England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
(MR JUSTICE LINDSAY PRESIDING)

		Royal Courts of Justice Strand London WC2A 2LL Thursday 5 April 2001

1. LORD JUSTICE PETER GIBSON: This is an application by 61 employees of the respondent, London General Transport Services Limited, for permission to appeal from the order of the EAT on 30 November 2000. Thereby the EAT allowed an appeal by the employer from part of the decision promulgated on 5 November 1997 of an Employment Tribunal sitting in London south. By that part, the tribunal had upheld the complaint of, amongst others, the appellants that there had been there been an unlawful deduction of wages by the employer under section 23 of the Employment Rights Act 1986.
2. The dispute arises out of the privatisation in November 1994 of part of the London bus services. The employer was formerly part of London Transport. Privatisation was effected by the sale of the shares in the employer to a private company which was the vehicle used by the management of the employer for a management/employee buy-out ("MEBO"). The Transport and General Workers Union ("the union") was the only trade union recognised by the employer. London Transport and the employer had for many years negotiated collective agreements with the union prior to August 1994. The employer's management involved in the MEBO had meetings with the union and the union was supportive of the MEBO.
3. On 12 August 1994 the employer and the union entered into an agreement known as the Framework Agreement. It was conditional on the MEBO being successful. In the Framework Agreement it was accepted that there would be changes to the terms and conditions of the employees, including the appellants. This resulted in a deterioration in the remuneration of employees when the agreement was implemented, as it was in November 1994. The union informed the employer that the majority of its staff had consented to the agreement.
4. Staff were asked to sign a document in which each agreed the changed terms and conditions of the employment. All but one of the appellants refused to sign. Mr Couchman did so, but the tribunal was to hold that he had not agreed to the variation in his terms of employment.
5. Two petitions were presented by staff in the Stockwell Garage. One, on 7 November 1994, placed on record the signatories' dissatisfaction with the new terms and conditions. They stated that they would continue to work under protest. The second, on 17 November 1994, stated that the petitioners did not vote for the new terms and conditions and asked for a ballot. It appears that ballots had been held previously when there had been collective agreements entered into by the union.
6. The tribunal first considered on whom the burden of proof lay to establish that the terms of employment were varied. It found assistance in the decision in this court in Miller v Hamworthy Engineering Ltd [1996] IRLR 461 in which it was said that it was for the employer to establish how the contracts of employment were varied so as to permit reduction in remuneration.
7. The tribunal then considered whether the Framework Agreement had been incorporated into the contracts of employment of the individual appellants. It said that strict evidence was required to establish that the union was the agent of the employees and that the tribunal said that the evidence fell far short of establishing that. The tribunal then considered the employer's argument that the Framework Agreement was incorporated by custom and practice into the individual contracts of employment. The tribunal said that the principle of custom and practice was based upon the presumed intention of the parties and the tribunal asked the question:

"Did all parties understand and expect that all agreements negotiated between the [employer] and the recognised trade union would become terms and conditions of employment without further agreement or formality?"

8. The tribunal said that it was not satisfied that evidence as to the tradition of negotiations with the union was sufficient to establish that the fundamental changes proposed by the Framework Agreement were incorporated by virtue of collective bargaining. It held that the burden on the employer had not been discharged.
9. The tribunal next considered the question of acquiescence and said it was satisfied that the appellants who signed one or other of the Stockwell Garage petitions were clearly indicating to the employer that they did not accept the new terms and conditions of employment and that they were only continuing to work under protest.
10. On the employer's appeal to the EAT, the EAT held that the tribunal erred in law on the burden of proof. The EAT said that a neutral approach was the correct one to determine what were the terms of employment. The EAT also criticised the tribunal for requiring strict proof of a term incorporated by custom and practice. It said, on the question which I have cited, that it was the wrong question and that thereby the tribunal erred in law. It further found error in what it said was a distinction drawn by the tribunal in a very general manner between a practice sufficient to effect changes and a practice sufficient to effect fundamental changes. The EAT found further fault in the conclusion of the tribunal that those who signed the Stockwell Garage petitions did not accept the new terms, saying that the tribunal erred in law in adopting this route to the conclusion which it reached. The EAT remitted the matter to the same tribunal.
11. The appellants now appear by Mr Juss. They say that the EAT erred in relation to the onus of proof on the incorporation of a term by custom and practice and on the question of acceptance of the new terms of employment. They criticise the EAT for interfering with findings of fact made by the tribunal, it being well established that the EAT must not usurp the fact finding functions of the tribunal. I cannot say that the appellants, in making these points, are without any real prospect of success on an appeal. It seems to me that the points raised are properly arguable. Further, they raise a point of some general importance in relation to the incorporation of a collective bargain into individual contracts.
12. Accordingly, I would give permission to appeal.
Order: Permission to appeal granted. Amended section 7 grounds of appeal to be redrafted within 10 days. List of names of appellants to be provided. Appeal to be listed for 1 day the court to consist of at least one Lord Justice with EAT experience. Costs to be costs in the appeal.