United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR B NAPIER (One of Her Majesty's Counsel) Instructed by: North Lanarkshire Council Legal Services P O Box 14 Civic Centre Motherwell ML1 1TW
For the Respondent	MR C BOURNE (of Counsel) Instructed by: Messrs Digby Brown Solicitors The Savoy Tower 77 Renfrew Street Glasgow G2 3BZ

SUMMARY

Unlawful Deductions From Wages

Local authority employers attempted to implement single status agreement between COSLA and unions as regards contracts of employment of concierges. Prior contracts included provision whereby they were entitled to a one hour paid lunch break in each 12 hour shift. Employer sought to impose changes including making part of lunch break unpaid. Employees objected and earlier Tribunal had found that there had been no variation of the original contract regarding the lunch break; concierges were still entitled to a one hour paid break in each 12 hour shift. Employer had, since 2000, been paying the claimants on the basis of the changes they had sought unilaterally to impose. Subsequent tribunal found, accordingly, that they were in breach of their contractual obligation to pay the concierges for the entirety of their one hour lunch break and that that was an unlawful deduction which gave rise to a loss which they quantified. On appeal, tribunal's judgment quashed, save pronouncing a declaration of unlawful deductions, because (a) the tribunal had failed to recognise that the original contract had not been varied; (b) therefore that no contractual reduction in basic hours had yet been achieved; and (c) that meant that there was no basis in fact for the tribunal's determination as to the value of the unpaid breaks.


 


THE HONOURABLE LADY SMITH

Introduction

1. This appeal arises from a finding in favour of a concierge, who used to be employed by the Appellants, that he suffered unlawful deductions from his wages. This concierge's claim is one of a group of 52 such claims and his is being treated as a test case. The claimants are all members of the GMB Union.
2. The judgment appealed against is a judgment of an Employment Tribunal sitting at Glasgow, Chairman Mr C S Watt, registered on 23 March 2007, following a remedies hearing. We propose to continue to refer to parties as Claimant and Respondents and to the Tribunal which pronounced judgment on 32 March 2007, as "the 2007 Tribunal".
3. That hearing had been preceded by a tribunal hearing in October 2004 in respect of a reference under s.12 of the Employment Rights Act 1996, at which the same tribunal made various findings in fact which were relevant to the issues determined at the hearing in February 2007.

Background

4. Before 1999, all manual workers employed by local authorities in Scotland worked a basic 39 hours per week. SPT & C workers worked a basic 37 hours per week. Following negotiations between COSLA and the unions that were then represented in Scotland, an agreement was entered into in 1999 known as the "Single Status Agreement". It came into effect on 1 July 1999. It was part of the Single Status agreement that the basic weekly working hours of both groups of employees should be 37 hours. It was proposed that that would be achieved by a reduction by one hour of the basic hours of manual workers in each of the two subsequent years i.e. moving to 38 hours in 2000 and to 37 hours in 2001. It was also agreed that that should be achieved without any reduction in the total weekly pay payable to manual workers. The Single Status Agreement set out aspirations. Its clauses were not appropriate for direct incorporation into the contracts of employment of individual employees. It was left to local authorities to negotiate variations to existing contracts of employment on an individual basis.
5. In 1996, the Respondents and concierges had agreed that the latter would work 12 hour shifts on a four days on, four days off basis (i.e. an average working week of 42 hours, 39 hours of which were "basic" hours and 3 hours of which were overtime). It was also agreed that they were entitled to a one hour paid "lunch" break in the middle of each shift. That agreement was incorporated into their contracts of employment.
6. Prior to April 2000, the Respondents sought to negotiate with the GMB with a view to reducing the concierges' hours so as to accord with the Single Status Agreement. No agreement was reached. The Respondents then sent out letters dated 20 April to each concierge, which included the following terms:

"Single status agreement – working arrangements

As you will be aware, a key element to the single status agreement which became effective in July 1999, is the reduction of the standard working week to 37 hours by April 2002, at the latest.

In accordance with the national agreement, the council will implement a deduction on a phased basis, reducing initially by one hour, for employees who currently work 39 hours as a standard working week with effect from 1 April. As a consequence, there will be an increase in the corresponding hourly rate, for full time and part time employees, which will form the basis for recalculating additional allowances where these were applicable.

When employees operate a shift at variable pattern of hours, the working week of individual employees may vary from the standard weekly hours provided that the employees' average over a pre determined period does not exceed the standard working week over the same period. Should it do so, appropriate overtime conditions will be applied.

Accordingly, I would now duly notify you that your contract of employment will be varied to the extent that your average working week will reduce by 1.08 hours to 40.92 hours inclusive of a reduced element of overtime hours of 2.92 hours.

A reduction will be achieved by the introduction of a non-paid element for lunch breaks which will enable concierges to leave their station.

………………………."

7. The GMB, on behalf of all the Claimants, objected to the proposal contained in the letter and registered a failure to agree. The Respondents have never sought to argue that the concierges acquiesced in the changes set out in the letter. The non-paid element of the lunch break referred to was to amount to 18 minutes in the first year. A letter in very similar terms was sent out on 19 April 2002, this time intimating that the standard working week was reduced by one hour to 37 hours by reducing the paid element of the lunch break further. The reduction in the paid element of the lunch break was thereafter to be a total of 36 minutes. The concierges again, through their union, objected to the letter and indicated that they were working under the new conditions "under protest".
8. The Respondents thereafter approached matters on the basis that concierges' hours were reduced in the manner set out in those letters and recalculated the basic rate of pay. At the beginning of 2000, it was £4.8110 per hour. The total gross weekly wage earned by the concierges on the basis of an average of 42 hours per week (39 basic hours plus 3 hours overtime at 1½ x £4.8110) was, accordingly, £209.27. The Respondents calculated that, to avoid a reduction in pay when the hours were reduced to 41 (38 basic hours plus 3 hours overtime), they required to increase the hourly rate to £4.9376, which was what they did. As result the concierges in fact received an overall increase of 57 pence per week.
9. In 2002, a similar exercise was carried out. As result of pay increases, the basic hourly rate was then £5.2515. They calculated what would have been the concierges' gross weekly pay on the basis of 39 basic and 3 overtime hours per week (43.5 x £5.2515). They then adjusted the basic hourly rate to allow for payment to the concierges for 41.5 hours (37 hours basic and 3 overtime hours) which brought out an hourly rate of £5.5354. Since then, the Respondents have paid the concierges on the same basis. Reduction in their hours on the bases set out in the letters of 20 April 2000 and 19 April 2002 has been inherent in the calculations that have produced an increased hourly rate. The concierges have, however, persisted in their objection to their hours being reduced by part of the lunch break being upaid.

The 2004 Tribunal

10. The concierges lodged claims with the Employment Tribunal in which they made two complaints. The first was for a declaration under section 11 of the Employment Rights Act 1996 ("the 1996 Act") for the determination of particulars that ought to have been included in the statutory statement of their employment particulars (s.1 of the 1996 Act). The concierges' complaint was to the effect that they ought to be paid for the full hour of their lunch breaks. The second was a claim for unlawful deductions.
11. Parties agreed that, at a hearing on 28, 29 and 29 October 2004, in Glasgow, only the first claim would be determined, leaving over the unfair deductions matter until a later date. We will refer to that tribunal, whose judgment was registered on 1 December 2004, as "the 2004 Tribunal".
12. At paragraph 32 of its judgment, the 2004 Tribunal states:

"The first task of the Tribunal is to make findings of the terms and conditions of the contract of employment as initially made and then consider whether there have been subsequent variations."

and at paragraph 36, having referred to the term of the 1996 contract of employment that provided that each concierge was entitled to a one hour paid lunch break in each 12 hour shift, they state:

"The question the Tribunal then has to decide is: - has there been a variation of that term?"

13. They answer the question they had posed for themselves from paragraphs 40 onwards:

"40. The Tribunal then have to consider how North Lanarkshire attempted to vary the term in relation to normal working hours which they had previously agreed in 1996, with the individual claimants in these cases.

41. The first question the Tribunal had to consider was whether North Lanarkshire had a contractual right to vary the normal working hours. It was accepted by the respondents in this case that they had no such contractual right to vary. There was no evidence put forward by the respondents in this case that they had any such contractual right to vary. Clearly, there was a history of negotiations being conducted on a collective basis between the Council and the relevant trade unions.

42. The second question the Tribunal had to consider was – has there been a variation by agreement? It is clear that the evidence on behalf of the claimants in this case is that there has been no agreement to the proposed variations as contained in the letters of 20 April and 19 April 2002. The Tribunal accepts there was no acceptance by the individual claimants in this case of the proposed variations contained in these letters.

43. The third question the Tribunal considered is – has there been a unilateral variation by the employer which has been acquiesced in and subsequently accepted by the claimants in this case.

44. It has been accepted by the respondents very fairly in the view of the Tribunal that there had been no such acceptance by the employees in this case. The respondents accepted that they were not seeking to argue a case based on personal bar."

14. The 2004 Tribunal's decision and reasons is contained in its final two paragraphs:

"45. In the view of the tribunal these are the only ways in which the term in the claimants' contract in relation to normal working hours could be varied. In the view of the Tribunal the original term entitling the employees to one hour paid lunch break has not been effectively varied.

46. It is accordingly the view of this Tribunal that each of the individual claimants in this case still has a condition in their contract of employment with North Lanarkshire entitling them to be paid for their one hour lunch break during each 12 hour shift."

15. On the basis of that explanation and reasoning, the Tribunal pronounced a judgment in the following terms:

"The unanimous judgment of the Tribunal is that, on a reference under Section 12 of the Employment Rights Act 1996, the Tribunal determine that the following particulars are to be contained within all 52 claimants' statement of employment particulars either by way of amendment or substitution.

'Your normal working hours are 40 hours per week (3 of these to be paid at overtime rate) with each lunch break being a paid lunch break of one hour per day.' "

16. No review application was sought following the judgment of the 2004 Tribunal nor was it appealed against.

The 2007 Tribunal

17. At a case management discussion, it was agreed that the issues for the 2007 Tribunal were:

1. Whether there had been a breach of the term set out in the judgment of the 2004 Tribunal?

2. If there had been such a breach, whether there had been any loss to the claimants arising from that breach?

3. If the claimants had sustained a loss, what was its quantum?

18. The 2007 Tribunal indicates, at paragraph 18, that the facts were not really disputed and that the background to the case had been set out in the 2004 judgment but:

"it is probably better to set out the basic facts again."

and between paragraphs 19 and 35 that is what it does. In the next two paragraphs, however, they state:

"36. The claimants accepted the reduction to the basic hours of 37 hours and they also accepted the increase in the basic rate of pay. The claimants have been paid on the basis of a 37 hour week since the beginning of tax year 2002/2003.

37. The claimants did not accept the further reduction of the non-paid element in their break."

19. Before turning to the first issue, the Tribunal sets about what it refers to as "Clarification of the Judgment of 1 December 2004" and, having considered its terms, states:

"63. The effect of this latter part of the term is to require the employers to pay another 2 hours pay per week, in addition to the 37 basic hours and the 3 hours overtime.

64. It can be seen, therefore, that the term requested by Ms Gribbon is, in effect, the same as that sought by Mr Bourne, i.e. a basic week of 37 hours and 5 hours at paid overtime rate. They have simply expressed this in different ways.

65. The only thing which is not clear from the original term sought by Ms Gribbon is that the additional 2 hours would have to be paid at a premium rate of time and half, since they are in addition to the basic hours of 37 hours per week.

66. The Tribunal, therefore, wish to clarify that the original Judgment dated 1 December 2004 decided the Section 12 reference. This decided that Mr Cowan and his colleagues should be paid, in a normal working week, for a basic 37 hours at basic rate, with an additional 5 hours being paid at overtime rate of time and a half."

20. The 2007 Tribunal note that the Respondents' case was to the effect that, given the Claimant's position that he had never agreed to any change in hours, his basic working week remained at 39 hours. That argument was rejected on the basis that it represented an attempt to re-argue the case that had been determined by them in 2004. In so doing they referred specifically to the passage in its 2004 judgment from paragraphs 36 to 46, from which we have quoted; at paragraph 72, they comment:

"The Tribunal set out from paragraph 36 to paragraph 46 their reasoning on the question of whether there had been a variation in the term entitling each of the concierges to be paid one hour for their break during their 12 hour shift. The conclusion of the Tribunal was that there had been no variation in that term and each of the men were still entitled to be paid for the full one hour of the break. The Tribunal considered that the respondents had no contractual right to vary the normal working hours, that there had been no agreement by the claimants to the variation, and it was specifically accepted by the respondents that they were not claiming acquiescence or personal bar on the part of the claimants….." .

21. The Tribunal does not explain how or why, if they decided in 2004 that there had been no variation of the original contract, an argument based on the subsistence of a term of the original contract fell to be rejected as attempting to re-open that determination.
22. The Tribunal then proceeds to find that since the Respondents had not paid the Claimant for the whole of his lunch break from 2000, it was:

"obvious ….that there is a breach of that term of the contract by the respondents." (paragraph 74)

and that there had been a failure to pay an identifiable sum in respect of the other Claimants again in respect of the whole of their lunch breaks. They rejected an argument that there had been no loss suffered, finding that the claimant had suffered a weekly loss of one hour per week between April 2000 and April 2002 and thereafter in respect of 2 hours week, all at the premium rate of 1.5 hours pay, and issued judgment in the following terms:

"The unanimous judgment of the Tribunal is that: -

(1) there has been a breach by the respondents of the term set out in the Contract of Employment of the claimants by virtue of the Judgment of the Tribunal issued on 1 December 2004;

(2) there has been an unlawful deduction by the respondents contrary to Section 13 of the Employment Rights Act 1996;

(3) there has been a loss to the claimants arising from the breach of contract and unlawful deduction;

(4) the quantum of weekly loss for each claimant amounts to:

(a) between April 2000 and April 2002, the amount of the nett pay for one and a half hours work, paid at the relevant basic rate of pay, per week worked and;

(b) from April 2002 to date, the nett amount of pay for three hours work paid at the relevant basic rate of pay, per week worked."

The Appeal

Submissions for the Respondents:

23. Mr Napier set out the Respondents' position very clearly. At the heart of his argument lay the submission that there was a contradiction in the Tribunal's reasoning. They said that the concierges had accepted the reduction in hours and the increase in pay offered but did not agree in the variation to normal working hours. The latter was, however, an essential part of the Respondents' offer. The Tribunal's whole reasoning flowed from that contradiction.
24. In this case, there had been protest by the Claimants to the Respondents' proposal. That meant that there was no basis for inferring any agreement regarding it: Cumbria County Council v Dow (No.2) [2008] IRLR 109 at para 40. It was clear that the concierges had never agreed to the reduction in hours that the Respondents were trying to achieve. That being so, they could not say they accepted a reduction in working time and the related increase in basic hourly rates but did not accept that they should not be paid wages in respect of the period of time by which their hours were reduced. The former without the latter was never on offer. When the concierges rejected the reduction of the paid element of the lunch break, they also failed to acquire for themselves the entitlement to work reduced hours and to receive an increase in their basic hourly rate of pay.
25. Mr Napier submitted that the Tribunal had erred in approaching matters on the basis that there was a change in the basic working week. There was not. There was an attempt by the Respondents to achieve a change but it did not succeed because the concierges did not agree to it. The Respondents were in breach of contract in insisting on their doing so and in purporting to be entitled to approach matters on the basis that it had been achieved. They had had no right to calculate pay on the basis that they had. He recognised that the result of his submission was to demonstrate that the Respondents had not yet implemented the Single Status Agreement. It was unfortunate that implementation had not been achieved but the Respondents' position would be that they had genuinely tried to do so by making the proposals contained in the two letters in April 2000 and April 2002. In any event, non-implementation of the Single Status Agreement was irrelevant. Its contents were not "self executing" within the contracts of employment of individual employees.
26. Mr Napier went on to submit that it was not open to the Tribunal to, as it put it "clarify" its earlier judgment. There were certainly problems with it; the effect of the shift patterns was, for instance, such as to make it a nonsense to suggest that the concierges normally worked 40 hours each week or that they were entitled to five hours of paid lunch breaks each week yet that was what the judgment provided. That did not, however, mean that the Tribunal could competently revisit its 2004 judgment in its 2007 judgment. It could have done so on review but no review was initiated or sought. It was too late for it to revisit the judgment.
27. Further, the Tribunal were wrong to have rejected the submission that the basic working week remained at 39 hours on the ground that it was inconsistent with their 2004 decision. It was not. That was the only approach that was consistent with the 2004 judgment.
28. Mr Napier submitted further that esto the Tribunal did have power to revisit its earlier judgment, it was wrong to have done so in the manner it did. If its decision were to stand that would mean that the concierges would receive, in respect of the unlawful deductions that had been identified by it, payments as specified by the Tribunal which, taking the calculation up to 2008, amounted to some £600,000. That outcome illustrated the unreality of the claim. It was plainly never the intention of the Single Status Agreement or of the Respondents' proposal that its objective would be achieved by the employer being required to pay substantially more for the same number of hours whilst leaving the contractual hours worked by the employees unchanged. The Respondents were liable to be faced with having to make the payments for unlawful deductions whilst there were still concierges who had not agreed to any variation in their working hours.
29. On the matter of loss, Mr Napier accepted that the Respondents had not been contractually entitled to calculate wages on the basis that the concierges were not entitled to be paid for the whole of their lunch breaks. To that extent, a bare finding of unlawful deduction had to follow. That did not, however, mean that they had suffered loss. The starting point was to assess the value to the concierges of one hour's work. That was a figure that required, in Mr Napier's submission, to be calculated by apportioning part of the overtime value to each hour of work. He took the first half of 2000 as an example:

- at the start of that year, the rate for a basic hour was £4.8110;

- since the concierges worked a weekly average of 42 hours on the basis of 39 basic hours and 3 hours overtime, that meant that they were paid 43.5 x £4.8110: £209.84;

- it was appropriate to assess the value of each hour worked by dividing £209.84 by 42: £4.924

- after April 2000 (and until a rate increase from week 28), the concierges were paid on the basis of an hourly rate of £4.9376

- during that period, wages were calculated on the basis that there had been an overall reduction in hours worked by one hour with their basic hours having been reduced to 38 but their overtime hours remaining at 3 hours

- that meant that between April 2000 and week 28, the concierges were paid on the basis of 42.5 x £4.9376: £209.84 per week;

- that was more than they would have received had the Respondents not been approaching matters on the basis that they did.

30. Having followed through the above calculation, Mr Napier submitted that it demonstrated two things. One was that the value of each lunch break hour was not simply the rate payable for a basic hour but neither was it the rate payable for a premium rate hour. The other was that it demonstrated that the enhancement of rates applied to allow for the reduction in hours that the Respondents had purported to effect had resulted in the concierges suffering no loss. The pattern had been continued in the same way. The payments already made in fact met the Respondents' obligations.
31. Mr Napier, anticipating a submission that might be made against him accepted that it was not open to an employer to replace a contractual overtime payment with a higher rate of basic pay: Pendragon v Nota EAT/0031/00.
32. That was not, however, what had happened. To find, as the Tribunal had done, that the concierges were entitled to recover pay at premium rates in respect of the whole of the lunch breaks without taking into account the counterbalancing payments that had been made by the Respondents was to ignore both common sense and the provisions of s. 25(3) of the Employment Rights Act 1996. He also referred to the case of Laird v AK Stoddard Ltd [2001] IRLR 591 where it was held that it could not be an answer to a claim for unauthorised deduction from an attendance allowance that the basic hourly rate had been increased but the issue of whether or not loss was suffered was not addressed nor had the effect of s.25(3) been considered.
33. There was, in Mr Napier's submission, no need for the matter to be remitted. The appeal ought to be allowed to the extent that there should be substituted for the Tribunal's judgment a bare declaration that the complaint under s.23(1) of the Employment Rights Act was well founded.

Submissions for the claimant:

34. At the heart of Mr Bourne's submission for the Claimant was the proposition that the Tribunal had not erred because the Respondents had unilaterally imposed the changes that they set out in their letters. He was not, however, arguing personal bar or acquiescence. It was a matter, he said, of change having been imposed by the Respondents. It was not a matter of looking at offer and acceptance. It was a matter of looking at unilateral imposition of terms. The concierges were entitled to take objection to part, all or none of the elements of the changes proposed in the Respondents' letters. Further, it was wrong to say that the Council had increased the basic rate to see that the concierges did not lose out. Using the hourly rates in paragraphs 28 and 29 of the judgment and multiplying them by 39 and 38 respectively, brought out the same totals.
35. Regarding the Respondents' submission that the original contract remained in place, with the concierges still contracted to a basic 39 hours per week, he noted that it was not foreshadowed in their skeleton argument or notice of appeal but was content to deal with it. He did accept that it had formed part of the Respondents' case before the 2007 Tribunal. In response to it he referred to evidence that had been given at the 2007 Tribunal hearing by Mr Dornan (a senior personnel officer of the Respondents) to the effect that he accepted that the concierges were agreeable to the basic hourly rate being increased and to the working week's hours reduced but not agreeable to lunch breaks not being wholly paid, calling it a "concession". Since they had not accepted the latter, there was no "deal" to bring it into effect. He referred to the Cumbria County Council case and submitted that paragraph 24 of the judgment supported the Claimant's case.
36. Mr Bourne submitted that it was not for an employer who acted unilaterally to say that he had not imposed terms which were not objected to. He did not accept that the changes proposed in the Respondents' letters were indivisible packages. Contractual terms regarding payment were severable, not composite: Pendragon; Laird .
37. Regarding Mr Napier's submission that the concierges had suffered no loss, Mr Bourne submitted that it was evident that there was no composite rate provided for in the contract of employment and that made the approach of attributing some of the overtime value to each hour inappropriate. There was no warrant for asserting that every hour's pay included an element of overtime pay. The concierges were required to work their basic hours and then move onto overtime rates. Further, on a proper interpretation of the 2004 judgment there was no contradiction in saying that they were entitled to receive overtime rates for the pay that had been withheld on account of disallowance of part of the lunch breaks.
38. As to disposal, Mr Bourne submitted that there were some express findings not made, such as the basis for the findings in paragraph 36 of the 2007 judgment. That meant that the only appropriate way forward was to remit the case. Further, it required to be remitted in any event to consider the matter of loss. A remedies hearing had been fixed prior to the appeal being lodged.

Discussion and Conclusions

The Majority View:

39. A majority of this Tribunal are satisfied that the appeal should be upheld. The 2007 Tribunal erred in law in failing to recognise that since it had held in 2004 that the original contracts of employment had not been varied, that meant that the concierges' basic hours remained at 39 and that their entitlement was, accordingly, to be paid in accordance with those contractual provisions. That meant that, since their average working week was 42 hours, being paid 43.5 x the hourly unenhanced rate.
40. There is a fundamental inconsistency in the judgment of the 2007 Tribunal. On the one hand they recognise that they had previously found that there had been no variation of the Claimant's original contract of employment and specifically refer to the relevant passages in the 2004 judgment. In particular it reminded itself that it had determined that the Respondents had no contractual right to vary the normal working hours and that there had been no agreement by the Claimants to any such variation. On the other hand, however, they proceed on the basis that there was variation of that contract, namely that the basic working week was reduced from 39 to 37 hours. The Claimant and the concierges cannot have it both ways yet that is what they seek to do. As the 2004 Tribunal determined, they did not accept the "proposed variations" (see: 2004 Tribunal paragraph 42) in the Respondents' letters of 20 April 2000 and 19 April 2002, proposals which included the reduction in the basic working week. Not having accepted them, they cannot hold the Respondents contractually bound to them. Further, it is not thereafter open to them to extract two of the terms which they did not accept and produce a calculation of wages due different from and greater than that which would have been produced had they accepted the whole of the package that was proposed. That is, though, in short, what the Claimant's case amounts to.
41. Mr Bourne's approach is misconceived. Whilst asserting that he does not seek to argue that the contract was varied by offer and acceptance and specifically does not seek to rely on principles of personal bar or acquiescence, he says that the reduction in basic hours became part of the Claimant's contract because it was imposed by the Respondents. That approach is wrong for a number of reasons.
42. Firstly, it ignores that, as a matter of law, contractual obligation is dependent on the agreement of the parties.
43. Secondly, it ignores the fact that the 2004 Tribunal, when specifically addressing the question of what had been agreed between the parties, found that there was no agreement to the variations proposed in the Respondents' two letters. It is not at all surprising that they did so, given that the GMB registered a failure to agree and, as was recognised by both Tribunals, worked "under protest" when the Respondents sought to implement their proposals. It is quite inconsistent with those findings to assert that agreement had been reached regarding part of those proposals.
44. Thirdly, we agree with Mr Napier that it is plain that the proposals in those letters were a package. Insofar as Mr Dornan's evidence was indicative of the position of the concierges being that they were agreeable to two out of the three parts of the package, that was a qualified acceptance and thus, properly analysed, amounted to a counter offer which was never accepted and was, accordingly, of no contractual effect. The only basis on which the Respondents were prepared to enhance the basic hourly rate and reduce the basic hours was if the overall working hours, including overtime, were reduced as set out in their letters. There was never any question of the Respondents being prepared to agree to increase the rate and reduce the number of basic hours whilst maintaining an overall working week of 42 hours nor any evidence before the Tribunal that they had in fact so agreed. The fact that, after April 2000, they carried out their pay calculations on the basis of the basic hours being reduced is not evidence that they did so. Rather the fact that they acted as they did and did so by calculating pay on the basis that the overall working hours were reduced first to an average of 41 and then to an average of 40 hours, points to the contrary.
45. Fourthly, Mr Bourne's approach involves accepting that one party to a contract can unilaterally impose terms on the other party. Such an approach runs contrary to the well established principles of the law of contract. His reliance on paragraph 24 of the Cumbria County Council case in support of his submission to that effect seems misplaced. We consider that the passage to which he refers from the judgment of Elias P, reads, rather, as support for the Respondents' position:

"The majority (Elias P and Mrs Gallico) agree with Mr Jeans that where it is clear from the contractual documents that the parties have agreed to effect changes by a fresh contract, that must be decisive. The courts must give effect to their chosen mechanism. However, we do not accept that the mere fact that an employer issues a document which purports to be a new contract will suffice. That would be to allow the employer unilaterally to dictate the mechanism to be adopted, which is inconsistent with fundamental contractual principles. Both parties must consent to this mechanism being adopted."

46. We should add that we accept Mr Napier's submission that the Single Status Agreement was not, as he put it, "self-executing". It did not, of itself, alter or vary the Respondents' contracts with the concierges.
47. We are, accordingly, satisfied that the Tribunal ought to have acceded to the Respondents' argument that there had never been any departure from the original contractual terms as to hours and rates.
48. That finding does not conflict with the statements of particulars in the 2004 Tribunal's judgment. As we have already noted, such a statement is not conclusive as to contracted terms.
49. Separately, we are persuaded that it was not open to the Tribunal to "clarify" their 2004 judgment. They were, in short, functus regarding it and it was not open to them to do as they did which was, in effect, to rewrite it and produce a decision that found the concierges entitled to 37 basic hours and five hours overtime each week, a decision which was at odds with their 2004 determination that the original contract (39 hours basic plus 3 hours overtime) had not been varied.
50. That is not, however, an end of the matter. The Respondents accepted that they ought not to have been paying the concierges on the basis of a calculation that involved treating part of the lunch break as unpaid. That requires there to be a declaration that they have made unlawful deductions from wages. It is then necessary to consider s.25(3) of the Employment Rights Act 1996:

"(3) An employer shall not under section 24 be ordered by a tribunal to pay or repay to a worker any amount in respect of a deduction or payment, or in respect of any combination of deductions or payments, in so far as it appears to the tribunal that he has already paid or repaid any such amount to the worker."

51. The relevant question is, accordingly, whether the employer has "already paid" any amount to the worker "in respect of a deduction".
52. We accept that to do so, it is necessary to assess the value to the concierges of the lunch break time for which they were, in the Respondents' post April 2000 calculations, not paid. Then, it is necessary to compare that value with what the concierges would have been paid if the Respondents had complied with their contractual obligations. Those obligations were to pay according to the 1996 contract. If those calculations are carried out in the manner proposed by Mr Napier, we accept that the concierges have suffered no loss. His approach to calculation has merit. It takes account of the value of overtime to the employee and avoids the difficulty of trying to calculate so as to allow, for instance, for the stage in the shift cycle at which the unpaid part of the lunch break occurred or for days when the employee was off sick, all of which would add considerable complexity. However, we are conscious of the fact that the question of whether or not the concierges suffered loss once matters are approached on the basis that the Respondents' obligations lay within the four walls of the original contract has not been addressed by the Employment Tribunal and it is not, we feel, something that should be determined for the first time at appeal stage. We will, accordingly, remit but solely for the purpose of determining whether the Respondents have already paid or repaid to the concierges, any of the unlawful deductions made in respect of unpaid lunch breaks and if so, to what extent?

Disposal

53. We will pronounce an order upholding the appeal and setting aside all but part "(2)" of the 2007 judgment. We will thereafter remit to the Employment Tribunal for the foregoing purpose. The remit will be to a freshly constituted Tribunal, in the light of the guidance set out in the case of Sinclair Roche Temperley v Heard [2004] IRLR 76. The fact that the Tribunal went beyond its jurisdiction in revisiting its 2004 judgment and the nature and consequences of its failure to recognise the fundamental contradiction that lay at the heart of its 2007 judgment both make it appropriate to do so.

Dissenting Minority

54. Mr Thomson disagreed with the majority.
55. In his view the Tribunal was entitled from the submissions and findings in fact to conclude that both parties had agreed or acquiesced to the reduction in the basic working week from 39 to 38 and then from 38 to 37 hours. Consequently the contracts of the concierges had been partially varied in this respect. It was accepted by both parties that the Claimants had not agreed to the reduction in hours of the paid break and consequently they were entitled under that part of their contract which had not been varied to be paid for those hours unlawfully deducted by the Respondents.
56. It is a matter of law that a contract can be varied in part so long as both parties agree or acquiesce. Also a Tribunal is entitled to consider not only the contractual documents but also the oral exchanges and conduct of the parties.
57. He would refuse the appeal and remit to the same Tribunal for a remedies hearing.
58. At the outset the judgment of the 2004 Tribunal quoted in the 2007 Tribunal that

"your normal working hours are 40 hours per week (3 of these to be paid at overtime rate), with each lunch break being a paid lunch break of one hour per day"

must be erroneous. The wording was submitted by the Claimant's solicitor. This was an error which should have been corrected by the Claimant's solicitor, if necessary by a review of the decision. On the basis of the submissions and pleadings of both parties and the findings of the Tribunal, 40 should have been 42, otherwise the claims for unlawful deductions and their calculation make no sense. At para 56 of the 2007 Tribunal the Claimant's counsel, Mr Bourne, submitted that the proper statement should have been 42 hours. Mr Napier, the Respondents' counsel, accepted that the normal working hours were 42 hours but disagreed on what hours should be paid at overtime rate. This error has confused the understanding of both Tribunals' decisions.

59. In their letter to the Claimants of 20 April 2000 the Respondents stated they were implementing the SJC Single Status Agreement on the reduction of the basic working week for manual employees in order to equalise them with staff employees. The letter indicated there would be a consequential increase in the hourly rate so that mutual employees would not suffer any loss of basic wage as a result of the reduction in the basic working week. The Respondents implemented this by changing the calculator for the hourly rate from 39 to 38 and subsequently from 38 to 37 (see respondents' responses to orders for additional information). These calculations of hourly rate for basic working week, contractual overtime and incidental overtime were contained in written payslips issued by Respondents to Claimants.
60. If, as argued at a late stage by the Respondents that the basic working week remained at 39 hours because of the Claimants' refusal to accept the proposed reduction in the paid break the Respondents would not have changed the calculator from 39. Neither would they have paid SJC agreed yearly increases, some of them calculated on the reduction of the basic working week. They did not argue at the 2004 Tribunal that the basic working week remained at 39 hours. Nor did they argue this in the ET3 response and other submissions to the 2007 Tribunal. The reality is that by their submissions and actions, the Respondents agreed that the basic working week of the claimants had been reduced. The late pleadings that the Claimant's contract remained as agreed in 1996 was put forward by senior counsel to extract them from their procedural failings and breaches of contract. If agreement could not be reached with the Claimants on unpaid breaks, they could have issued notice of termination of existing contract and issued new contracts with the unpaid break terms included.
61. The Respondents' submission that there was no agreement that contractual hours worked in excess of the basic working week would be paid at overtime/premium rate was not valid by their own actions in paying overtime rates except for the disputed unpaid break time. In their submissions they had stated that the reduction in hours had applied to all 5,000 manual employees. Any of these employees working overtime would be paid the overtime at the premium rate of one and a half times the basic hourly rate. This is a longstanding clause in the SJC Agreement which was well understood by both parties and the Tribunal as an industrial jury.
62. The Respondents in their ET3 submissions stated that the SJC Agreement had been incorporated into the Claimants' contracts and specifically that the Claimants' working week had been reduced to 37 hours. This confirms that they had agreed to the reduction in the working week and indeed they had a genuine belief that this was the case and that the only dispute was on the issue of the paid/non paid element of the break.
63. The reductions in the basic working week were accepted by the Claimants (see ET1 application and other submissions). In evidence to the 2007 Tribunal, Mr Dornan, senior personnel officer for the Respondents, accepted that the Claimants had agreed to the reduction in the basic working week. This was not challenged by Mr Napier at the appeal hearing. Alternatively, by acquiescence, they had accepted the variation in their contracts in respect of the reduction in the working week.
64. The 2004 Tribunal stated at para 27

"It was accepted by both parties that the claimants normally now worked, in addition to their basic hours of 37 hours, three hours overtime every week."

65. This was a finding of the Tribunal not appealed by the Respondents. The only possible construction of this is that both parties agreed that the claimants' contractual basic working week was 37 hours.
66. On the 2007 Tribunal's "clarification" of the 2004 Tribunal's decision was their finding based on the findings of the earlier Tribunal and their findings based on the submissions made to them. The term "clarification" was unfortunate but is not fatal to the Tribunal's decision. If this is wrong, this specific issue should be remitted to the same Tribunal.
67. If all the above is wrong and the Claimants remained on their 1996 contracts, then the issue of any loss should be remitted to the same Tribunal. They are familiar with the complex calculations involved and it is in the interests of time and cost that they deal with them. It is assumed that the Tribunal is capable of a professional approach to dealing with this matter on remissions (Sinclair Roche Temperley v Heard (2004) IRLR 763).