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United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Ackinclose & Ors v. Gateshead Metropolitan Borough Council  UKEAT 0087_04_2810 (28 October 2004)
Cite as:  UKEAT 0087_04_2810
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|At the Tribunal|
|On 20 September 2004|
HIS HONOUR JUDGE ANSELL
MR D EVANS CBE
MR M WORTHINGTON
Transcript of Proceedings
|For the Appellants||MR BRIAN LANGSTAFF QC
(7828 4000 - firstname.lastname@example.org)
St Nicholas Building
Newcastle upon Tyne
|For the Respondent||MR J BOWERS QC
MR SEAMUS SWEENEY
Gateshead Metropolitan Borough Council
Directorate of Legal and Corporate Services
HIS HONOUR JUDGE ANSELL
"Employees within the scope of the Green Book are all employees of local authorities or other authorities of equivalent status in the UK."
Thus it is argued by the Respondents that private sector contracted out employees are not covered by the Green Book.
"From 1 April 1999 the standard weekly hours of all full time employees will be 37. For part-timers there will be corresponding increases in hourly basic rates from the date of the reduction in standard hours for their full-time counterparts."
Further, Clause 8.1 of the Green Book provisions provided that"
"Part-time employees shall have applied to them the pay and conditions of service pro-rata comparable to full-time employees in the same authority."
It is therefore argued by the Respondents that since there were no direct full-time comparators in Castle View at the relevant time, the wording of the Agreement had no direct relevance to the Appellants.
"4 After considering the matter at some length the Tribunal were of the view that the document which comprised the applicants' terms and conditions of employment was not exhaustive but was in effect simply a statement of main terms and conditions. Literal reading of the clause which appears at R50 might incline to the view that it was simply the National Joint Council for Local Authorities Services (Manual Workers) handbook, namely the White Book which formed part of the terms and conditions which transferred. However, having regard to the existence of the contract conditions of the other manual worker groups employed by the respondents and in particular to the evidence of Mr Robson 'in reality' there was no difference in these groups, we have concluded that upon a proper construction of the. agreement reached between the respondent and the applicant and which transferred to Castle View and back to the respondent it was the national bargaining machinery which was intended to be incorporated rather than a particular document which might have represented that agreement at the particular time"
"……whether there is any term proper to be implied or imported (whether by custom and practice or otherwise) that touches a switch from White Book to Green."
Lindsay J was also particularly troubled about the Constitution arrangements that brought to an end the old NJC manual workers and created the new NJC for all employees, and the interrelation between the two.
" (i) The Employment Tribunal would be asked to consider the events leading up to the abolition of the NJC for manual workers and the creation of the NJC for local government services.
(ii) The Employment Tribunal would be asked to consider the effect of this on the contracts of employment of on the one hand local government employees and on the other hand none local government employees.
(iii) The parties would also ask the Tribunal to consider what, if any, is the effect of the amendment and/or replacement of the White Book terms by the Green Book and in particular whether there is any difference between the two.
(iv) Whether any future agreement transfers to a transferee in the sense that the agreement did not exist at the time of the transfer.
(v) Whether there is a full time comparator in any event in order to give rise to any practical application of the relevant Green Book terms in the hands of the employees in question."
In addition there was an issue relating to Regulation 12 of TUPE, which contains a general prohibition on contracting out.
"17 Accordingly as no additional evidence has been offered other than the minute to which reference has been made this matter becomes a matter of construction of the contract and in absence of our being able to imply by the application of the usual test so that the Green Book was meant to apply to outsourced employees such as these applicants then the express term clearly does not suggest that they were included, but even were we to be wrong about that then the express terms which provide for a pro rata payment for part-time employees to that being received to equivalent full-time employees by virtue of the reduction in hours could not apply where in the same employment there were no such full-time employees.
18 Accordingly as our original reasoning has been found to be at fault and as the parties have been invited to offer further evidence which might have introduced some other interpretation or construction of the contract we are unable to find that such a construction or interpretation is appropriate and have no alternative but to conclude that our original decision was wrong and that the applicant's claims in this respect are not well-founded."
"Wages and Conditions of Service will continue to be in accordance with the NJC (Manual Workers) Agreement ……"
In her terms and conditions of employment, her hourly wage rate was defined as "NJC (Manual Workers) Agreement Grade 1", and in the final paragraph of her terms, set out the following:
"Please note that the above is an outline of your main terms and conditions of service. Full details are contained within the National Joint Council for Local Authorities' Services (Manual Workers) Handbook insofar as they are adopted by this Authority."
It was agreed that Gateshead had indeed adopted the Handbook. Both parties accepted that the old NJC had power to change the terms and conditions of the White Book arrangements and those changes became part of the Appellants' contract. The EAT, in their Decision, recognised the ability of the NJC to negotiate these changes, and in paragraph 12 Lindsay J said this:
"Whilst the NJC terms shown to us do not expressly provide for how those should be changed, that rates should change over time was inevitable and the functions of the NJC (Manual Workers) were expressed to include consideration of proposals and the taking of action as to the provision of machinery for the regular consideration of wages, hours and working conditions."
"1 The Implementation Agreement presented to the meeting of the NJC on 30 January 1997 is hereby adopted:
2 Accordingly the present national scheme of conditions of service is hereby replaced by the new scheme of conditions of service (the "Green Book") as supplemented and in accordance with the Implementation Agreement with effect from 10 July 1997."
In that meeting, the NJC manual workers resolved to dissolve.
"This provides for the implementation of the agreement between the national Employers and the trade unions (a) to introduce a new national agreement in place of the APT& C handbook (Purple Book) and the Manual handbook (regionally variable colours and (b) to merge the existing negotiating machinery for APT& C and Manual Workers.
2 From 1 April 1997 the national agreement for former APT& C and Manual employees will consist of a new handbook to be known as the Green Book. ….."
Mr Langstaff's argument, simply put, is that the NJC Manual had the ability to agree to changes in the White Book from time to time under the collective bargaining machinery, and that those changes were thereby incorporated into the Appellant's contract. Those changes could also include both handing over power to the new NJC and the acceptance of the new Green Book and that as a result, the new NJC, and the Green Book thereby became part of the Appellants' contract. In particular Mr Langstaff points to the similarity in both constitutions between the old body and the new, and the fact that many of the provisions of the old White Book were carried over into the new Green Book.
"My Lords, I will say at once that I prefer the approach of the learned judge. But I think I should preface my explanation of my reasons with some general remarks about the principles by which contractual documents are nowadays construed. I do not think that the fundamental change which has overtaken this branch of the law, particularly as a result of the speeches of Lord Wilberforce in Prenn v. Simmonds  1 W.L.R. 1381, 1384-1386 and Reardon Smith Line Ltd. v. Yngvar Hansen-Tangen  1 W.L.R. 989, is always sufficiently appreciated. The result has been, subject to one important exception, to assimilate the way in which such documents are interpreted by judges to the common sense principles by which any serious utterance would be interpreted in ordinary life. Almost all the old intellectual baggage of "legal" interpretation has been discarded. The principles may be summarised as follows:
(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 was famously referred to by Lord Wilberforce as the "matrix of fact," but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it 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. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.
(4) The meaning which a document (or any other utterance) 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. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax. (see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd.  2 WLR 945
(5) The "rule" that 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. Lord Diplock made this point more vigorously when he said in The Antaios Compania Neviera S.A. v. Salen Rederierna A.B. 19851 A.C. 191, 201:
". . . if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense."
He then invited us to consider the context or "background", as Lord Hoffmann put it, in respect of the creation of the new NJC, the Implementation Agreement and the Green Book, namely:
(1) the desire to phase out a situation in which there were two sets of pay and conditions affecting the bulk of Local Government employees and to harmonise them, and to create one overall NJC Council.
(2) Most importantly, the intention that those who had been subject to one or other of the two existing machinery would now be subject to the new Single Status Agreement; in other words there was clearly an intention that employees, such as the Appellants, should not be excluded Such intention could be ascertained from the minutes of the NJC Manual Workers referred to above.
(3) A similarity in words, both within the Constitution and within the Green Book, to that which previously appeared.
'It is true that collective agreements such as those in the present case create no legally enforceable obligation between the trade union and the employers. Either side can withdraw. But their terms are in this case incorporated into the individual contracts of employment, and it is only when those terms are varied collectively by agreement that the individual contracts of employment will also be varied. If the collective scheme is not varied by agreement, but by some unilateral abrogation or withdrawal or variation to which the other side does not agree, then it seems to me that the individual contracts of employment remain unaffected. This is another way of saying that the terms of the individual contracts are in part to be found in the agreed collective agreements as they exist from time to time, and, if these cease to exist as collective agreements, then the terms, unless expressly varied between the individual and the employer, will remain as they were by reference to the last agreed collective agreement incorporated into the individual contracts.
In paragraph 13 Judge Hicks went on as follows:
"The relevant statements of principle there, as the industrial tribunal accepted, were those of Kerr LJ that the terms of a collective agreement can be incorporated into and become legally binding terms of individual contracts of employment, and that unilateral abrogation of or withdrawal from the collective agreement does not affect the latter. Those principles, however, lead in the present case to the opposite conclusion from that at which the tribunal arrived. If the individual contracts of employment of the appellants remain unaffected by the respondent's withdrawal from the NJC agreement, and the latter remains in existence and in operation, the contract term referring to it can and should continue to have effect"
and, further at paragraph 16,
"The tribunal's next reason is that it 'cannot be right that an employer is bound ad infinitum by the terms of a collective agreement negotiated by bodies other than themselves'. In our view that is fallacious for a number of reasons. In the first place the employer is not in any event bound ''infinitum'. It can at any time, without breach of contract, negotiate variations of contract with individual employees, as its letter of 21 April 1994 professes it as being eager to do, or terminate their contracts on due notice and offer fresh ones. The latter course may no doubt lead to its incurring obligations to compensate for unfair dismissal, but that is a matter for it to weigh commercially. The words 'ad infinitum' are in truth no more than colourful surplusage; the question is simply whether the employer is still bound by the NJC agreement, so far as incorporated in individual contracts of employment, notwithstanding its 'withdrawal' from collective participation. The second reason why this argument is fallacious is that if correct there seems to be no reason why it would not have applied from the .moment of transfer, whether or not the respondent had 'withdrawn', since there is no finding, and little likelihood, that it had any representation on the management side of the NJC. The third is that there is simply no reason why parties should not, if they choose, agree that matters such as remuneration be fixed by processes in which they do not themselves participate. The tribunal themselves accept that that is true of some employers who are not local authorities. It must, on the agreed facts set out near the beginning of this judgment, equally be true of non-union employees"
"The NJC (Manual Workers) is a different body to the NJC for Local Government Services; they have different functions, a different balance between members and different constitutions. The differences cannot be glossed over. A reference to one is not, without more, a reference to the other. If, as the Tribunal rightly held, a literal reading of the letter from Gateshead to Mrs Ackinclose of 28th September 1994 supra, as an outline of her main terms of contract, might lead to a view that it was only the White Book that was incorporated, it would not at law be possible to avoid that conclusion by reference to the different terms upon which different classes or workers were later engaged. In any event, accepting that the letter of 28th September 1994 was only an outline of the main terms, as the Tribunal itself said, that would still leave the earlier offer and acceptance as the contract itself, and that refers to her contract continuing to be in accordance with the agreement of the NJC (Manual Workers) without mention of any successor body. A contract is to be construed by reference to its own terms (those which it contains or which it incorporates) and not by the terms of quite extraneous contracts".
"Where contracts of employment incorporate national agreements, references to the former APT& C or Manual agreements will now be to the new Green Book. Employees need to be notified individually, accordingly, at a suitable opportunity."
He submits that Clause 4 is a scoping provision for the direct application of the Green Book, and is descriptive rather than prescriptive, and although coming before Clause 5, should be construed as standing apart from it. He submits that it is no more than an agreement between the national employers and trades unions that all employees of local authorities, or other authorities of equal status, will have Green Book terms and conditions applied to them, but it is not intended as a provision which excludes other staff. Indeed he submits that it is more applicable to those persons who become employees after the implementation of the Green Book. He points to the similarity of Clause 4 to the old Clause 3(a) in the NJC Manual Workers Constitution, which provided that:
"The functions of the Council as specified in Clause 8 hereof shall relate to all manual workers in the employment of all local authorities and joint authorities established under the 1985 Local Government Act and other bodies of equivalent status. …."
He also argues, again as a matter of textual interpretation, that it cannot have been the intention of the parties to the new agreements to exclude contracted out employees, who were previously covered under the White Book arrangements. He submits that Clause 5 clearly refers to existing employees, with the reference to the necessity to notify employees, which is consistent with a requirement to inform existing employees of a variation or substitution of terms and conditions, rather than the concept of offer and acceptance, which would be applicable for new employees.
"From 1 April 1999 the standard weekly hours of all full-time employees will be 37. For part-timers there will be corresponding increases in hourly basic rates from the date of the reduction in standard hours for their full-time counterparts."
Clause 6.1 of the Green Book provides:
"The standard working week for full-time employees is 37 hours"
and Clause 8.1 provided that
"Part-time employees shall have applied to them the pay and conditions of service pro rata to comparable full-time employees in the same authority …."