provisions of 10.3. Some of its 85 paragraphs are highlighted in whole or in part. It is now accepted, though, by virtue of the application to amend the particulars of claim, the provisions were all concerned with guidance and procedures that were inapt for incorporation and were not contractual. At its highest, therefore, the contractual highlighting merely supports the contention that the defendant did intend that at least some of Chapter 10 Part A should be incorporated into the contracts of employment of its employees."
(G) Proposed Outcome
Lord Justice David Richards:
Lord Dyson, The Master of the Rolls: