United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR R HOWE (Of Counsel) Messrs Orchards Solicitors 99 Bishopsgate London EC2M 3YU
For the Respondent	MR D OHLSON (Representative) Southwark Law Centre 14-16 Hanover Road London SE15


 


JUDGE HULL QC: This is an appeal to us by the employers, Burns International Security Services (UK) Ltd, from a decision of the Industrial Tribunal sitting under the Chairmanship of Mr Pearl with two Industrial Members at London (South) on 9 August 1996, who published their decision on 16 September 1996. They held that Mr Archer, the Respondent to the appeal, had been unfairly dismissed and at a later hearing awarded him compensation.

The history, put shortly, is as follows: In 1990 Mr Archer had a day job as a kitchen porter with well-known caterers, working from 7.30 a.m. until 4.00 p.m. He was interested in getting further employment and he heard of a job as a lorry park attendant and went to see the manager responsible, and told him about his day job. It came to the attention of the management of the Appellant's predecessors that he had not filled in their form correctly; that led to the conversation at which he explained to them about the day job and how, therefore, he could only do a night shift. He did the night shift at the lorry park in the Old Kent Road. There came a change of ownership of the business; it was transferred in 1996. The Tribunal deal in their findings with that. It emerged that the new employers would wish their employees to work on a roster basis, that is to say that from time to time they would be asked to change their hours of work and, of course, their places of work. They were looking for a more flexible labour force, to put it in management language.

Mr Archer was quite unable to do that because he still had his day job. He in fact attempted to work his old hours. He presented himself at work. He was sent home because he was not wanted for his old hours. He was not in fact dismissed and what was found by the Industrial Tribunal was that having been treated in the way which I have described, his IT1 (his application to the Industrial Tribunal) marked his acceptance of the repudiation of his contract of employment and that his dismissal dated from that same date on which he had presented his IT1. There is no appeal concerning that matter.

We now turn to what the Industrial Tribunal had to say about this and then to the criticisms which are made of their decision. They held that he had been unfairly dismissed and they went on to give their reasons. First of all they spoke of their findings with regard to the history of the matter:

"4. The Applicant's evidence concerning the events at the time that he was offered the job (which we accept) is as follows. He filled in an application form but left blank the termination date of his current employment, since he intended to continue therein. The relevant manager asked him why there was no finishing date specified and the Applicant told him that he was still working with Gardner Merchant [the caterers] and he informed him of the hours of work there. The manager then discussed the matter with the supervisor, Mr Williams, and he was duly offered the job by APCOA Ltd. [the earlier employers]. We accept the Applicant's evidence that, at the outset of his employment Mr Williams was aware of the situation. The Statement of Terms of Employment [they refer to that and they quote from it. It has been put in front of us in its entirety] .....

'4. Location. Your place of work is Lorry Park, Southwark although the company reserves the right to move you to an alternative site if necessary.

5. Hours of Work. Your normal hours of work are according to the needs of the operation at which you are working. The basic hours of work are a week. REFER TO YOUR LETTER OF APPOINTMENT.'

5. No letter of appointment has been produced and we accept the Applicant's evidence that none existed. The basic hours of work were left blank in clause 5. The Applicant clearly has a capacity for hard work and, from 14 June 1993 until the end of March 1996 he worked from 7.30am to 4.00pm at his daytime job and from 10.00pm to 6.00am for APCOA Ltd. It is the Tribunal's view that the Applicant was employed to work on this particular shift. Had this shift (alternatively one other shift which was never discussed) not have been offered to him, he could not have accepted the employment. We consider it clear that APCOA Limited were happy with the situation and, indeed, it was never varied. In these circumstances, we find that there was an express contractual agreement between that company and the Applicant that he work on the 10.00pm to 6.00am shift. This was the effect of the oral agreement at the outset of the Contract of Employment and it is evidenced by the subsequent conduct of the parties. An issue has arisen in this case as to whether or not clause 5 is a flexibility clause such as to require the Applicant to work flexible hours, as required. We consider that the clause as a whole is close to meaningless given the blank that was left where hours should have been specified; and in view also of the reference to the non-existent letter of appointment. As to the first sentence of clause 5, we are unable to read this as a contractual provision requiring flexibility of hours. First, we are unable to give those words that interpretation. Second, we do not find that such an interpretation in any way accords with the intention of the parties at the outset of the contract or at any time thereafter. Third, we note the absence of any express reservation by the employer of the right to require flexibility, akin to the wording in clause 4. Fourth, even if this was a flexibility clause, it was overtaken by the agreement and conduct of the parties."

They then refer to the history which led to the new employers taking over the contract at this particular car park - the contract with the Local Authority. They deal with the occasion when the Manager of the new company, the Appellants here, addressed the workforce, and there was some difference of recollection between the Applicant and Mr Crooks, the Manager, as to what had been said on this occasion. It appears to us, for what it is worth (which does not seem to us to be of critical importance) that the Tribunal were of the view that Mr Crooks had failed to explain to the workforce that rostering would come in with all that that implied in elasticity and flexibility of hours, but that that was made plain to them later; and then the history followed shortly as I have said.

The appeal to us is based on an amended Notice of Appeal. The ground is as follows:

"6. that the industrial tribunal erred in its construction of Mr Archer's written contract of employment, by having regard to inadmissible matters, namely evidence and/or subsequent conduct

The two "first" grounds, which are possibly similar, are crossed out, and it is put as shortly as that. That the Industrial Tribunal took into account inadmissible matters in construing a written contract of employment.

Mr Howe, to whom we are grateful both for the force and brevity of his submissions to us, referred us to passages from Chitty on Contracts, in particular at Chapter 12 paragraph 80:

"Written documents. Where the parties appear to have embodied their agreement in a written document, ⁶¹ the question arises whether extrinsic evidence, that is to say, evidence of matters outside the document, is admissible so as to affect its content. Two issues are involved: first, whether it is permissible to adduce extrinsic evidence of terms other than those included, expressly or by reference, in the document; secondly, whether extrinsic evidence may be admitted to explain or interpret the words used in the document.

(a) The Parol Evidence Rule

081 Whether document conclusive. It is often said to be a rule of law that "If there be a contract which has been reduced to writing, verbal evidence is not allowed to be given . . . so as to add to or subtract from, or in any manner to vary or qualify the written contract."⁶² Indeed, in 1897, Lord Morris⁶³ accepted that "[p]arol testimony cannot be received to contradict, vary, add to or subtract from the terms of a written contract, or the terms in which the parties have deliberately agreed to record any part of their contract." This rule is usually known as the "parol evidence" rule. Its operation is not confined to oral evidence: it has been taken to exclude extrinsic matter in writing, such as drafts,⁶⁴ preliminary agreements,⁶⁵ and letters of negotiation.⁶⁶ The rule has been justified on the ground that it upholds the value of written proof,⁶⁷ effectuates the finality intended by the parties in recording their contract in written form,⁶⁸ and eliminates "great inconvenience and troublesome litigation in many instances."⁶⁹

The learned authors of Chitty, which is of course authority, go on to say that the parol evidence rule is and has long been subject to a number of exceptions. Certain academic writers have described those as apparent exceptions. We are certainly not going to embark on an analysis of the exact character of the rule, it is undoubtedly a rule. It is undoubtedly subject to exceptions and apparent exceptions. I amused myself for a little while before coming into the Tribunal this morning by writing down what appeared to be to me a number of exceptions, simply drawing on memory and then looking quickly at the textbook. They are, I believe, all supported by authority:

1. Oral evidence of an agreement not to insist on a particular written term is always admissible. If a contract is entered into that basis, then that term will not be enforceable: see City and Westminster v Mudd.

2. The rule only applies if the parties intend the writing to embody the whole of their contract. If it is not intended to embody the whole of their contract then the other terms can, of course, be proved by parol. By definition, I noted, what is usually called the "contract of employment" is not intended by Parliament to contain the whole of the bargain. The Contracts of Employment Act, now embodied in the Employment Rights Act, says expressly that certain of the most important terms are to be contained in the contract of employment.

3. Another apparent exception is that any written contract may be rectified by the court if it does not embody the true agreement between the parties. Clearly there must be a serious burden on any party who says that a written agreement does not embody his agreement. But that is a well-established thing and Parliament, as well as enacting the provisions with regard to written terms of a contract, has expressly embodied statutory provision for rectification of such terms. Any party who says that the terms either did not or no longer represent the agreement between the parties is at liberty to apply to an Industrial Tribunal to say what the terms ought to be. We will not embark on speculation as to whether that statutory provision is wider than the equitable rules for rectification of contracts.

4. Another apparent exception is that if one party gives to another party an assurance, whether oral or in writing, about the true meaning and construction of a term, then that is binding if the agreement is entered into on the faith of that assurance.

5. Another apparent exception is that evidence is admissible where there is an ambiguity in a written agreement. Again I will not go into the delicate and difficult distinction between patent ambiguities and latent ambiguities.

6. Finally the rule does not apply and never has applied to oral or written subsequent variations. The written agreement is conclusive only as to what the parties intended at the time it was made. If they subsequently agree to vary the contract and can prove that subsequent variation, then again the rule does not apply to that.

That was simply a list which I wrote down, so to speak, off the top of my head. One could, no doubt, with a little research, arrive at other exceptions. So, as Cheshire & Fifoot under the editorship of Professor Furmston now say, and have said for a long time, the alleged rule is so full of exceptions (or apparent exceptions) as almost to be empty of meaning. For my part I would not accept that statement, but that is the view of distinguished academic writers (two of them unhappily now deceased and therefore authoritative).

Now we look to see what the situation is here. This Contract of Employment, as it is headed, does not purport to embody all the terms between the parties. It says:

"The basic terms and conditions of your employment with this company are in accordance with and subject to the disciplinary rules and procedure, the Contracts of Employment Act 1972 (as amended), the Trade Union and Labour Relations acts 1974 and 1976 and the Employment Protection Act 1976.

Copies of these rules and the Acts of Parliament are kept in the General Manager's office and copies may be inspected following application to your supervisor."

Then it goes on with the undoubted flexibility clause so far as location is concerned:

"Your place of work is LORRY PARK, SOUTHWARK although the Company reserves the right to move you to an alternative site if necessary."

No doubt there might be an implicit term they would not do so unreasonably, or without proper notice. But that is undoubtedly a flexibility clause. Then under the heading Hours of work:

"Your normal hours of work are according to the needs of the operation at which you are working."

Does that mean "from time to time"? It does not say so. It does not say that the company reserves the right to change one's hours of work. Mr Howe told us that that was self-evident. It should be read as "the needs of the operation at which you are working from time to time". But it is far from clear to us that that is so. It goes on:

"The basic hours of work are a week. REFER TO YOUR LETTER OF APPOINTMENT" [There was no letter of appointment.]

The Industrial Tribunal found it hard to give any meaning to this clause but we would go further and say it really is impossible. In those circumstances, it appears to us, there was an ambiguity and they were clearly entitled to say "well what did the parties in fact agree. For if they did in fact agree on something, whether in letters or by word of mouth, then whether by adding to or varying the terms under our statutory power, or by the ordinary rules of common law, we are entitled to look at that and say what the parties did in fact agree."

When we look at their decision it appears to us that that is exactly what this Tribunal did do. They referred to the conversations and the reason for the conversations; that is to say Mr Archer's personal reason; the fact that from his point of view there could be no other reasonable hours of work, except for one shift which he was not offered. Then they go on to say in paragraph 5:

".... we find that there was an express contractual agreement between that company and the Applicant that he work on the 10.00pm to 6.00am shift. This was the effect of the oral agreement at the outset of the Contract of Employment..."

They go on to say that they are unable to construe the contractual provision which they found in the written contract as requiring flexibility of hours.

They do, it is true, refer to the conduct of the parties thereafter and that is not something which is a legitimate aid to construction of a complete contract recorded in writing, by itself. But everything else appears to us to show that they were completely entitled to reach the conclusion which they did. They were satisfied of the sincerity of the Applicant and the truthfulness of his evidence. They could find plenty of reasons for the reaching of such an agreement. The agreement was not reached until the local manager had referred to a superior, and it was then agreed. Then come the written terms. The written terms say nothing coherent about hours of work, except that they are in accordance with the needs of the operation at which Mr Archer was working. So they self-evidently were. So the clause was, in effect, blank. We do regard it as meaningless. We certainly do not construe it, any more than the Industrial Tribunal did, as being a flexibility clause.

With regard to the submissions made to us, of course we accept all that is said by Lord Wilberforce in F L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC. That case was dealing with a commercial contract of a most important sort. It was not suggested in that litigation that any of the exceptions which we have referred to applied. On the contrary, it was said that it was the conduct of the parties which had implicitly varied the contract or was a guide to its construction.

Subsequent conduct; the House of Lords held that that could not be. The contract was written. Of course if it were varied by the parties expressly, orally or by deed, or in writing thereafter, that would be different. What was suggested was simply that the conduct of the parties was a guide to construction. That was a heresy. It was accepted by the Court of Appeal. It was repudiated by the House of Lords. But in this context, it must be said that the considerations which govern an important commercial contract must be very different from those which govern a contract of employment. It is in the nature of things, as we have said, that the "contract" frequently does not embody all the terms of the contract.

It is also in the nature of things that under a contract of employment an employee makes progress. He may reveal talents which show that he can undertake extra work or greater responsibilities. He may show limitations which mean that he ought to have part of his responsibilities taken from him. These matters are commonly adjusted in the most informal way. A person may leave his job and the employer may say to a fellow employee "can you do part of this job" and so the contract is very frequently varied in all sorts of substantial ways as it goes along. It is not, we believe, in the course of ordinary everyday behaviour of employers to say "ah, we must put all this in writing, let us get the contract out, if we can find it, let us initial the alterations which we wish to make. Let us make quite sure that the new responsibilities, the new hours of work, whatever they may be, are written in with precision and then initialled". So we think that an Industrial Tribunal is entitled, having regard of course to important principles of law, to have regard also to what the parties have done, not to construe the contract, that would be quite wrong, but to say "has this contract in fact been altered by consent of the parties?". This Tribunal was not engaged primarily in that task. This Tribunal was engaged in saying "did this contract (or the terms of it which were written by them) embody the whole agreement of the parties?" Plainly it did not, both as a matter of construction and of evidence. They heard the evidence. With regard to the hours of work they found that those were agreed orally between the parties and were not in any way supplanted or superseded by the written terms which were served in due course by the employer.

The Industrial Tribunal were, in our view, entirely entitled to do that. It does not matter what we think we might have decided had we heard the evidence. We have not heard the evidence. It matters not that a different Tribunal of fact might have reached a different conclusion. That is entirely beside the point. We can only decide points of law. If we may say so, because the only contention for the Appellants was put so clearly and shortly by Mr Howe, we have reached a very clear decision that it is mistaken on the facts of this case. We can find no point of law which is fairly arguable here in spite of the leave which was given, and we think that the contentions which are made by Mr Howe, though as hypothetical submissions entirely correct, do not meet what has happened in this case and are to be distinguished on legal principle on the findings of fact which this Industrial Tribunal reached. We therefore have to dismiss this appeal.