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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Department for Transport v Sparks & Ors [2016] EWCA Civ 360 (14 April 2016)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2016/360.html
Cite as: [2016] ICR 695, [2016] IRLR 519, [2016] WLR(D) 188, [2016] EWCA Civ 360

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Neutral Citation Number: [2016] EWCA Civ 360
Case No: A2/2015/0563

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Mr Justice Globe
HQ13X03800

Royal Courts of Justice
Strand, London, WC2A 2LL
14 April 2016

B e f o r e :

LORD DYSON, MASTER OF THE ROLLS
LORD JUSTICE McCOMBE
and
LORD JUSTICE DAVID RICHARDS

____________________

Between:
DEPARTMENT FOR TRANSPORT
Appellant
- and -

MAUREEN SPARKS & ORS.
Respondent

____________________

Adam Tolley QC (instructed by the Government Legal Department) for the Appellant
Mathew Purchase (instructed by Slater & Gordon) for the Respondents
Hearing date: 16 February 2016

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    Lord Justice McCombe:

    (A) Introduction

  1. This is an appeal by the Department for Transport from the judgment and order of 3 February 2015 of Globe J by which he made declarations that certain terms, identified in a schedule to his order, were terms of the contracts of employment between the Department and the respondents. In particular, the judge decided that the following provision contained in the Department's Staff Handbook was a term of the contract between the Department and the First Respondent:
  2. "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.

  3. As a result of his finding, the judge declared that a new policy of attendance management, purportedly introduced by the Department in July 2012, was not effective to vary the contractual terms of the employment contracts and was not contractually binding upon the respondents.
  4. The Department appeals against the judge's decision with permission granted by (Stephen) Richards LJ by order of 23 March 2015. In the event that the court upholds the judge's decision that the provisions in issue were terms of the respondents' contracts, there is no appeal against the judge's further finding that the Department was not entitled unilaterally to vary the contractual terms as to attendance management.
  5. (B) The Employment Documents

  6. We were not shown the statutory statement of employment terms in respect of any of the respondents. It seems to be common ground, however, that nothing in such statements affected the matters that we have to decide. The question in issue turns upon the status of the particular paragraphs in the Handbook, as they applied to the seven individual "agencies" in which the seven respondents were employed. The seven agencies concerned were Department for Transport (Centre), Driving Standards Agency, Driver and Vehicle Licensing Agency, Highways Agency, Maritime and Coastguard Agency, Vehicle Certification Agency, Vehicle and Operator Services Agency. The seven respondents were each employed in one of these agencies.
  7. The particular provision in issue in the proceedings appeared in varying forms in the Handbook as it related to the different agencies. However, it was agreed that the same issue as to the incorporation of the provision into the individual contracts could be decided by reference to one example. For practical purposes of argument the provision appearing in the first respondent's employment documents was used. It is agreed that the decision as to that one example would resolve the question between the Department and all seven respondents.
  8. The provision that was placed before us for the purposes of the appeal was in a slightly different form from that which appears in the schedule to the judge's order, which I have already quoted above. The version that we saw was this:
  9. "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."
  10. At the beginning of the hearing of the appeal there was considerable difficulty in identifying the precise provisions of the Handbook that were in operation at the relevant times, in particular because it proved impossible for anyone to find the "Annex A" referred to in the quotation immediately above. The problem arose because the Handbook has, for some time, only existed in electronic form. Various provisions have been amended, deleted or inserted without maintaining the possibility of retrieving deleted material. The relevant Annex A has now been lost for all time. Clearly, this is far from satisfactory on a continuing basis for employee and employer alike and was not satisfactory for the purposes of our task in construing the relevant provisions at issue in the proceedings. In paragraph 8 of his judgment, the judge resolved this dilemma as follows:
  11. "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."
  12. Sadly, it was also impossible to identify the earlier document to which the judge was referring, because the "Disciplinary Procedures" section before us (p.18 of the appeal bundle) stated that it was "A3 annex C: Disciplinary procedures", not "Chapter A10 Annex A, Disciplinary Procedures" as referred to in paragraph 8 of the judgment. In the end, however, having heard argument from counsel, we decided that we would proceed on the basis that our document, at pp.18-23 of the appeal bundle bore sufficiently the characteristics referred to by the judge as to enable us to treat them as one and the same Annex as the judge had before him and which he decided to treat as the "Annex A" document. Thus, that document was treated as the "Annex A" referred to in the important clause 10.1.18.
  13. The employment documents introduced the Handbook by way of the following provisions:
  14. "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
    (1) …………
    (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:
  15. Those provisions lead into the relevant parts of the Handbook itself as follows:
  16. "Chapter A10: Ill Health
    This chapter
    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.
    b………
    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:

    "Trigger points
    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.
    Long-term 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

  17. The Department argued before the judge that clause 10.1.18 was not apt for incorporation into the contract of employment. The respondents contended to the contrary. The judge referred to a number of authorities which had been cited to him and to some of which I shall return. They included Wandsworth LBC v D'Silva [1988] IRLR 193 and Keeley v Fosroc International Ltd. [2006] EWCA Civ 1277. After summarising the submissions of Mr Tolley QC, the crux of the judge's decision on the present issue can be found in paragraphs 44-47 of the judgment as follows:
  18. "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

  19. The resolution of the issue of whether a provision in a staff handbook is incorporated into individual employment contracts or not will always turn upon the precise terms of the particular documents in each case, but the authorities to which we were referred provide some helpful guidance as to the approach to be adopted towards the problem.
  20. The first case was Alexander v Standard Telephones & Cables Ltd. [1991] IRLR 286, where the court was concerned with the status of certain terms as to redundancy contained in a collective agreement. Hobhouse J said this:
  21. "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."
  22. That passage was expressly approved in this court in the Wandsworth case (supra), a case concerning a staff code on sickness. The court commended as "good sense" a comment of the industrial tribunal in that case as to the approach to codes of that sort. The comment was this:
  23. "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."
  24. In Keeley (supra) the court was concerned with the question whether provisions in a staff handbook relating to enhanced redundancy payments were contractual terms or not. Reversing the judge, this court held that they were. At paragraphs 33 to 35 Auld LJ (with whom Dyson LJ (as he then was) and Sir Martin Nourse agreed) said:
  25. "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 [2002] 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".

  26. In Hussain v Surrey & Sussex Healthcare NHS Trust [2012] Med. LR 163, Andrew Smith J had to consider whether the provisions of the Trust's disciplinary procedure were incorporated into a doctor's contract of employment or not. He held they were. The words of "incorporation" were to be found in clause 17 of the doctor's contract as follows:
  27. "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 [2008] 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 [2010] 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.

  28. We were referred to other authorities. However, for my part, I found the cases that I have mentioned above the most helpful in resolving the present case.
  29. The question to be asked is whether the provision in question is apt for incorporation into the contract between employer and employee. The starting point, of course, is the language of the employment documents as a whole (I avoid the term employment contract at this stage.) As Hobhouse J said in the Alexander case, as approved in this court in Wandsworth, contractual intention when expressed in a written document must be ascertained in accordance with ordinary principles of contractual construction, but where a document is incorporated by general words it is necessary to ask whether any particular part of the document is apt to be a term of the contract. Each set of employment documents will differ and each has to be analysed in accordance with its own terms, not over-rigidly controlled by what another court may have thought of a different set of documents, dealing perhaps with a similar subject matter to the one in question.
  30. While I note what was said by Lord Woolf approving the tribunal's general approach to the desirable approach to dealing with ill-health absence, it is still necessary to decide whether in the context of the particular documents in question any one or more provisions are or are not, in the context of the whole, apt for incorporation as contractual terms.
  31. (E) The Appeal

  32. In support of the appeal, Mr Tolley QC for the Department argued that clause 10.1.18 did not have contractual force. First, he submitted that attendance management procedures are inherently unsuitable for incorporation into contracts and for this proposition he relied upon the approval given by Lord Woolf MR (as he then was) to the comment of the industrial tribunal in the Wandsworth case (quoted above) that it was "eminently desirable that an employer's approach to dealing with ill-health absence should not run the risk of being viewed…in the same manner as misconduct disciplinary procedures" and that the tribunal "would wish to see covered by negotiated codes…" etc. rather than "being treated as part of the contractually binding obligations…". He submitted that there was no reported case in which sickness management matters had been treated as having contractual force.
  33. Secondly, it was argued that clause 10.1.18 was not expressed in the language of entitlement when looked at as a whole. The first sentence was expressed in the language of expectation of what "will" happen and as a description of expected events, without being prescriptive.
  34. Thirdly, it was submitted that clause 10.1.18 dealt with only one type of sickness absence, cumulative short-term absences of more than 21 days, whereas the other provisions for sickness management in 10.3.8 to 10.3.10, which were expressly only "guidance and procedures", provided for other types of absence. Further, one of those provisions (10.3.9) also dealt with the trigger point of 21 days absence in 12 months. It made no sense, said Mr Tolley, that the one provision should have contractual force and the other should not.
  35. Fourthly, it was argued that clause 10.1.18 was to be found among a number of provisions in section 10.1 which were not apt for incorporation, as Globe J found. Mr Tolley said that the judge was wrong to find that this one clause had a "life of its own" (per Keeley) among these other non-contractual provisions. In this respect Mr Tolley relied upon paragraph 168(iv) in the judgment of Andrew Smith J in Hussain.
  36. Fifthly, it was submitted that even the Disciplinary Procedures in "Annex A" were couched in the language of procedural guidance rather than of contractual entitlement. Mr Tolley referred in this respect in particular to the "Core Principles" section at the beginning of the Annex. He said that this Annex as a whole could be treated as analogous to the initial stage "trigger points" of sickness management which were held in the Wandsworth case not to be contractual in character.
  37. Finally, Mr Tolley argued that to hold clause 10.1.18 as having contractual effect led to undesirable consequences in practice. Why, he argued, should 21 days cumulative absences produce a contractual water-shed whereas a single long term absence of 21 days (clause 10.3.10) did not? Equally, he argued, there seemed to be no contractual provision covering absence amounting to misconduct, e.g. in a case of malingering absence for less than 21 days. In such a case, could it be suggested that an injunction could be sought to prevent reference to disciplinary processes because the 21 day trigger point had not been reached?
  38. (F) My Conclusions

  39. In my judgment, clause 10.1.18 does have contractual force between the Department and the first respondent and that the judge was right so to hold.
  40. My reasons for reaching this conclusion are essentially those advanced by Mr Purchase in his arguments for the respondents.
  41. Referring back to the point I make in paragraph 19, I see no inconsistency in the sickness management procedures being largely matters of guidance and good practice, but with specific provisions relating to that subject having contractual force, if that is the proper effect of the documents as a whole.
  42. I agree with Mr Purchase that the words introducing the Handbook into the employer/employee relationship in clauses 1.2.1 and 1.2.2 point to a distinct flavour of contractual incorporation while, of course, preserving the question as to the aptness of any provision to incorporation. The theme continues into the introduction to the Handbook chapter on health which states that that chapter sets out "your terms and conditions of employment relating to sick leave" and "…to the management of poor attendance". Descending to further detail, clause 10.1.1 starts by saying expressly that paragraphs 10.1.2 to 10.1.23 "set out your terms and conditions of employment relating to sick leave". Annex A is said to "set out the procedures that can be invoked whenever your line managers believe your attendance is unsatisfactory". It is not perhaps surprising that a contractual limit upon that might be set in a clause such as clause 10.1.18. In contrast section 3 of the Chapter, i.e. the clauses in 10.3, are stated to be "guidance and procedures for helping you and your line managers to address sickness absence". That section introduces the provisions as "policy". The particular provision in 10.1.18 is separate from this policy section of the sickness management arrangements.
  43. I also accept Mr Purchase's submission that certain questions advanced as potentially relevant to these issues in Lord Woolf's judgment in Wandsworth are material here. Those questions are:
  44. "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)

    and

    " 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).
  45. It seems to me that the introductory words to which I have referred above and the terms of the provision itself indicate that it is designed to confer a right on employees over and above the good practice guidance in the policy section of the Handbook. I would add that, for my part, this provision would also meet the test suggested by my Lord, the Master of the Rolls (as Dyson LJ) in Keeley's case. If the provisions had been set out in the same terms in a formal contractual document could it 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? I think not.
  46. This is not a case like Wandsworth where the code on staff sickness could be seen to be a "framework within which to approach such matters" and as providing "a framework for discussion between manager and employee of the effect of sickness absence on an employee's performance and/or capability to carry out the duties of the post". The code there described itself as specifying "levels of absence to act as prompts for managers to review all employees' sickness records regularly and on a consistent basis". This was hardly the language of contractual incorporation. The language of the documents here is of a different character, as I have sought to explain above.
  47. It may be a generally desirable feature of industrial management (as the tribunal said in the Wandsworth case) to handle these matters through non-contractual policy, but that does not appear to me to prevent a particular provision such as clause 10.1.18, if considered to be worthy of separate treatment, receiving such treatment in a different part of the employment documents and being apt for incorporation into the contractual terms. As Mr Purchase submitted, this provision is not simply part of a general code or policy; it seems to me to go beyond mere "framework for discussion" or "prompts for managers" as the provisions were expressly in the Wandsworth case. Therefore, having regard to the language of clause 10.1.18, its place in the documents and the introductory words leading into 10.1 of this Chapter, it seems to me that the clause is apt for incorporation as a contractual term.
  48. I also accept the submission for the respondents that this provision is not an aspect of "micro-management" of the employer's handling of sickness absences. It does not prevent the employer and employee engaging constructively to manage such absence. It does not require the invocation of disciplinary procedures at any particular stage. The policy arrangements in section 10.3 remain effective.
  49. I do not accept Mr Tolley's point, made in the course of his helpful argument, that there is some inconsistency between the policy provisions of section 10.3 and a "contractual" 10.1.18. Section 10.3 is entirely capable of being operated in parallel. The fact that section 10.3.9 also has a trigger point at 21 days cumulative absence in 12 months is not, I think, inconsistent with a promise to employees not to invoke the Annex A procedures before that time in a case of simple cumulative sickness absence. The policy section does provide for possible reference to disciplinary action even at stage 1 in cases of misconduct e.g. malingering (10.3.8), but there seems to me to be no reason why, in such a hypothetically bad case, the procedures could not be invoked even if they could not be so invoked if questions of misconduct did not arise. I think there is sense in the suggestion that if clause 10.1.18 is not of contractual effect there could be little purpose in having it in the documents at all, since the policy section would cover the matter as a whole in 10.3.9.
  50. In the Respondent's Notice, it is further contended that Globe J could have found that clause 10.1.18 could be a contractual term in this case, even without having a "life of its own" surrounded by other provisions in clause 10.1 which would not have been apt for incorporation. I agree with Mr Purchase that a number of other provisions in section 10.1 might also have been so apt. He suggested clauses 10.1.4 (relating to the keeping confidential information as to medical conditions), 10.1.9 (loss of sick pay in the absence of appropriate medical certificates) and 10.1.20 (prohibition of alternative employment during sick leave without the Department's approval). Without deciding whether Mr Purchase was right in picking out these examples or not, it is not to me obvious that these provisions would not be apt for incorporation into the employment contracts.
  51. The second point taken in the Respondent's Notice is that Globe J did not give sufficient weight to the fact that, at one stage, a number of the terms in the Handbook (including 10.1.18) had been subjected to "contractual highlighting" in an attempt to identify provisions designed to have contractual effect. When the Department decided to remove that highlighting in July/August 2012, it said this in a news Article entitled, "New HR policies":
  52. "… 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."
  53. The judge said this on the subject of this highlighting:
  54. "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."
  55. For my part, I find it difficult to disagree with the judge's overall assessment of the contractual highlighting. The episode of inserting the highlights and then removing them seems to display nothing more than another illustration of internal confusion within the Department, similar to the loss of the historic "Annex A" that is material to this appeal. The only feature that one may perhaps draw out of the episode is that there was an overall understanding that the Part A provisions of the Handbook were prima facie intended to be of contractual force, save perhaps where the contrary was manifestly apparent. However, for the reasons that I have endeavoured to set out already, I am content, agreeing with the judge, to reach the conclusion that clause 10.1.18 was apt for incorporation as a contractual term and was, therefore, incorporated into the employment contract of the first respondent.
  56. (G) Proposed Outcome

  57. For these reasons, I would dismiss this appeal.
  58. Lord Justice David Richards:

  59. I agree.
  60. Lord Dyson, The Master of the Rolls:

  61. I also agree.


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