United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR IRVINE MACCABE (of Counsel) Instructed by: Messrs Moorhead James Solicitors Kildare House 3 Dorset Rise London EC4Y 8EN
For the Respondent	MR JOHN NECKLES Representative Public Transport Staff Consortium 31B Mervan Road Brixton London SW2 1DP

SUMMARY

The Tribunal did not err in law in rejecting the Appellant's argument that the Respondents were barred by issue estoppel from pursuing their claims. However the Tribunal did err in law in its construction of the Framework Agreement and the 1994 Operating Agreement as regards pay for public/bank holidays worked.


 


HIS HONOUR JUDGE RICHARDSON

1. This is an appeal by London General Transport Services Ltd (“LGT”) against a Decision of the Employment Tribunal sitting in London South entered in the Register on 26 January 2004. The Tribunal was considering 49 complaints by employees of LGT claiming unlawful deductions from wages and, in effect, a declaration as to the terms of their contracts in respect of pay for public and bank holidays. The Tribunal rejected an application by LGT to strike out the complaints as misconceived and made findings favourable to the employees concerning their pay for public and bank holidays.
2. Before turning to the detail of the appeal it is convenient to set out in summary form essential features of the background and of the history of these and certain other proceedings.

Background

3. LGT operates bus services in parts of London. In 1988 LGT was formed as a wholly owned subsidiary of London Transport. Employees were transferred to LGT. The employees included what are known as “platform staff” – that is, those directly involved in driving and operating the buses. These employees were members of a trade union – the Transport and General Workers Union (“TGWU”). The TGWU negotiated collective agreements.
4. Between 1988 and 1994 there was a process of change in the way LGT operated and was financed. A system known as block grant funding was being replaced by a system which involved tendered routes. Also during these years there were negotiated changes to the terms and conditions of platform staff.
5. In 1994 the privatisation of LGT was proposed. On 12 August 1994 an agreement known as a “Framework Agreement” was made between LGT and the TGWU. It purported to provide revised terms and conditions covering, amongst others, platform staff. The revised terms involved reductions in pay amongst other things. LGT then displayed notices at garages and asked members of staff to sign individual contracts of employment. This happened at Stockwell garage in November 1994 and at Putney garage in January 1995. More than 100 platform staff at Stockwell garage declined to sign the new terms and conditions. But the staff went on working, albeit under protest. They worked the new rotas. They were paid in accordance with the terms of the Framework Agreement. The staff who declined to sign were a small proportion of the total across the whole of LGT, but nevertheless a significant number. Much later, in July 1995, more than 100 Putney staff also protested.
6. The Framework Agreement was not fully comprehensive. Its most important feature was the introduction of consolidated rates of pay. These replaced various existing allowances. The appropriate consolidated rate of pay was also the basis for calculating holiday pay. All voluntary overtime and rest-day working was also to be paid at the rate of time and a half of the appropriate consolidated hourly rate. Ten months later, on 23 June 1995, another collective agreement was signed. This, despite its date, was called the 1994 Operating Agreement. It purported to replace a whole series of existing agreements including most recently the Framework Agreement. Its provisions were more detailed than those of the Framework Agreement.

The Henry claims

7. Over a period mainly in the latter part of 1996 and at the beginning of 1997 group of about 95 employees presented complaints to the Employment Tribunal. These complaints were consolidated and heard together. The lead case became that of Mr Henry. We shall call these cases “the Henry claims”.
8. The Henry claims were principally for unlawful deduction of wages. In essence it was alleged that LGT unilaterally changed the terms and conditions of the claimants to their disadvantage. Annexed to the Particulars of Claim was a document entitled “Statement of Effect of Changes with respect to the terms of employment”. This referred to pay, including rest-day working. It was said the loss of earnings by reason of the changes amounted to £50 - £60 per week. It also referred to holiday entitlement. There was, however, no specific reference to public or bank holidays.
9. In the Tribunal some of the Henry claims were successful and others failed. In its Decision dated 5 November 1997 the Tribunal rejected LGT's argument that the contracts of the staff had been varied by incorporation of the Framework Agreement as a collective agreement. The Tribunal held that the conditions had been imposed unilaterally. But the staff from Putney were held to have accepted the changes. The Employment Tribunal drew a distinction between the staff from Stockwell (who had complained straightaway) and the staff from Putney (who complained late).
10. The Henry claims went to the Court of Appeal. The Court of Appeal remitted them to the Tribunal for further consideration both of the question whether the new terms and conditions in the Framework Agreement had been incorporated into the contracts of the individual employees and of the question whether, in any event, the individual employees in Stockwell as well as in Putney had accepted the changes. The Tribunal in its Decision dated 30 September 2003 decided that the new terms and conditions in the Framework Agreement had been incorporated into the contracts of the individual employees by custom and practice as a collective agreement. The Tribunal went on to say that in any event it would have found that the employees acquiesced by waiting some two years before commencing tribunal proceedings. So the Henry claims were entirely unsuccessful.
11. However, while the main Decision in the Henry claims was being appealed the Tribunal held a hearing to determine the quantum for successful Stockwell employees. An expert report was served on their behalf. It included a claim for holiday pay on a basis which LGT disputed. But this was only one small aspect of the differences between the parties, and it received no attention in the Tribunal's Decision. The Tribunal took average figures given by LGT, without any analysis of individual issues. See paragraphs 20 - 21 of the Decision dated 10 December 1998.
12. Eventually, of course, the Tribunal's awards to the Stockwell employees became of no effect. As we have seen, the Stockwell employees eventually were held to have been bound by the Framework Agreement.
13. The issue in the Henry claims always related to the incorporation of the Framework Agreement. The later 1994 Operating Agreement played no part.

The Bell claims

14. As we have seen, litigation over the Henry claims stretched from about 1996 to 2003. In the meantime, in 1999, a second set of proceedings were commenced. That is the set with which this appeal is concerned. We will call them “the Bell claims”. In all there were about 105 complaints at first. But some were withdrawn, leaving 49 by the time of the Tribunal Decision under appeal. Some are from Stockwell staff, some from Putney staff. Of the 49 complaints, 30 were also from staff involved in the Henry claims.
15. The Bell claims were presented in 1999. The Particulars of Claim alleged that in April 1999 LGT had unilaterally attempted to impose changed terms and conditions. They alleged that the employees had refused to be bound by those terms. They set out in general terms what the altered terms of the contract were alleged to be. They said that the employees had objected to the varied conditions. They claimed a remedy for unlawful deductions. They also claimed a reference under section 11 Employment Rights Act 1996 to determine terms and conditions of employment.
16. After some delay a Directions Hearing took place on 27 September 2000. At this time the Henry claims were still under appeal. It emerged that the Bell claimants were seeking two main forms of relief.
17. Firstly, they were seeking a declaration, pursuant to section 11, that their terms and conditions were in accordance with an operating agreement dated September 1986 and not (as LGT alleged) varied in November 1994. This head of relief closely resembles what was sought in the Henry claims.
18. Secondly, they were seeking a remedy for unlawful deductions. The Bell claimants' representative (Mr Neckles, who still appears for them):

“confirmed that the only claim being pursued by the Applicants was in respect of an alleged change in terms for working on bank holidays. He said that the “old” terms were that the Applicants were paid for 7 hours 36 minutes if they worked on a bank holiday, were given a supplement of 27% to their pay for that day, and also one additional day paid holiday. In other words for the bank holiday they were paid a multiple of 2.27 of their ordinary pay rate. It was alleged by Mr Neckles that now they only received double pay.”

19. At this hearing each party was saying the other was acting improperly in their conduct of the proceedings by reason of the existence and the result of the Henry claims. LGT argued that the Bell claims were an abuse of the process. The Bell claimants argued that LGT were seeking to relitigate issues in the Henry claims (which, of course, they had at this stage won). See respectively paragraphs 6 and 9 of the Decision dated 19 October 2000.
20. The Chairman ordered a preliminary hearing to deal (inter alia) with the estoppel point. The hearing took place on 27 and 28 February 2001. The Bell claimants withdrew their argument. But LGT proceeded with their argument that the Bell claims were an abuse of the process. It is clear that LGT relied on the rule in Henderson v Henderson (1843) 3 Hare 100. It seems, but is perhaps not quite so clear, that LGT also relied on estoppel.
21. The Tribunal rejected LGT's argument. It held that there was “potentially” sufficient evidence to demonstrate that the Bell claimants first became aware of the possibility of the claims now being made in April 1999. By this the Henry claims had been issued. The Tribunal did not consider that the Bell claimants were acting scandalously, frivolously or vexatiously by issuing their claims as a separate set of proceedings rather than applying to amend the existing claims. LGT did not appeal this Decision.
22. The Bell claims were not then re-listed until the Henry claims were finally resolved more than two years later. By then only 49 were left; the others had withdrawn. It is the result of the re-listed hearing which is under appeal. The hearing took place on 27 and 28 November 2003.

The Tribunal's Decision

23. It is plain that by the time of the hearing on 27 November 2003 the Bell claimants were no longer challenging LGT's position that they had accepted the terms and conditions in the 1994 Framework Agreement. They were, however, seeking to have determined an issue which according to them was not resolved by the 1994 Framework Agreement – namely, the conditions for pay and working on public and bank holidays. The Bell claimants were saying that this only arose as an issue in April 1999.
24. The Bell claimants' case was again put by Mr Neckles: see paragraphs 10 - 11 of the Tribunal's Decision.
25. At the start of the hearing on 27 November 2003 counsel for LGT again applied to strike out the claims. He said it was an abuse of the process to relitigate what was effectively decided in the Henry claims. And he said that the issue of holiday pay, including bank holiday pay, was dealt with by the Framework Agreement. The Tribunal's conclusions may be summarised as follows.
26. The Tribunal rejected LGT's application to strike out the proceedings. The Tribunal did not give Reasons for this Decision, but was asked to do so by this Appeal Tribunal in accordance with its modern practice. See Burns v Consignia (No. 2) [2004] IRLR 425 at paragraphs 10 et seq. By its answer dated 15 June the Tribunal said, in effect, that the Bell claims were all about pay for public holidays and payment for working on public holidays. The Decision in the Henry claims did not relate to this issue. Moreover the Framework Agreement, which was the subject of the Henry claims, did not mention payment for public holidays, whereas the 1994 Operating Agreement, which did, was not mentioned in the Henry claims at all. The Tribunal continued:

“It is a fact that the Henry case did not relate to holidays or holiday pay, and the issue as to whether the same rate of pay for annual holidays applied to public holidays was not a matter raised or considered in the Henry case.

In those circumstances the Tribunal did not understand how Mr Maccabe argued that the Applicants in these proceedings were somehow estopped or that the issue had already been decided by the Tribunal.

The dispute in these proceedings, so far as the Tribunal could see, had never been the subject of consideration, let alone a decision, by the Tribunal in the “Henry” case or any other case.”

27. On the question of public/bank holiday pay, the Tribunal held that employees were entitled to pay at the consolidated rate of pay, ie one day's consolidated rate of pay per one day's public/bank holiday. The Tribunal also found that staff whose rostered rest-day falls on the public/bank holiday, or who are on annual leave or on certified sickness absence on that day were entitled to be paid an additional day's pay at the consolidated rate of pay. The Tribunal further found that staff in service as at 19 September 1992 were entitled to take a paid day of in lieu of the additional day's pay. The Tribunal found, essentially, that they followed from implementation of the Framework Agreement: see paragraphs 25 - 28 of the Decision. There is no appeal or cross-appeal from these conclusions.
28. As to public/bank holiday working (other than Boxing Day), however, the Tribunal reached conclusions which are the subject of appeal. The Tribunal concluded that for such working the employee was entitled to pay at the consolidated rate of pay times two and a half. If the work was done as voluntary overtime or rest-day working then the employee was entitled to consolidated rate of pay times three. LGT, however, says the correct answer is that such an employee is entitled to pay at the consolidated rate of pay times two or, if the work is done as voluntary overtime or is rest-day working at the consolidated rate of pay times two and a half. That is the central issue.
29. There was a sub-issue relating to staff in post as at 19 September 1992. Such staff could elect to take a paid day off in lieu. The Tribunal found that they were entitled to be paid for public/bank holiday working at the consolidated rate of pay times one and a half or times two depending on whether the work was voluntary overtime or rest-day working. LGT's position was that such staff were entitled to be paid at the consolidated rate of pay times one and a half.
30. The Tribunal's reasoning is contained in paragraphs 29 - 31 of its Decision, which needs to be read against findings made in paragraph 23 - 25. The Tribunal's reasoning is not altogether easy to follow. If we have understood it correctly it runs as follows. The Framework Agreement, although it affected holiday pay, did not affect pay for working on a bank holiday. Hence one could look at earlier agreements. Earlier agreements invited the conclusion which the Tribunal reached (ie two and a half times consolidated rate of pay or three times consolidated rate of pay). Nothing in the later Operating Agreement affected this view.

The first ground of appeal: estoppel

31. There are three classes of case where it may be an abuse of the process to re-litigate similar issues. Firstly, it is generally an abuse of the process to re-litigate a claim which has already finally been decided between the parties. This is sometimes given the name “cause of action estoppel”. Secondly, it is generally an abuse of the process to re-litigate an issue which has already finally been decided between the parties. This is generally known as “issue estoppel”. Thirdly, there is a broader class of case where it may be an abuse of the process to litigate an issue which ought to have been raised in earlier proceedings either between the same parties or otherwise in circumstances where the parties ought as a matter of justice to be bound (for example where they have agreed to be bound by a test case).
32. Mr Maccabe submits that the Bell claims are an abuse of process by reason of issue estoppel: the second class above. He does not rely on cause of action estoppel. He does not rely on the third, wider, category of estoppel because, he frankly acknowledged, LGT did not appeal the adverse Decision of the Tribunal in 2001.
33. Mr Maccabe submits that the Employment Tribunal erred fundamentally in its reasoning. The Tribunal ought to have appreciated that the question of holiday pay was an issue litigated and decided at the Remedies Hearing of the Stockwell employees in the Henry claims. He has taken us through the way in which that Tribunal dealt with the issue of compensation. He submits that there is an issue estoppel. He has not taken us through the many cases on this subject, but has relied on Halsbury's Laws of England, title Estoppel, at paragraph 989, where the cases relating to decisions of employment tribunals are gathered.
34. We reject this argument. It is clear law that an issue estoppel cannot arise unless the later court can identify a clear finding in the earlier proceedings on the relevant issue: see Janata Bank v Ahmed [1981] ICR 791. As we have already explained, no such decision was made in relation to pay for working or for holiday on public/bank holidays. To the extent that the issue arose at all the Tribunal did not decide it. See paragraph 11 above.

The second ground of appeal: pay for bank holidays worked

35. Mr Maccabe's submissions on the question of pay for bank holidays worked may be summarized as follows. He submits that the Tribunal reached a result which was different from and higher than that contended for by the claimants; inexplicable by reference to any agreement; and inconsistent with both the Framework Agreement and the later 1994 Operating Agreement. Insofar as the Tribunal relied on criticisms of a witness, Mr Mahon, they have not made it clear what criticisms influenced them and why, bearing in mind that the question is principally one of construing agreements. Mr Maccabe made detailed submissions on the agreements. Mr Neckles submitted that the Decision of the Tribunal on the question of payment for working on bank/public holidays was correct. He submitted, by reference to older agreements, that a distinction had always been drawn between ordinary holidays and public/bank holidays. He emphasized that there was no mention of public/bank holidays in the Framework Agreement.

Conclusions

36. We have reached the clear conclusion that the Tribunal's Decision on pay for public/bank holiday working cannot stand. In our judgment it runs contrary to the Framework Agreement and the 1994 Operating Agreement. Our reasons are as follows.

The Framework Agreement

37. The Framework Agreement is a convenient place to begin, because it is now established that it was incorporated into the contract of employees at both Stockwell and Putney.
38. The starting point of the Framework Agreement was to establish consolidated rates of pay. It is clear in our judgment that the consolidated rates of pay were intended to sweep up special rates and allowances. Examples of special rates and allowances (which we take from a “Suttonbus” set of terms and conditions effective from 1988, as examples only, recognizing that there may have been subsequent changes) include unsocial hours, rest-day working, public holidays, non-traditional work and so forth. The Framework Agreement set the new consolidated rates. It dealt expressly with holiday pay which was no longer to be paid at basic rate plus 27 percent. Indeed there was no longer any such creature as basic rate. The Agreement dealt expressly with voluntary overtime and rest-day working, which was to be at the rate of time and a half of the consolidated rates. The Framework Agreement did not always deal expressly with special rates and allowances which ceased to exist. In our judgment any special arrangements for bank holiday working, not being mentioned, were subsumed in the consolidated rate.
39. The Tribunal correctly concluded – contrary to the submission of the claimants – that the Framework Agreement set the rate of holiday pay on a public/bank holiday at the consolidated rate. There was no longer a base rate, and the Tribunal rightly rejected the contention that holiday pay on public/bank holidays should be at consolidated rate plus 27 percent.
40. But the Tribunal seem to have considered that, because the Framework Agreement did not expressly mention pay for working on public/bank holidays, it was right to return to look to old agreements. Here the Tribunal in our judgment fell into error. The old agreements were all set on a base rate which ceased to exist. It is plain in our judgment that the consolidated rates were to apply to working on public/bank holidays.
41. When the Framework Agreement said that all (our emphasis) voluntary overtime and rest-day working was to be paid at the rate of time and a half of the appropriate consolidated rate (paragraph 5), it did not leave room, as the Tribunal seem to have thought, for a circumstance where the rate would be double.
42. Therefore under the Framework Agreement an employee who worked a public/bank holiday which was one of his normal rostered days would be entitled to payment at the consolidated rate. An employee who worked a public/bank holiday which was overtime or rest-day working would be entitled to payment at one and one half time consolidated rate.
43. The Framework Agreement sets the rate of holiday pay at consolidated rate, but does not deal comprehensively with the question of holiday entitlement. It does not actually say that an employee is entitled to be paid for the public/bank holiday which he has missed. But we have no difficulty, looking at the holiday entitlement given in paragraph 3, in concluding that this is what would have been understood.
44. Summarizing, therefore, an employee who worked a public/bank holiday which was one of his normal rostered days would be entitled to payment at consolidated rate times two (ie consolidated rate for the day, and consolidated rate for the holiday lost). An employee who worked a public/bank holiday which was overtime or rest-day working would be entitled to consolidated rate times two and a half (ie overtime rates for the day worked and consolidated rate for the day lost).

The 1994 Operating Agreement

45. We turn to the 1994 Operating Agreement. This is also a collective agreement between LGT and the TGWU. It is far more detailed in its provisions. Nowhere is there any mention of a special rate of pay for public/bank holidays worked. The reason for this, in our judgment, is that any such rate had ceased to exist on the implementation of the Framework Agreement. Moreover, in our judgment, the terms of the 1994 Operating Agreement are not consistent with any special rate of pay for public/bank holidays worked.
46. The Agreement spells out that there are no different rates for a bank holiday (except for Boxing Day, where there were special arrangements): paragraph 4(h).
47. The Agreement also deals expressly with bank holidays worked: see paragraph 4(h), third paragraph. Staff would be paid a day's holiday pay for any bank holiday worked or rest-day or annual holiday falling on bank holiday.
48. The Agreement also deals with overtime. All voluntary overtime and rest-day working is to be paid at the rate of time and a half of the appropriate consolidated hourly rate for all time worked over 43 hours or after five days' completed duties: see paragraph 7(a).
49. In our judgment there is no room for a contention that bank holidays worked were to be paid at the consolidated rate times two and a half, or times three if rest-day working or voluntary overtime. The correct figures are 0.5 lower in each case.
50. We are by no means sure we follow the reasoning of the Tribunal in paragraph 30 of its Decision. Paragraph 4 of the 1994 Operating Agreement is clear. There are no different rates for a bank holiday, except Boxing Day.

Other Matters

51. We wish to deal finally with three miscellaneous points.
52. Firstly, we refer to the argument by Mr Maccabe to the effect that the Tribunal dealt in an unsatisfactory way with the evidence of Mr Mahon. We do not need to reach any final conclusion on this point, though it is certainly difficult to see from the Decision what part of Mr Mahon's evidence was rejected and why. The fundamental point, as we see it, is that the collective agreements were for the Tribunal to construe, and evidence from witnesses could do no more than set the factual matrix within which they were to be construed.
53. Secondly, we note a point made by Mr Neckles. He submitted to us that the 1994 Operating Agreement was not brought to the attention of the Bell claimants (who had, as we understand it, broken away from the TGWU) until long after it was signed. He did not accept that it was binding on the Bell claimants.
54. Our observations are as follows. The Tribunal did not make a positive finding as to whether the 1994 Operating Agreement was binding on the Bell claimants, either as a collective agreement incorporated by custom and practice or by acceptance. It is not quite clear why the Tribunal did not deal with this issue. Perhaps they did not see it as arising, since they construed the 1994 Operating Agreement favourably to the Bell claimants (and LGT did not dispute the application of the Agreement). We, however, have construed the 1994 Operating Agreement unfavourably to the Bell claimants. If that was the critical conclusion in this case, it might be necessary for the Tribunal to find whether the 1994 Operating Agreement was binding on the Bell claimants either as a collective agreement by custom and practice or in some other way. But we do not see the need for that issue to be resolved in these proceedings. For we have reached the conclusion that the same result flows from the Framework Agreement which has now been held to be binding on both Stockwell and Putney employees.
55. Finally, we address two points of detail

(a) There is the question of staff in service as at 19 September 1992. The Framework Agreement, as we have said, did not deal exhaustively with holiday entitlement. The 1994 Operating Agreement provided that staff in service on 19 September 1992 might, subject to conditions, have a day in lieu instead of an extra day's pay. LGT accept this. It follows that a member of staff who takes a day in lieu instead of an extra day's pay will be paid for the bank holiday in accordance with normal rates, ie at the consolidated rate, or (if the employee is working overtime or rest-day) at 1.5 times consolidated rate.

(b) Although we have referred to public/bank holidays, it is common ground that special arrangements apply to Boxing Day.

Result

56. For these reasons the appeal will be allowed to the following extent.
57. The Tribunal's findings as to public/bank holiday pay when the employee is not working are not challenged and are upheld.
58. The Tribunal's findings as to pay for public/bank holidays worked are set aside and replaced with the following findings.

(a) Subject to paragraphs (b) and (c) below an employee is entitled to be paid for public/bank holidays worked at twice the consolidated rate of pay (ie for the day worked at consolidated rate and for the equivalent of a day's holiday at consolidated rate).

(b) An employee is entitled to be paid for public/bank holidays at two and a half times the consolidated rate of pay if the work is done as voluntary overtime or rest-day working (ie for the day worked at one and one half times consolidated rate, and for the equivalent of a day's holiday at consolidated rate).

(c) An employee who was in post on 19 September 1992 may take a day's holiday in lieu of the public/bank holiday which he has worked, in which case he will be paid for the bank holiday at consolidated rate or (if it is overtime or rest-day working) one and one half times consolidated rate.

59. We record that there are special arrangements for Boxing Day with which the appeal is not concerned.
60. The Tribunal's direction that further hearings will take place to deal with the quantum of payments to the Bell claimants and to deal with affirmation will be set aside. These issues do not arise in the light of our determinations.