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||Neutral Citation Number:  EWHC 181 (QB)
||Case No: TLQ/14/0533
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
||Royal Courts of Justice
Strand, London, WC2A 2LL
B e f o r e :
MR. JUSTICE GLOBE
|| Maureen Sparks
Department for Transport
Mathew Purchase (instructed by Slater and Gordon Sols) for Claimants 1-7
Adam Tolley QC (instructed by The Traeasury Sols) for the Defendant
Hearing dates: 3rd and 4th November 2014
HTML VERSION OF JUDGMENT
Crown Copyright ©
Mr. Justice Globe :
- The claimants are each employed by one of seven individual bargaining units (agencies) for which the defendant is responsible:
- Second claimant – Driving Standards Agency (DSA)
- Third claimant – Driving and Vehicle Licensing Agency (DVLA)
- Fourth claimant – Highways Agency (HA)
The "Departmental Staff Handbook" for each agency contains written provisions concerning attendance management. The claimants apply pursuant to CPR Part 8 for a declaration in relation to their terms of employment arising out of the introduction of a new policy for attendance management introduced by the defendant in July 2012. The proceedings are intended to be representative proceedings and are backed by the recognised unions, namely, the PCS, Prospect and the FDA.
- Fifth claimant – Maritime and Coastguard Agency (MCA)
It is common ground that the case raises three questions:
- First, prior to July 2012, were the relevant attendance management provisions of each "Departmental Staff Handbook" terms of each claimant's contract of employment?
- Secondly, if so, was the defendant entitled to vary those terms unilaterally in July 2012?
- Thirdly, if not, should the court grant a declaration in the circumstances of the case?
First question - were the attendance management provisions terms of the contract of employment?
Chapter 1 of the "Departmental Staff Handbook" for each agency provided as follows
"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 Departmental 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 [my commentary: ie Annex A of Chapter 1])
1.2 The Departmental Staff 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.
- Annex A [my commentary: i.e. Annex A of Chapter 1] - Variations between bargaining units
The Department's individual bargaining units are required to adopt the Departmental Staff Handbook, but have discretion to:
- adopt different, local terms and conditions in respect of the following areas if it is demonstrably necessary for them to do so:
- leave and attendance (including working hours, absence monitoring and FWH provisions)
The seven agencies exercised their discretion under Annex A of Chapter 1. Each adopted its own local terms and conditions in respect of attendance management. There were marginal differences between the individual terms and conditions, but they were all broadly similar provisions. It is common ground that, notwithstanding the marginal differences, the resolution of the three issues will be the same for each claimant. Thus, by agreement between the parties in the course of the hearing and subject to there being a successful application to amend the details of the particulars of claim in relation to the first claimant, the principal focus has been on the provisions of the DfT(C).
- discipline (poor performance, poor attendance and misconduct…..)
The DfT(C)'s provisions
The provisions applicable to the first claimant were as follows.
Chapter 10 Part A of the DfT(C) Departmental Staff Handbook provided as follows
"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 in Annex A, Maintaining satisfactory standards of attendance." [my commentary: ie Annex A of Chapter 10]
At some unspecified date prior to July 2012,"Chapter A10 Annex A, Maintaining satisfactory standards of attendance" was replaced by "Chapter A10 Annex A, 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 absence 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.
The local terms and conditions relied upon as being applicable to the first claimant are pleaded in paragraphs 9-12 of the particulars of claim dated 18 July 2013. Mr Purchase, for the claimants, applies to amend those paragraphs. It is a late amendment. It is opposed by Mr Tolley QC, for the defendant, on the basis of the defence having concentrated upon the original drafting in order to defend the claim and generally because of its lateness and current practice that the court should be less ready than in former times to grant a late application to amend a pleading.
I am mindful of cases such as Swain-Mason and others v Mills & Reeve LLP  1 WLR 2735. They confirm the principle that a court should be less ready to grant late applications to amend pleadings. In deciding whether to grant a late application to amend, the court should pay particular regard to the overriding objective of enabling the court to deal with cases justly and at proportionate cost in the sense defined by all the circumstances listed in CPR rule 1.1(2). In considering the overriding objective, I am also mindful of the principles emanating from Mitchell v News Group Newspapers Limited  EWCA Civ 1537 and Denton v TH White Limited  EWCA Civ 906 in relation to the approach to be taken to a party seeking relief from sanctions under CPR rule 3.9.
In the narrow context of the first claimant's case, the amendment is significant. It involves the substitution of the provisions within Chapter 10.1 for the pleaded provisions of Chapter 10.3. Mr Purchase now concedes that the particulars within chapter 10.3 merely provided guidance and procedures and could not have been incorporated as terms of the first claimant's contract of employment.
In the wider context of all seven claimants and the action as a whole, the significance of the amendment is substantially diminished. It merely replicates the general substance of the pleaded cases of the other claimants. In particular, it replicates very similar provisions of the MCA in relation to the fifth claimant and the VCA in relation to the sixth claimant. The amendment therefore makes little or no difference to the substance of the declaration being sought under CPR Part 8. The application to amend is late because there has been recent discovery of a full copy of the staff handbook for the DfT(C). The provision of documentation has not been an easy exercise due to the overwriting of computerised material and the difficulty of finding hard copies of documents. For these reasons, the effect of the amendment and any default in its lateness can properly be regarded as trivial. Furthermore, no underlying prejudice to the defence arises from granting the application. There may have been some wasted preparation time concentrating on defending the first claimant's pleaded case. However, it was also necessary to concentrate on the case as pleaded in relation to the other claimants. There has therefore been no delay and Mr Tolley has been able to address the issues without making any application for an adjournment. In my judgment, it would be just to allow the amendment. I grant leave for it to be made.
Having granted the application to amend, I concentrate, as agreed, upon the amended particulars of the first claimant. For the avoidance of doubt, even if the amendment had been refused, I would have concentrated upon the like particulars of the other claimants and particularly the almost identical particulars of the sixth claimant in relation to the VCA in order to answer the three questions referred to above in paragraph 3.
The provisions applicable to the other claimants
For completeness, I briefly refer to the provisions applicable to the other claimants. The processes adopted by all were similar to those of the first claimant. All bar the DSA had provisions in very similar terms to paragraph 10.1.18 above and the DSA provisions were not significantly different. Overall, there were minor variations between the agencies in relation to their trigger points and the details of the procedure that was triggered. However, in circumstances where it is agreed there is no material difference between the processes for the purpose of resolving the issue of whether or not the individual provisions were terms of the contracts of employment, there is no need to descend into a detailed analysis of all seven processes. It is sufficient to provide a summary of what was the position prior to July 2012.
In each case, informal, followed by formal, procedures were triggered by sickness absence for a specific number of working days or a number of occasions over a 12 month period.
- DfT(C), MCA and VCA – 21 days absent
- DSA and DVLA – 8 days absent or 4 occasions absent
- HA – 14 days absent or 7 occasions absent
- VOSA – 8 days absent
Paragraph 1.1.1 of Chapter 1 of the handbook stated the Departmental Staff Handbook contained terms and conditions which should be incorporated into an employee's contract of employment. It is well established that an employer's handbook can be incorporated into an employee's contract of employment. In the words of Potter LJ at paragraphs 14 and 28 of Briscoe v Lubrizol Limited  EWCA Civ 508
"14. …..It is of course frequently the case that details of an employee's contract and the benefit to which he is entitled by virtue of his employment are largely to be found in a handbook of the kind supplied to the claimant.……… Again, it is frequently the case that, in the employment context, the language of a handbook, while couched in terms of information and explanation, will be construed as giving rise to binding legal obligations as between employer and employee…. "
"18. In the instant case, as it seems to me, it was the clear contractual intention of the parties to bestow upon the claimant as an employee the benefits provided for in the claimant disability scheme."
Paragraph 1.2.1 of Chapter 1 stated that it was the intention of the trade unions and the Crown that all of the provisions of the handbook that applied to an employee and were apt for incorporation should be incorporated into the employee's contract of employment. The generality of paragraph 1.2.1 was qualified by paragraph 1.2.2, in that it separated out Parts A and B of the handbook. All of Part A and all annexes of Part A that applied to the employee and which were apt for incorporation were to be incorporated. By way of distinction, Part B merely contained procedures and guidance relevant to the operation of the contractual terms and conditions. Annex A of Chapter 1 gave the DfT(C) discretion to adopt its own terms and conditions for attendance management. Chapter 10 Part A contained the key provisions. Paragraph 10.1.18 is one of those provisions.
Mr Purchase submits that paragraph 10.1.18 applied to the first claimant and the terms and conditions within it were apt for and were thereby incorporated into her contract of employment. Mr Tolley accepts the paragraph applied to the first claimant but submits the terms and conditions were not apt for incorporation and were not so incorporated.
There is no clear evidence as to when the handbook was first implemented. I have seen no complete handbook, either in its original form or in its most recent pre-July 2012 hard copy form. The files of exhibited documents include extracts from the handbook and its separate constituent elements for each agency. They are undated and the precise origin of each is not entirely certain. Part of the confusion about the documentation relates to the understandable decision by the defendant and its separate agencies in about the year 2000 to stop producing hard copies of the handbook and instead to produce electronic versions of it. Any subsequent changes to a handbook involved an exercise in overwriting a previous version. There is a lack of archive material to trace back to earlier copies or versions.
When the defendant and its agencies produced the handbook in electronic form, a decision was taken to produce it with some of the text highlighted in yellow. The text so highlighted was referred to as "contractual highlighting". I have seen a copy of a 2009 print-out of the DfT(C)'s handbook. It contains "contractual highlighting". It is an unsatisfactory document. It is common ground that the highlighting in the copy that has been produced is incomplete. That is nobody's fault. It is the product of an unsatisfactory technical and/or printing process. The highlighting is clear in parts and much less clear in other parts. In parts, it fades away in the middle of a sentence or a paragraph such that it becomes almost meaningless. By way of example in relation to Chapter 10 Part A, paragraph 10.1.1 does not appear to be highlighted and it is unclear as to whether all of paragraphs 10.1.2 to 10.1.23 are highlighted, although all of paragraph 10.1.18 does appear to be highlighted. The highlighting I have seen is therefore confusing and the presence or absence of highlighting is unreliable.
My conclusion that the highlighting is confusing is supported by a bulletin posted by the defendant on its Transnet network website on 25 July 2012. In a news article headed "New HR Policies", the defendant included the following statement:
"…….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 parts."
The intention that it was the whole of Part A that was to be contractual is further supported by the defendant's response on 10 July 2014 to a Freedom of Information Request as to the contractual effect of the highlighted provisions. It included the following passages:
"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 of 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. However, it is necessary to look beyond the contents of the bulletin and the Response to the Freedom of Information Act Request and to examine the contents of paragraph 10.1.18 itself to ascertain if that provision was so incorporated.
In this regard, assistance is gleaned from the case of Keeley v Fosroc International Limited  EWCA Civ 1277 where the Court of Appeal was considering whether the redundancy section of a staff handbook had been incorporated into an employee's contract of employment. In the course of giving judgment, Auld LJ said as follows:
"31. On the question of construction, as Mr Brennan acknowledged, where a contract of employment expressly incorporates an instrument such as a collective agreement or staff handbook, it does not necessarily follow that all the provisions in that instrument or document are apt to be terms of the contract. For example, some provisions, read in their context, may be declarations of an aspiration or policy falling short of a contractual undertaking see e.g. Alexander and others v Standard Telephones and Cables Limited (No.2)  IRLR 286 per Hobhouse J, as he then was, at paragraph 31; and Kaur v MG Rover Group Limited  IRLR 40 CA per Keene LJ with whom Brooke and Jonathan Parker LJJ agreed……It is necessary to consider in their respective contexts the incorporating words and the provision in question incorporated by them."
Alexander and Kaur were both concerned with the possible incorporation of a collective agreement rather than a staff handbook, but the principles remain the same.
In Alexander, Hobhouse J summarised the principles as follows:
"31. …… 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 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 crucial to the decision whether or not the inference should be drawn."
In Kaur, Keen LJ succinctly described the task in the following way:
"10. ………One must therefore look at the content and the character of the relevant parts of the collective agreement to determine whether they are apt to be a term of the individual contract of employment."
In looking at the content and character of paragraph 10.1.18, the case of Wandsworth London Borough Council  IRLR 193 is relevant for the proposition that sickness management provisions are normally unsuitable to be contractual terms. Wandsworth is a case where the Court of Appeal had to consider an analogous situation of the Council's unilateral decision to alter its code of practice in relation to the trigger points for procedures to be taken following absences due to staff sickness. The staff objected, maintaining that the code formed part of their contractual terms and conditions of employment and the employers were not entitled to make unilateral changes. In giving judgment and in deciding on the facts of the case that the provisions were not contractual, Lord Woolf approved the observations of the industrial tribunal in saying as follows:
"24. In relation to this code the industrial tribunal spoke good sense when they stated a general approach to codes of this sort in these terms: 'It is, we believe, from our industrial 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 being treated as a 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 result in Wandsworth is relied upon by Mr Tolley as support for the proposition that the provisions of paragraph 10.1.18 were not apt for incorporation. I accept that, in terms of principles to be applied, the observations of Lord Woolf in Wandsworth are of assistance. However, in terms of result, it remains a fact specific decision. It was dealing with a code of practice on staff sickness. There was no mention in the code of it containing terms and conditions. To the contrary, it was described as a framework in respect of which flexibility was required. There were no trigger points. There were prompts for absences to be reviewed and the details of when the prompts should occur were imprecise. It was in this context that the court concluded that the language of the provisions was not an appropriate foundation upon which to base contractual rights. The code was doing no more than providing guidance for the supervisors and employees as to what was expected to happen. The decision was therefore reached upon different facts to those under consideration here.
In terms of principle, Lord Woolf stated in paragraph 22 that the outcome of the appeal turned on the following question:
"22. ………..whether, on the proper interpretation of the code, the relevant paragraphs are to be construed as conferring rights on the employee or as setting out no more than good practice which the council's officers were intended to follow."
Lord Woolf referred to the observations of Hobhouse J, already referred to above, and added the following at paragraph 25:
"25. …..Those views of Hobhouse J do provide a valuable guide as to the solution of this issue on appeal. They can however be supplemented in this context by asking a question………That question is whether the code should properly be regarded as conferring a right on the employee not to have the short or long-term procedures contained in the code invoked without the triggering event having happened."
In concluding that the appeal in Wandsworth should be allowed, Lord Woolf made the following observations at paragraph 29:
"29. ……..If the language of the provisions to be amended are examined in the context of the scheme as a whole, they are not an appropriate foundation upon which to base contractual rights. 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-term and 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 employee's arguments would have much more force."
The content and character of paragraph 10.1.18 therefore needs to be tested against its surrounding context and the question needs to be asked as to whether it is to be construed as providing a right on the employee not to have the procedures in Annex A invoked without the triggering events having happened. The stage of the process is also of importance.
Paragraph 10.1.1 stated that "Paragraphs 10.1.2 to 10.1.23 inclusive set out your terms and conditions of employment relating to sick leave".
A number of the provisions within paragraph 10.1 were inapt for incorporation.
Paragraph 10.1.2 required an employee to inform a line manager of absence through illness with paragraph 10.3 applying if, without good reason, there was a failure to comply with the requirement. Paragraph 10.3.28 required the employee to ring by 10 am. It would have been inapt for there to have been a term of the contract with breach of it occurring, for example, if a call was not made until a few minutes after 10 am.
Paragraphs 10.1.5, 10.1.6 and 10.1.8 related to detailed provisions as to the provision of self certification or medicate certificates within set periods of time. It would have been inapt for there to have been a term of the contract with breach of it occurring, for example, if a certificate was produced a day late or on an incorrect form.
Paragraphs 10.1.4 and 10.1.7 required a line manager to keep confidential any information about illnesses or medical condition of staff and to forward immediately any sickness certificates to Human Resources. It would have been inapt for such guidance provisions for line managers to be terms of the contract.
Paragraph 10.1.14 required an employee to inform a line manger immediately if there had been contact with someone who had contracted a notifiable infectious disease or rubella. The employee would then have been entitled to a period of paid leave. It would have been inapt for there to have been a term of the contract with breach of it occurring, for example, if an employee's son had had rubella and the line manager was not notified immediately.
Paragraph 10.1.22 set out the provisions as to obtaining occupational medical advice from an external medical adviser and the entitlement of the employee to see a copy of any report. It would have been inapt for the description of such a procedure to have become a term of the contract.
However, paragraph 10.1 was within Part A of Chapter 10. It had to be read together with the provisions of Chapter 1. The effect of paragraphs 1.2.1 and 1.2.2 was that it was only those aspects of Part A that were apt for incorporation that would have been incorporated into the contract of employment. The fact that some of the provisions within paragraph 10.1 were inapt for incorporation did not mean the provisions within paragraph 10.1.18 were not apt for incorporation.
In this regard, the observations of Auld LJ at paragraph 35 in Keeley are relevant:
"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. "
Mr Tolley submits that, when 10.1.18 is read on its own, there are a number of reasons why it was not apt for incorporation. When the first sentence is considered alone, it only required a return to work discussion to take place with the line manager, made no mention of when that discussion should take place or what should happen in circumstances where no discussion was needed. Hence, the first sentence is more suggestive of being guidance only. When the second sentence is considered alone, it refers to a line manager "consequently" perceiving a problem after exceeding the trigger points. That may not have been the case, for example, with a known cancer problem. The word "consequently" is further evidence of guidance only. When the provision is considered as a whole, it only dealt with cumulative short-term absences and did not cover any single long-term absence. The long-term position for anything more than 21 days absence in any one absence was covered in paragraph 10.3.9. However, that provision is now not relied upon as being contractual. Mr Tolley submits that all such matters militate against paragraph 10.1.18 having a life of its own.
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".
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.
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.
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.
Second question - was the defendant entitled unilaterally to vary the terms of employment as to attendance management?
Chapter 1 paragraph 1.3.1 of the agencies' handbooks stated:
"1.3.1 Your contract of employment cannot be changed detrimentally without your agreement. Consequently, the Department will not change any of your terms and conditions of contract without your consent or that of a recognised Trade Union (see paragraph 1.3.2). Any proposals affecting staff will be the subject of consultation through the Whitley system, with a view to reaching agreement, with the recognised Trade Unions."
By a letter dated 6 July 2012, following unsuccessful negotiations, the defendant informed the claimants' trade unions that it would be imposing a new attendance management procedure across the agencies as from 9 July 2012. The new procedures, as subsequently revised in November 2013, have set new standardised 'trigger points' for 'cumulative short absences'. Under the 'first trigger point', an "informal review meeting" should be held after 5 working days absence or 3 occasions of absence in a rolling 12 month period. At that meeting, the employee should be advised of the potential for formal disciplinary action if there is further absence and the 'second trigger point' is breached; and an outcome letter confirming the advice should be sent to the employee. Under the 'second trigger point', formal action should always be considered. A "formal review meeting" at which a sanction may be imposed must be held after 8 working days absence or 4 occasions of absence in a rolling 12 months period. Further absence could ultimately lead to dismissal.
Two sub-issues arise: was the defendant entitled unilaterally to vary the terms at all and was the defendant entitled unilaterally to vary the terms to the extent that they were varied?
Was the defendant entitled unilaterally to vary the terms at all?
The answer to the question depends upon the contractual interpretation of paragraph 1.3.1.
In June 1997, Lord Hoffman summarised the well-known modern principles of contractual interpretation in the House of Lords case of Investors Compensation Scheme Limited v West Bromwich Building Society  1 WLR 896 at 912F-913E.
"(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
(2) The background…….includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.
(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent…….
(4) The meaning which a document……would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean…….
(5) The 'rule' that the words should be given their 'natural and ordinary meaning' reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had….. "
In December 1997, in Wandsworth, Lord Woolf referred to the issue of variation of contract in an employment context in paragraph 31 of his judgment.
"31. The general position is that contracts of employment can only be varied by agreement. However, in the employment field an employer or for that matter an employee can reserve the ability to change a particular aspect of the contract unilaterally by notifying the other party as part of the contract that this is the situation. However, clear language is required to reserve to one party an unusual power of that sort."
Two cases demonstrate the essence of construction of a contract and what language is required to reserve a power of unilateral variation.
In Securities and Facilities Division v Hayes and others  IRLR 81, the claimants' contracts of employment provided for payment of a subsistence allowance if an employee was absent from home overnight. The employers sought agreement from the unions for a reduction of the rate of allowance. When no agreement was reached, the employers unilaterally reduced the allowance. There was no express term permitting unilateral variation. The employers argued there was an implied contractual term permitting unilateral variation. In holding that the employers were in breach of contract, Peter Gibson LJ stated as follows in paragraphs 44 and 46:
"44. It is a strong thing to imply a term into a contract of employment when that term allows the unilateral variation of the contract. That is all the more so when there are established means for reaching consensual variations to the contract through the Whitley Council procedures………..
46. ……..Had the parties intended a provision allowing the unilateral variation of the rate of allowances, in my judgment the contractual terms would have had to provide unambiguously for that."
In Bateman and others v Asda Stores  IRLR 370, the claimants' contracts of employment included conditions of employment within sections of Asda's "Colleague Handbook". One of the provisions of the contract stated "The company reserves the right to review, revise, amend or replace the content of this handbook and introduce new policies from time to time to reflect the changing needs of the business and to comply with new legislation…". After a consultation process failed to produce widespread agreement, Asda unilaterally imposed changes to sections of the handbook. The Employment Appeal Tribunal held that, upon construction of the terms of the contract, the employer had expressly reserved the right unilaterally to alter the terms of employment.
Paragraph 1.3.1 contains three sentences. The interpretation of whether the defendant reserved to itself the positive right unilaterally to amend the contracts of its employees is complicated by its drafting in negative rather than positive terms. Further, literally and separately, the first and second sentences conflict with each other. The first sentence is qualified by the word "detrimentally", whereas the second sentence provides an unqualified right to the employee not have any change of the contract without consent. Nonetheless, in my judgment, the meaning that paragraph 1.3.1 as a whole would have conveyed to a reasonable person is that any proposals affecting a change in an employee's terms and conditions should first of all have been the subject of consultation through the Whitley Council system with a view to reaching agreement. In the absence of agreement, unilateral changes could then have been made, but only if they were not detrimental to the employee. Such a meaning could have been more clearly set out in the paragraph. However, I regard the language of the paragraph as a whole as being sufficiently clear, unambiguous and certain as to be interpreted as amounting to the reservation by the defendant of the right to impose unilateral changes to terms and conditions that were not detrimental to an employee.
Was the defendant entitled unilaterally to vary the terms to the extent that they were varied?
It is common ground that no agreement was reached through consultation and the defendant unilaterally varied the terms. Was the variation detrimental to the claimants?
The Oxford English Dictionary defines 'detrimental' as 'causing loss or damage, prejudicial, harmful'.
Albeit within the ambit of discrimination legislation, Lord Hope of Craighead gave consideration to whether something is to an employee's 'detriment' in the House of Lords case of Shamoon v Chief Constable of the Royal Ulster Constabulary  ICR 337
"35. …….one must take all the circumstances into account. This is a test of materiality. Is the treatment of such a kind that a reasonable worker might take the view that in all the circumstances it was to his detriment? An unjustified sense of grievance cannot amount to 'detriment'……….But,……it is not necessary to demonstrate some physical or economic consequence."
Mr Tolley submits that the changes introduced are not detrimental. To the contrary, they are beneficial. They enable both management and an employee to deal at the earliest opportunity with any issues arising from sickness absence and to attempt to address such issues so as to enable the employee to provide effective service. The aim is to ensure that an employee's absence is supportively managed to enable there to be a return to work at the earliest appropriate point. Mr Tolley places reliance on the fact that there has been no recorded case of any employee who it is said has suffered any actual detriment as a result of the implementation of the new policy.
I am prepared to accept that the reasons for the changes may be well motivated on sound principles. Nonetheless, the changes that have been introduced are fundamentally different to the previous processes. An "informal review meeting" is mandatory after the first trigger point of only 5 working days absence or 3 occasions in a rolling 12 month period. The employee is obliged to go to such a meeting whether or not the employee wants to go to the meeting. The outcome of that meeting refers to the employee's absence being "a cause for concern" and states "formal action would be considered if your absence continues to remains at an unsatisfactory level; reaching 8 days or 4 periods or more in a rolling 12 month period. Your attendance will therefore be closely monitored in accordance with these procedures". A "formal review meeting" is mandatory after the second trigger point of 8 working days or 4 occasions in a rolling 12 month period. A formal written warning is a possible outcome. This is in contrast to the processes under Annex A of the old procedure only being able to be instigated after sick leave had exceeded 21 days in any 12 month period. Thus, the trigger points initiating the implementation of disciplinary procedures that could lead to formal sanctions have been brought forward. This is particularly acute for the first, fifth and sixth claimants. It is less acute, but still apposite, for the other claimants.
In my judgment, there are material differences between the two sets of processes and any reasonable worker would take the view that the new provisions were to his or her detriment, both in the sense of its dictionary definition or as explained in Shamoon. I come to that conclusion notwithstanding the point that, as yet, there has been no identifiable case recorded of any specific aspect of detriment being established. Circumstances may not yet have arisen to demonstrate the detriment in a clearly identifiable manner. However, I am in no doubt the potential exists. Additionally, and as stated in the Shamoon case, "it is not necessary to demonstrate some physical or economic consequence". In any event, there is some evidence that employees are fearful of being caught by the low triggers of the policy and are acting in what may be a dangerous way. In an email dated 27 March 2013, reference was made to two examples. In one example, a DSA employee continued to work despite having being struck on the head by a defective door handle and being knocked unconscious for a short while. In the other example, a DVLA employee made a decision to come to work with his nine month old child when his wife was ill and he could not contact either set of grandparents to assist with child-care responsibilities.
In my judgment, therefore, the answer to the second question is no.
Third question – should the court grant a declaration in the circumstances of the case?
In accordance with the provisions of CPR 40.20 there is power to grant a binding declaration whether or not any other remedy is claimed.
The principles as to whether a declaration should be granted are summarised in paragraph 120 of Rolls-Royce plc v Unite the Union  1 WLR 318. The power of the court is discretionary. There should be a real and present dispute between the parties. However, a claimant does not need to have a present cause of action against a defendant. Each party must be affected by the court's determination of the issues. The court will be prepared to give declaratory relief in respect of a "friendly action" or where there is an "academic question" if all parties wish. This may particularly be so in a "test case" or where it may affect a significant number of other cases and it is in the public interest to decide the issue. Assuming all the other tests are satisfied, the court should ask the question "is this the most effective way of resolving the issues raised?"
In the case of Financial Service Authority v Rourke  CP Rep 14 Neuberger J stated that, in deciding whether it was appropriate to grant a declaration, consideration should be given to
"justice to the claimant, justice to the defendant, whether the declaration would serve a useful purpose and whether there are any other special reasons why or why not the court should grant the declaration."
Mr Tolley submits this is a not a suitable case for declaratory relief given the lack of any actual detriment and the lack of any specific case by which the court can test the issue. For the reasons already touched upon in relation to answering the second question, I am satisfied that these objections are insufficient to preclude the making of a declaration if there is a useful purpose in granting a declaration. Mr Tolley submits that there is no useful purpose. That submission has to be balanced against the fact that lack of clarification is to no one's benefit.
Mr Tolley also raises the issue of delay, not only in terms of how long it has taken to commence proceedings but also in terms of it being disruptive and an inefficient and ineffective management of the defendant's sickness policy to have to abandon it and revert to the various policies previously in existence.
In relation to how long it has taken to commence proceedings, the proceedings were not commenced until July 2013, which was twelve months after the change in policy. I have had the opportunity of reviewing the correspondence between the parties. Without descending into its detailed particulars, I am satisfied that genuine, albeit ultimately unsuccessful, attempts were being made to resolve the issue. There is evidence that, as late as mid February 2013, there was a real possibility of there being resolution without court proceedings. In any event, the claim is well within any limitation period. I do not regard delay as a sufficiently powerful reason not to make a declaration.
In relation to the wider point of the consequences of having to change the policy, the disruption that might be caused has to be set against the importance of the issue to all of the defendant's employees in relation to changing their terms of employment such that they could potentially become subject to disciplinary proceedings at a much earlier stage than previously. It is a real and present issue. The defendant has known about the objection to the process from its inception, but has continued to operate the new policy. It has done so at its own risk.
In my judgment, given the importance of the issue and taking into account justice on both sides, a declaration would serve a useful purpose and there is insufficient reason not to grant a declaration. The answer to the third question is yes.
I turn therefore to the terms of the declaration. There are four declarations sought in the amended particulars of claim:
(1) The terms of the claimants' contracts of employment are as set out above.
(2) The new procedures are not effective to implement any variation to those terms and are not contractually binding on them.
(3) In imposing the new procedures, the defendant and/or the agencies have committed an anticipatory breach of contract.
(4) Absent any material change in circumstances, if the new procedures are applied in an individual case, the defendant and/or the agencies will commit a breach of contract.
Mr Tolley submits that, even if a declaration is made, it should be limited to (1) and (2) only. There is a lack of specificity in relation to (3) and (4). There is no evidence of any individual case in which the new procedure has been applied. Declaring an anticipatory breach serves no useful purpose unless one also considers issues of repudiation, discharge of the contract and/or damages. That cannot be done on the information presently before me.
Mr Purchase submits that all four declarations should be made. The lack of any individual case is irrelevant. The claimants are not seeking a declaration for an actual, as opposed to an anticipatory, breach of contract. The new procedure has not yet been applied because no one has been sufficiently sick to reach the new trigger points. Nonetheless, the defendant is insisting it will apply the new procedure if anyone is absent from work and the application of the new procedure is justified. The issue potentially affects a very large number of employees across all of the agencies. It is in the interests of all of them, not just the claimants. Further, unless an employee is actually dismissed, there is unlikely to be any financial loss that might lead an employee to bring a claim after the event. A declaration in all four of the terms sought serves a useful purpose and is the only sensible remedy.
I find merit in and prefer the submissions made on behalf of the claimants. I therefore grant all four declarations.
I add the following. In terms of drawing up the order, consideration will need to be given to the precise wording of declaration (1). The order cannot be drawn up simply stating "……as set out above". The terms of the contracts of employment or a sufficient description of them will need to be reproduced from the body of the amended particulars of claim so to avoid any uncertainty as to what is the subject matter of the declaration.
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