United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR ANDREW SHORT (of Counsel) Messrs Rowley Ashworth Solicitors Suite 1B Joseph's Well Hanover Walk Leeds LS3 1AB.
For the Respondent	MR DAMIAN BROWN (of Counsel) Messrs Mills & Reeve LLP Solicitors Midland House 78-84 Colmore Row Birmingham B3 2AB.


 


SUMMARY

Contract of Employment: Written Particulars

Unlawful Deduction from Wages

The Claimants are maintenance supervisors of craftspersons in the NHS. As a matter of construction, AFC as incorporated into the Claimants' contracts in the context of a desire to create gender-free pay systems did not entitle them to the Recruitment and Retention Payments made to the craftspersons they supervised, even though all were required to have the same qualifications and the Claimants did do some work "on the tools". Majority Employment Tribunal Judgment (Employment Judge dissenting) upheld.


 


HIS HONOUR JUDGE McMULLEN QC

1. This is the Judgment of the court to which all members, appointed by statute for their diverse specialist experience, have contributed. Each of us has direct experience of job evaluation free of gender bias. We pay tribute to the negotiators of Agenda for Change ("AFC"), a formidable piece of industrial relations engineering in the modernisation of the NHS. Drawing expressly on the Boulting Brothers, Counsel in our case invite us to consider the rather unpromising cry, which we adapt to the 21st century, "What about the supervisors?" We think it unlikely that had Peter Sellers uttered that, his role would have been so memorable.
2. In form this case is about unlawful deductions from pay of supervisors who have not been given an allowance paid to craftworkers they supervise. We will refer to the parties as Claimants and Respondent.

Introduction

3. It is an appeal by the Claimants in those proceedings against a Judgment of an Employment Tribunal sitting at Nottingham, registered with Reasons on 22 July 2008. The majority decision of Mr G Kingswood and Mr C Goldson was to dismiss the claims; Employment Judge Lancaster dissented.
4. The parties are represented by Mr Andrew Short and Mr Damian Brown of Counsel. The Claimants made claims essentially under Parts I and II of the Employment Rights Act 1996 in relation to their contracts, which required a construction of AFC, to which we will refer in detail. The Respondent contended as a matter of a construction that the document did not enure to the benefit of the Claimants' case.
5. The essential issue as defined by the Employment Tribunal was to determine whether the Claimants' posts as Maintenance Supervisors were covered by that part of AFC dealing with a Recruitment and Retention Premium ("RRP"); such a payment being made to qualified maintenance craftspersons ("QMCs") and qualified maintenance technicians. The Tribunal found there was no practical distinction between craftspersons and technicians; nor that the use of the word 'transitional' in AFC made any difference. The transitional period dates from 1 October 2004 when AFC was implemented to 2011, but there is provision for review of certain aspects over time.
6. The majority found against the Claimants; they appeal. Directions sending this to a full hearing were given by Wilkie J indicating that this was a matter of national significance, but giving no opinion as to whether or not the appeal had reasonable prospects of success.

The legislation

7. As we have indicated, the vehicle is a claim of unlawful deductions and for particulars of a clause in the employment contract under the Employment Rights Act 1996 sections 11 and 13 The Employment Tribunal directed itself in relation to the relevant legal provisions and to other provisions which are now no longer relevant on appeal.

Agenda for Change

8. The setting of pay and conditions in the Health Service is subject to national collective bargaining. Today, AFC is the collective agreement on relevant terms and conditions. The exclusions are for very senior managers and medical and dental practitioners. It is common ground that AFC is incorporated into the contract of employment of each Claimant.
9. Part 2 of AFC sets out terms in relation to pay and section 5 of part 2 deals with RRP. This is the subject of the dispute in the present case. A description of the need for RRP is set out in Annex R:

"1 This note provides initial guidance on setting the levels of long-term recruitment and retention premia which have been agreed in principle at national level under the new NHS pay system.

Background

2 Recruitment and retention premia are additions to the pay of a post or group of similar posts where market pressures would otherwise prevent the employer from being able to recruit or retain staff in sufficient numbers at the normal salary for jobs of that weight. The new system provides for them to be awarded on either a national or local basis. But where it is agreed nationally that a recruitment and retention payment is necessary for a particular group the level of the payment should be specified or, where the underlying problem is considered to vary across the country, guidance should be given to employers on the appropriate level of payment.

3 This guidance therefore covers the award of long-term recruitment and retention premia for staff in the limited number of posts for which the payment of a premium had been pre-agreed. This does not mean that other premia cannot be agreed locally, provided the correct procedure for determining a premium is followed as set out in Annex J, including consultation with staff representatives and other local NHS employers.

Posts to which this guidance applies

4 The use of the job evaluation to ensure fair pay between NHS jobs has revealed a number of jobs with relatively high levels of pay in relation to job weight which appear to reflect past responses to external labour market pressures. In some cases employers have used higher grades than would appear appropriate on the basis of a strict interpretation of grading definitions in order to recruit or retain staff. In other cases there have been national agreements to improve the pay of particular grades or groups because of concerns about recruitment and retention.

5 Under normal circumstances, when the new pay system is fully operational, evidence would be sought that it is not possible to recruit or retain staff at the normal job-evaluated pay level before agreeing a recruitment and retention premium. However, this process cannot be safely applied to the transitional period in which the new system is being implemented, because data on recruitment at the new pay levels cannot be sought until the new pay rates are in force. That could result in the withdrawal of all past local and national measures aimed at dealing with recruitment problems for a period of several months and possibly longer, while data on recruitment at the new pay levels was gathered, which could severely disadvantage the NHS in the labour market.

-6 The negotiations of AFC have therefore agreed a list of jobs for which there is prima facie evidence from both the work on the job evaluation scheme and consultation with management and staff representatives that a premium is necessary to ensure the position of the NHS is maintained during the transitional period. The jobs concerned are listed in Table 19, below.

Table 19

Type of post

Chaplains

Clinical coding officers

Cytology screeners

Dental nurses, technicians, therapists and hygienists

Estates officers/works officers

Financial accountants

Invoice clerks

Biomedical scientists

Payroll team leaders

Pharmacists

Qualified maintenance craftspersons

Qualified maintenance technicians

Qualified medical technical officers

Qualified midwives (new entrant)

Qualified perfusionists

7 Under these circumstances, however, it is difficult, and in most cases would be inappropriate, to determine a national rate for the premium. The agreement therefore provides in these cases only that the premium must be sufficient to ensure no loss (in line with the principle that the NHS should not be disadvantaged in the labour market during the transitional period) while requiring employers working in partnership with staff representatives to review the evidence available locally. The exception dealt with below is that of staff who require full electrical, plumbing or mechanical crafts qualifications, where there is a high degree of consistency in NHS rates and readily available published market rates, on the basis of which an initial rate for the premium has been set.

8 The following paragraphs provide guidance on how the no loss guarantee should be interpreted, the constraints within the new system on the maximum level of premium which may be paid and specific guidance on some of the groups concerned where additional considerations apply, including the agreed rate in the case of staff who require full electrical, plumbing or mechanical crafts qualifications.

Qualified maintenance crafts persons and qualified maintenance technicians

13 Given the high degree of consistency in NHS rates and the existence of published market rates, it is appropriate to specify a single level of premium for staff who require full electrical, plumbing or mechanical crafts qualifications of £3,016 a year (from April 2007) rising to £3,046 from November 2007. Premia should only exceed this rate, or the equivalent rate as uplifted under the provisions below, where that is necessary to ensure no loss under the rules in paragraphs 4 to 7, above.

14 Premia may also be agreed locally for building crafts, subject to the guidance above on minimum and maximum rates.

Review of this guidance

18 This initial guidance on the level of nationally agreed recruitment and retention premia has been drafted to allow flexibility for the service during assimilation to the new system, taking account of the fact that the current grading of posts varies widely. Future reviews of the guidance should seek to introduce greater consistency in rates of premium for newly appointed staff, unless variation is justified by the evidence."

10. The other parts of AFC which refer to Annex R begin with a consideration of pay spines. These were the conditions which previously existed for the setting of pay scales in the Health Service and were then the subject of job evaluation in accordance with nationally published guidance in the job evaluation handbook. On assimilation, which was 1 October 2004, the new pay scales came into operation and previously existing profiles determining the bands into which employees were cast were no longer relevant.

The facts

11. There are national profiles incorporated within AFC which are relevant in order to set the conditions for individual post holders. An example of the job description of the Claimants is given; specifically there are two who fit the title Maintenance Supervisor-Team Leader (Electrical). Mr Briggs in these proceedings is Maintenance Supervisor-Team Leader (Mechanical). They are responsible to the Estate Operations Manager (Engineering) at the Respondent's hospital.
12. The Claimants were assimilated into the profile of Estate Maintenance Worker team leader. As such, according to Table 19; they were not paid the RRP which was paid to the workers who were supervised by them. Broadly speaking they are the ones who are qualified in electrical, engineering, plumbing and gas trades. All of the workers engaged by the NHS in those posts are required to have relevant qualifications and so are the Claimants.
13. The Tribunal examined the role of the Supervisor:

"5.5 The role of supervisor includes, primarily, dealing with contractors, invoicing, ordering materials, organising jobs and supervision of Estate Maintenance Workers. It also however includes going out to jobs, assessing them and if they can be done then by the supervisor doing it. They are required to provide on-call cover and they cover for absent Estate maintenance workers, of whom there is currently a shortage. When the maintenance Supervisor is himself absent, cover for his role is provided only by someone on at least the same level; under Agenda for Change there is no longer provision for employees on a lower band to be paid "acting up" money. The work sheets produced by Mr Briggs record a pattern of his frequently carrying out maintenance tasks personally, but not every day and not as a major proportion of his working day. The total is 536.6 hours and 422 hours overtime since 31^st  March 2005."

14. Some further material was adduced about this. A schedule produced by Mr Short indicates that Mr Briggs for example averaged 130 days a year on part of which, as Mr Short put it, "he was to be found with a screwdriver or a wrench in his hand". The practical effect was summarised by the Tribunal in this way:

"5.6 Prior to AFC the pay differential between Mr Briggs and the lower banded craft workers under his supervision was £79 gross per week. It is now some £20. This effectively reflects the difference in their now being paid RRP. The newly upgraded band 5 technicians who also receive RRP are now paid more than their supervisors. Maintenance supervisors are not required to work shifts. Other maintenance workers are so required and receive what is likely to be significant shift premium for doing, this element will therefore be reflected in overall earning differentials, though to what precise extent is unclear. Mr Brigg's current basic pay is £24, 324."

15. On the basis of those findings the Tribunal divided. The majority took the view that the question they had to answer was; do Supervisors qualify as QMCs within table 19? It being acknowledged that that was the issue, the three-person Tribunal accepted the submissions made on behalf of the Respondent that the job of Supervisor was fundamentally and qualitatively different from the QMC's. An analogy was made with senior managers who might, on their way up the career chain, have been once a craftsperson but would not necessarily qualify for an RRP. A supervisor was a type of managerial position.
16. The majority also considered that Mr Briggs worked roughly 10 per cent of his time 'on the tools'. It noted that there was no ability for one of the QMCs who he supervised to "act up" in his absence and having examined the profiles and his job description that Mr Briggs essentially held a managerial type role. The majority noted that the negotiators for AFC could have included supervisory staff but did not. Such a distinction was found in the post titles relating to midwives, for whom the RRP was payable only at the junior end, and for payroll team leaders, for whom RRP was payable at the senior end. The majority also invoked their own knowledge of the labour market.
17. They came to this conclusion:

"6.4 The majority hold that the purpose of RRP is to address particular concerns as to recruitment and retention. It is not to address any imbalance in pay and grade structures such as have arisen in this case. Although the employers may be creating a problem for the future, if maintenance technicians are not prepared to accept promotion to supervisor if this in effect results in a drop in salary, that is not an issue that was contemplated by the original RRP agreement. The remedy for the erosion of differentials is by internal dispute mechanisms or by an application for a separate RRP at local level, which the Respondents have suggested should be made, though, of course, with no assurance that it will be granted."

18. The minority decision was based on the Employment Judge's assessment of the material available for the construction of the agreement. It was argued by the Judge that the ordinary meaning of the phrase contained in clause 13 "staff who require" was that there should be a payment made to those who were required as part of their work to have the requisite qualifications. He held the following:

"7.4 The reference to "staff who require full electrical, plumbing or mechanical crafts qualifications" is not limited to staff at any particular level of seniority. The Claimants are, by their individual job description and person specifications, required to hold these professional qualifications. They are therefore covered by the express provision awarding a minimum RRP to this clearly delineated sub-group of qualified maintenance workers. That is the clearest indication that, in the absence of any contra-indication whatsoever, they are indeed included within the larger group as identified in Table 19."

Submissions and conclusions

19. We will take both the arguments together with our assessment of them at the same time. It is common ground that the approach to the construction of this document is to be regulated by the principles set out by Lord Hoffman in Investors Overseas Compensation Scheme v
    

West Bromwich Building [1998] 1 WLR 896 at page 912H-913F:

" (1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

(2) The background was famously referred to by Lord Wilberforce as the "matrix of fact," but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. …

(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd.  [1997] AC 749.

(5) The 'rule' that words should be given their 'natural and ordinary meaning' reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in  Antaios Compania Naviera S.A. v. Salen Rederierna A.B.  [1985] A.C. 191, 201:

"if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense."

Particular focus has been given to principle (3).

20. Mr Short contends that the construction of this document is a question of law, informed of course by findings as to the factual matrix against which the parties were negotiating and what was known to them. It is contended that the construction advanced by the Employment Judge as found, for example, in clause 7 of Annex R -"staff who require" - is correct. Those QMCs mentioned in the table are the supervised and their supervisors, since the supervisors require the same qualifications, be it electrical, plumbing, mechanical, gas, etc, as those they supervise.
21. Reliance is placed also upon a judgment of the Employment Tribunal in Newcastle upon Tyne, chaired by Employment Judge Malone, on 6 April 2009 in Hartley & Others v Northumbria Healthcare NHS Foundation Trust & Others ET Case no 2802136/2007 as covering some of the territory in this case (see paragraphs 227 and 253).
22. On behalf of the Respondent, Mr Brown contends that the wording in clause 7 of Annex R is simply a description and does not shed light upon the entitlement to an RRP of supervisors. This does not conform to the approach of the negotiating parties, which was to achieve a transparent gender-bias free set of terms and conditions. They were well aware of the strains on the pay structure brought about as a result of a huge number of equal pay claims. It would be wrong to allow the claims in this case for it would produce a windfall to the Claimants. No evidence was available to support, let us say by a genuine material factor defence, a contention for the Respondent that RRP was necessary to the same extent as was necessary for the protection of the NHS recruiting in the market for gas, electrical, mechanical qualified personnel.
23. In our judgment table 19 represents, at the time of the negotiation, a complete catalogue of those persons who would attract RRP. Distinctions are made as to seniority, as we have pointed out, in at least two of the categories: payroll team leaders and qualified midwives (new entrants). There is no such entry in respect of supervisors of craftspersons, maintenance supervisors or team leaders. In reality, clause 6 which gives access to table 19 is the solution to this case and it is clear. The "jobs concerned" for RRP "are listed in table 19".
24. The purpose of clause 7 is to identify, as a result of the survey which had been conducted, those occupations where there was consistency within the NHS so that a national rate could be applied to those particular occupations. On the other hand there are within the table those where there was insufficient material available for a national rate to be set at that particular time, in which case further talks would be envisaged or local agreements might be made. The purpose of the phrase which occurs in clauses 7 and 13: "staff who require full electrical, plumbing or mechanical crafts qualifications" is to identify exceptional jobs within table 19. Clause 7 paves the way to clause 13 which has its own heading and clause 13 deals with those who have already been listed in table 19. Some of them eg the QMCs are to be given RRP at a national rather than a local rate. But none of this affects the clear construction of clause 6 and table 19 where supervisors are absent.
25. A good deal of argument has been addressed in respect of the word 'post'. 'Type of post' are the words used in table 19 and the word 'post' occurs frequently throughout Annex R. In the introduction, that is in the substantive part of part seven, there is often a reference to the word 'job' and there is a table headed 'Jobs' which corresponds to table 19. "Jobs" occurs in clause 6 introducing table 19. In our judgment there is no significance in the distinction between jobs and posts since in context they are to do with the posts to which people are appointed. A good example Mr Brown put is to answer the question that Mr Briggs might have answered himself: What is your job? He would say, "I am a supervisor". He is unlikely to say, "I am a craftsperson" because he has already risen above that level. He is no longer 'on the tools'. He has been appointed specifically within the Hospital as a specifically designated post. This is not a post or job that falls within table 10 or table 19, whereas those in the supervised positions are appointed to a particular post which does not include the supervisory element.
26. We also consider that the work in the post is materially different. We do not know how many persons are within the supervisory category, but we accept the submission that their role is significantly different from that of those they supervise. The Tribunal majority found that only 10 per cent of Mr Briggs' time was spent on the tools and the rest of the time was supervisory. That corresponds to our impression gained from the job description and from the band to which he has been allocated, band five, as against band three for the QMCs supervised.
27. In those circumstances we think it unlikely that however many there were in the supervisory position they would have been left out if it were the intention of the collective bargaining parties to include them within scope of an RRP. The impact of not providing them with RRP affects differentials; but that is not an issue which can be resolved by the construction of this document. NHS jobs have been evaluated independently and objectively, and in specific circumstances, where evidence justifies it, additional pay is given over and above the rate for the work done because of difficulties in recruitment and retention in the labour market; in short that the NHS wanted to remain competitive and attract the right grade of staff.
28. In the future it may be that evidence is produced to show that supervisors of craftworkers are also swimming in the same national pool and the NHS by the rate of pay it awards is disadvantaged in attracting the best; but, as Mr Short accepted, that is not the evidence, it is simply an assertion or an inference which might be drawn. If there were evidence we have no doubt the collective bargaining parties would have had it in front of them and would have paid attention to it when seeking in table 19 to identify those posts where it was appropriate to award RRP. This case as argued before us turns on the correct construction of that clause. We adopt the approach respectfully provided by Lord Hoffmann in Carmichael v National Power Limited [2000] IRLR 43 where he said this:

"28. Included in the second category is the construction of documents in their natural and ordinary meaning. An uninitiated person might have thought that, for example, the interpretation of a letter written by a layman stating the terms upon which he offered work to someone else, should be a question of fact, best decided by an employment tribunal …, which was likely to be more familiar with the relevant background than a judge. But the opposite is the case: see Davies v. Presbyterian Church of Wales [1986] IRLR 194. This rule may be part of the explanation for the otherwise remarkable fact that the Employment Appeal Tribunal has a majority of lay members although it has jurisdiction to hear appeals only on questions of law. … Thus the rule that the construction of documents is a question of law was well established when industrial tribunals were created and has been carried over into employment law.

29. It was this rule upon which the majority in the Court of Appeal relied as entitling them to say that the construction of the exchange of letters between the CEGB and the respondents, together with any terms which could be implied by law into the contract which they created, was a question of law. I agree with my noble and learned friend the Lord Chancellor that even if this was the case, I would prefer the construction adopted by the industrial tribunal to that of the majority in the Court of Appeal. But I think that the Court of Appeal pushed the rule about the construction of documents too far. It applies in cases in which the parties intend all the terms of their contract (apart from any implied by law) to be contained in a document or documents. On the other hand, it does not apply when the intention of the parties, objectively ascertained, has to be gathered partly from documents but also from oral exchanges and conduct. In the latter case, the terms of the contract are a question of fact. And of course the question of whether the parties intended a document or documents to be the exclusive record of the terms of their agreement is also a question of fact."

29. This Employment Tribunal majority has infused its construction with the background knowledge of the parties it imputed to them. We accept in full Mr Brown's submission as to what those relevant facts were: the parties were aware of the importance of equal pay legislation; specific purposes must be met if an additional payment is to be made; different payments may be made according to when staff join according to the labour market; and that the parties would not have left out supervisors unintentionally.
30. In our judgment from the matrix of fact available to the parties to this collective agreement they knew that they could not introduce RRP to a significant community of supervisors without evidence and a specific agreement for it.
31. We have had our attention drawn, as was the Employment Tribunal, to review material collected by the University of Greenwich in looking at RRP in April 2007. Mr Brown contends that this is relevant to look to the construction of the clause in 2004 because it is post contract conduct. Mr Short also produced this material to us. We need to say no more than this. When a review of RRP was commissioned pursuant to the flexibility in AFC, it was to consider whether or not RRP should continue to be paid and be extended to other craft workers. There is nothing in here about supervisors. If it is legitimate to use this as a tool for construing the contract then it is consistent with the Respondent's approach; that is that there was not in 2004 nor in 2007 reference to RRP being extended to supervisors. So, intuitively that would tend to support the construction of the Respondent.
32. That is as far as we need to go and we have no doubt that if in due course it were thought by the collective bargaining parties that RRP should be applied to supervisors, they could so negotiate and commission evidence from an august body, such as the University of Greenwich, to that effect. Until they do this clause does not provide the right in the Claimants for that to occur.
33. It is not necessary for us to deal with an argument to deal with any other aspect of the Respondent's answer. The appeal is dismissed. Permission to appeal to the Court of Appeal is refused. [Reasons not transcribed]