United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR D TOWLER (Solicitor) Messrs Whittles Solicitors Joseph's Well Park Lane Leeds LS3 1AB
For the Respondents	MS I SIMLER (of Counsel) Masons Solicitors 30 Aylesbury Street London EC1R 0ER


 


JUDGE LEVY QC: Like the litigation in the Employment Tribunal, this appeal, we think, has become necessary because Moores Furniture Group Ltd, the Employer, failed to follow the advice given to it by the British Woodworking Federation in a letter dated 30th June 1997 sent to it, as one of the members of that Federation. A copy of the letter is found at tab 15.7 at page R65-66 of a bundle, which we were surprised to receive this morning, just before we came into court. From that letter, it is apparent that the British Woodworking Federation were advising their members materially to vary the terms of the contract of employment with various employees. In the course of that letter, the Federation advised:

"If your employee contracts of employment refer to the NJCBI Working Rules and you do not wish to continue using them it is essential that you advise your employees, in writing, that the Working Rules no longer apply."

Unhappily, that "essential" advice was not followed. Perhaps because of that omission that litigation ensued.

That issue in the litigation heard by an Employment Tribunal held at Leeds on 2nd March, 24th April and 5th May 1998 can be thus summarised: a number of employees of the Employer complained that when their contracts were varied there had been an unauthorised deduction of wages due to them, in contravention of the provisions of section 13 of the Employment Rights Act 1996.

Section 13(3) of the 1996 Act provides:

"(3) Where the total amount of wages paid on any occasion by an employer to a worker employed by him is less than the total amount of the wages properly payable by him to the worker on that occasion (after deductions), the amount of deficiency shall be treated for the purposes of that Part as a deduction made by the employer from the worker's wages on that occasion."

In the Originating Applications received by the Employment Tribunal on or about 11th December 1997, Mr Mark Baker and a number of others, complained in these terms in an amended Statement of Grounds:

"1. I am employed by the Respondent as a Building Trade Operative and I assert that the provisions of the National Joint Council for the Building Industry Working Rule Agreement apply to me.

2. On the 18th July, this year, the NJCBI negotiations produced a package for my sector showing wage rates of £4.00 per hour for General Operatives 5.5% in, £4.83 per hour for Craft Operatives 8.5% inc. This package was accepted on my behalf by my Trade Union.

3. On 30th June, this year the Company implemented, without consultation a 3.5% wage increase.

4. The promulgation of the 1997 NJCBI pay award took effect from the 18th August 1997. My employers have failed to pay me in accordance with the working rule agreement since that date and have accordingly made an unlawful deduction from my pay and/or have acted in breach of my contract of employment."

The Notice of Appearance by the Company says:

"1. At no time has the respondent been party to negotiations between any Trade Union and the National Joint Council for the Building Industry (NJCBI).

2. The applicant's main terms of employment and specifically, wages are not governed by the NJCBI or any other national agreement.

3. Prior to submitting a complaint to the Industrial Tribunal the applicant did not raise any issues through the company's internal grievance procedure.

4. The company has already provided the applicant with a declaration of terms and conditions of employment.

5. The respondent has not made any unlawful deductions from the applicant's pay.

6. The respondent has not been in breach of the applicant's contract of employment."

The decision of the Employment Tribunal on the issues was communicated to the parties on 12th June 1998. The majority decision of the tribunal was that:

"1. ... in the cases of all the applicants (except for Mr Holmes and Mr M R Simpson) their contracts included a collective agreement made under the auspices of the National Joint Council for the Building Industry until the unilateral decision of the respondent to exclude such a collective agreement was affirmed by the applicants between June and August 1997. At this stage the collective agreement was not included within the contracts of these applicants.

2. In the case of Mr Holmes and Mr M R Simpson, the Tribunal was unanimous in deciding that as these applicants were supervisors, their contracts did not include the collective agreement at any time.

3. As a consequence all of the applicants' claims for unlawful deduction of wages should fail."

A minority member had decided:

5. ... that all the applicants (except Mr Holmes and Mr M R Simpson) had as a term within their contracts the collective agreement made with the auspices of the National Joint Council for the Building Industry and that such a collective agreement continued to be part of their contracts following exclusion of the collective agreement by the respondent. This unilateral amendment had not been affirmed by the applicants between June and August of 1997."

For different reasons, however, all the members agreed that the claim made by the applicants failed. The reason the majority so held was that there had been, notwithstanding the last paragraph of the employers' IT3, a breach of contract. They went on to hold that such a breach of contract had been accepted by the applicants/appellants; as a consequence the breach of contract was affirmed and wages paid were not in breach of the agreement on which the applicants had relied. Faced with this decision, the applicants appealed.

At the ex parte hearing on 3rd November 1998, the matter was allowed to come to a full hearing. The tribunal did not indicate the grounds on which that leave was given, but they had the benefit of a skeleton argument provided by Mr Towler for that hearing, on which we understood he wished to rely for the appeal today. In paragraph 3 of his skeleton argument he said this in relation to the variation of the agreement:

"The Tribunal concluded that this variation to the Appellants' rates of pay, together with other benefits, constituted a unilateral breach of the Appellants' contracts of employment. It is submitted that this is incorrect and that it is not a breach of contract to pay more than the contractual terms dictate."

Ms Simler, who appears for the respondents in this appeal, did not appear below. She submitted that this passage in Mr Towler's skeleton argument, on which he relied, misunderstood the holding of the Tribunal. Of course employers can pay more wages to employees if they so wish, but the breach of contract which the tribunal found proved was the change of the terms of the contract. The change in the terms by which wages were to be calculated as due to thereafter to the appellant employees were a unilateral variation of the contract.

In our judgment, Ms Simler's submission was well-founded. In our judgment, within the four corners of the decision, there is found a repudiation by the employers of the original contract of employment and the substitution of a fresh contract. The appellants accepted wages paid under this new contract. The wages which they were paid and accepted were not paid in breach of section 13(3) of the 1996 Act.

It is not altogether clear from the Extended Reasons that the applicants were aware of the situation in June 1997. However, from the concessions very properly made by Mr Towler as to the evidence heard by the Employment Tribunal, we are satisfied that, although it is not spelt out in the decision, there was evidence before the tribunal which could properly have satisfied the majority to reach the conclusion, which they did, that there had been the affirmation by the appellants on which the majority relied in making their findings.

Because we think it was the failure of the Employer fully to follow the advice of their Federation which led to this litigation, we have sympathy for the appellants but there is no doubt in our minds that the Tribunal was entitled, applying the law as found on the facts, to come to the decision reached by the majority and that reached by all the members. In these circumstances, we dismiss the appeal. We thank Mr Towler and Ms Simler for the help each has given us today.