Appeal No. EAT/564/93

	EMPLOYMENT APPEAL TRIBUNAL
	58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

		At the Tribunal
		On 12 January 1995

	Before

	THE HONOURABLE MRS JUSTICE SMITH

	MR L D COWAN

	MR D G DAVIES

MR K W HIGGINS	APPELLANT

CABLES MONTAGUE CONTRACTS LTD	RESPONDENTS

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR D W VAN HEE
(Of Counsel)
Messrs Durlings
Solicitors
2 High Street
Gillingham
Kent
ME7 1BB

For the Respondents	NO APPEARANCE BY OR
ON BEHALF OF THE RESPONDENTS

	MRS JUSTICE SMITH:   This is an appeal from a decision of the London North Industrial Tribunal under Section 1(1) of the Wages Act 1986.  The Industrial Tribunal's decision was sent to the parties on 18 June 1993.  

	This appeal has proceeded in the absence of the Respondents who, as we are now told, are in receivership and liquidation.  The facts as found by the Industrial Tribunal may be summarised as follows.  

	The Appellant, Mr Higgins, had been employed as a heavy goods vehicle driver, by the Respondent employer since 1987.  In 1992 the employer fell into financial difficulty and wished to reduce its wages bill.  The Transport and General Workers Union were recognised by the employer for purposes of collective bargaining.  

	At the end of July 1992, Mr Cables, the Respondents' Managing Director, informed the District Officer of the Union of the company's difficulties and, in the course of the negotiations which followed, explained that if the wages bill was not reduced by 20% the company might cease to exist.

	There were several meetings during the first week of August attended by the Managing Director, the Union District Officer and several employees.  On 7 August an agreement was reached.  It has been referred to as the "Reduction Agreement".  We have not seen that document, but it is clear that its effect was that the employees' wages were to be reduced by 20% from the following Monday, 10 August.

	The Appellant was unaware of any of these discussions and negotiations.  He was on holiday throughout and when he returned to work on 10 August, the matter was fait accompli.  He was however, a member of the Union although as the Industrial Tribunal found, he terminated his membership soon after the Reduction Agreement had been concluded.  He complained, we are told, about the reduction in his wages which took effect from the date of his return, and we are told also that he never accepted that the employer was entitled to reduce his wages or that the Union was entitled to agree to a reduction on his behalf.  He continued to work for the employer until July 1993, when his employment was terminated in circumstances with which the Industrial Tribunal was not concerned.  

	The Appellant made a complaint to the Industrial Tribunal in January 1993, alleging that the deductions which had been made from his wages were unlawful by reason of Section 1 of the Wages Act 1986.  Section 1 of that Act provides as follows:

		"(1)  An employer shall not make any deduction from any wages of any worker employed by him unless the deduction satisfies one of the following conditions, namely -

			(a)  it is required or authorised to be made by virtue of any statutory provision or any relevant provision of the worker's contract; or

			(b)  the worker has previously signified in writing his agreement or consent to the making of it".

	It is not contended that the Appellant ever consented to the reduction, whether in writing or at all.  Before the Industrial Tribunal the employer contended that the deduction was authorised by a relevant provision of the worker's contract.  

	It is plain therefore, that it is important to determine what were the terms of the employee's contract and where were they to be found?  Did the contract incorporate the Reduction Agreement?  The Industrial Tribunal had before it a much larger bundle of documents than has been placed before us.  In particular, it had two documents both dated 12 March 1992.  One was entitled "Statement of Main Terms and Conditions of Employment pursuant to section 1 of The Employment Protection (Consolidation) Act, 1978.  It related to the Appellant.  We shall refer to that document as "the statutory statement" and will describe its contents in some detail in due course.

	The other document, also dated 12 March 1992, was headed "Norfolk Line Contract Drivers (Day)".  That was the work upon which the Appellant was engaged and the document is headed with his name.  It is dated at the head 1 February 1991, although it was signed at the foot, on behalf of the employer, on 12 March 1992.  It contains some very detailed terms of employment.  We shall refer to this document henceforth as "the detailed terms" document. It is necessary to describe its contents.  

	Paragraph 1 provided for the working week as being 50 hours (40 hours basic plus 10 hours guaranteed overtime).  

	Paragraph 2 provided for the start time.  

	Paragraph 3 provided there should be a basic rate of pay of £155.20 for 40 hours and a guaranteed rate of £213.30 for 50 hours.  (I interpose to say that it was those wages which were reduced by 20% under the Reduction Agreement of August 1992).  

	Paragraph 4 provided for overtime payments to be made where work began before the normal start time.  It also provided for the rates to be paid on Saturdays and Sundays.

	Paragraph 5 provided for a subsistence allowance when drivers were away from home.

	Paragraph 6 referred to "a sickness and injury benefits scheme" without providing any detail of either of those schemes.  

	Paragraph 7 provided for a protective boot allowance.  

	Paragraph 8 provided for the provision of overalls.  

	Paragraph 9 provided for top coats to be supplied by the employer.  

	Paragraph 10 provided for meal allowances.  

	Paragraph 11 referred to holidays and provided that holiday pay would be at the employee's guaranteed rate.  It did not state what the holiday provision, or allowance, would be.  

	Paragraph 12 referred to the insurance of drivers personal belongings.

	It is necessary now to consider "the statutory statement".  The preamble to that statement is of considerable importance in this case.  We shall read it in full.  It says this:

		"The basic terms and conditions of your employment by this Company are in accordance with, and subject to the relevant provisions of the collective agreements currently in force and made between and on behalf of (The Company) and if appropriate the Trade Union concerned, the Company's Rules and the Employment Protection (Consolidation) Act, 1978 and any other relevant legislation".

	Paragraph 1 provided for the DATE OF COMMENCEMENT OF EMPLOYMENT.

	Paragraph 2 dealt with CONTINUITY OF EMPLOYMENT AND JOB TITLE.

	Paragraph 3 headed "REMUNERATION" provided for the means of payment of wages in practical terms and finished with the words, "Full details of your rates are in accordance with the current agreement attached".  We have not seen that current agreement although we are told that it was before the Industrial Tribunal.

	Paragraph 4 dealt with hours of work.  It read: 

		"HOURS OF WORK  

		Are as detailed in the Company Rules or Appendix as attached".  

	We have not seen the company's rules or many of the appendices which would normally have been attached to this statutory statement, but we are told that the Industrial Tribunal had them.  
  
	Paragraph 5:  "HOLIDAYS.
  
		In addition to statutory holidays, the Company's standard annual holiday consists of 20 days, subject to a service qualification.  Details of entitlement and the basis of holiday pay are provided in the Company Rules as attached". 

	Paragraph 6. "PAYMENT DURING SICKNESS ABSENCE".  This is not explained in detail but reference is made to an "appendix as attached".

	Paragraph 7. "PENSIONS.  The Company is `contracted in' to the State Pension Scheme".

	Paragraph 8.  "COMPANY RULES

		You are required to observe and abide by the Company Rules, (as attached) ...." 

	Paragraph 9 dealt with a GRIEVANCE PROCEDURE appearing in the Company rules.

	Paragraph 10 made provision for NOTICE OF TERMINATION OF EMPLOYMENT.

	Paragraph 11 enumerated the DRIVERS [PRACTICAL] RESPONSIBILITIES.

	Paragraph 12 provided for the possibility of the VARIATIONS of the conditions of the contract of employment.  It said this:

		"The conditions mentioned above are subject to variation at any time, but notice of changes will not be less than one month".

	Paragraph 13.  CANCELLATION OF PREVIOUS ISSUE

		The statement supersedes any previous statement relating to the main terms of your employment.

		The foregoing particulars in this statement are correct as at 12th March 1992". 

	And then below the body of the text the following statement appears underlined and in capitals:  "THIS STATEMENT DOES NOT ITSELF CONSTITUTE A CONTRACT".

	The Industrial Tribunal's decision was very short.  Having set out the facts briefly in paragraph 2 and adding to them, even more briefly, in paragraph 5 the Tribunal considered at paragraph 3 the terms of Section 1(1) of the Wages Act 1986, to which we have already referred.

	At paragraph 4 the Industrial Tribunal set out Section 18(1) of the Trade Union and Labour Relations Act 1974, and concluded that the Reduction Agreement which they had before them was not a legally enforceable contract.  No criticism is made of that conclusion. 
They then went on at paragraph 6 to the nub of the decision in these words:

		"When the Reduction Agreement was entered into, the Applicant was employed by the Respondents in accordance with a contract of employment, one of the terms of which was ...."

	And they then read the preamble to the statutory statement.  Paragraph 6 continues:

		"By that term the Reduction Agreement was incorporated into the Applicant's contract of employment with the Respondent.  We find that it thereby became legally enforceable as between the Respondent and the Applicant.  See Robertson  v  British Gas Corporation [1983] ICR 351, and Marley  v  Forward Trust Group Ltd [1986] ICR 891.  Accordingly, the deductions made from the Applicant's pay pursuant to the Reduction Agreement were, for the purpose of Section 1(1)(a) of the 1986 Act required or authorised to be made by virtue of a `relevant provision' of the Applicant's contract.  It follows that the deductions were not made in contravention of Section 1(1) of the 1986 Act and this application must therefore be dismissed". 

	The essence of this finding is that the contents of the statutory statement were terms of the contract.  The preamble therefore, was a term of the contract and if a new collective agreement came into force, its terms were automatically incorporated into the employee's contract of employment.

	The Appellant argues before this Tribunal that the Industrial Tribunal was wrong in that conclusion.  Arguments have been raised before us which were not put before the Industrial Tribunal.  The Appellant appeared in person on that occasion.  His notice of application simply said that he did not agree or consent to the reduction in his wages.  

	It appears to us that no arguments were raised as to the true construction of the contract of employment.  Today, before us, it was asserted initially that at the hearing below, the detailed terms document had been accepted by both sides as being "the contract of employment" and that therefore, the Industrial Tribunal were in error in concluding that the statutory statement was the contract.  However, Mr Van Hee on being asked to justify that assertion accepted that there was nothing in the decision to indicate that both sides had accepted that the detailed terms document was the contract of employment and he was obliged to accept that he could not advance that proposition further.  We feel bound to say that it seems to us highly unlikely that this document ever was accepted as the contract of employment.  It is manifestly inadequate in that it fails to deal with important matters.  

	Mr Van Hee then submitted that it appeared from paragraph 6 that the Industrial Tribunal had concluded that the statutory statement was the contract of employment.  If they did he submits, that would be wrong.  He referred us to the well known authority of Robertson and Jackson  v  British Gas Corporation [1983] ICR 351, the authority to which the Industrial Tribunal had referred themselves.  

	That was a case in which two British Gas meter readers sued their employers in the County Court for arrears of pay, allegedly due to them under a bonus scheme, which had been in operation for many years, but which the company had sought unilaterally to terminate.  Each plaintiff had in his possession a letter dated 1970 which referred, in clear terms, to the incentive bonus scheme as being payable for the work the plaintiffs were to do.  In 1977 the employer issued a statutory statement which contained a provision that the amounts payable under the bonus incentive scheme were to be calculated according to the rules at the time in force under a collective agreement.  The judge held that the letter of 1970 was the contract of employment and that it imposed a binding obligation to make payments under the bonus incentive scheme, and that the rates payable were those in force immediately before the company attempted unilaterally to resile from the scheme.  

	The Court of Appeal held that the judge was right.  Lord Justice Ackner, as he then was, considered that, in so far as there was any inconsistency between the letter and the statement, the letter being the contract would prevail.  Lord Justice Kerr did not find there to be any inconsistency.  

	However, of particular importance in this case, is the approval given by the Court in Robertson's case to the statement of the law relating to the status of statutory statements made by the President, Mr Justice Browne-Wilkinson, as he then was, in System Floors (UK) Ltd  v  Daniel [1982] ICR 54.  Lord Justice Ackner noted that Mr Justice Browne-Wilkinson at first referred to an observation of Lord Parker in the case of Turriff Construction Ltd  v Bryant [1967] 2 KIR 659 where Lord Parker, the Lord Chief Justice, had said this:

		".... It is, of course, quite clear that the statement made pursuant to section 4 of the Act of 1963 [that is the Contract of Employment Act] is not the contract; it is not even conclusive evidence of the terms of the contract".

	Mr Justice Browne-Wilkinson in System Floors went on to say:

		"It seems to us, therefore, that in general the status of the statutory statement is this.  It provides very strong prima facie evidence of what were the terms of the contract between the parties, but does not constitute a written contract between the parties.  Nor are the statements of the terms finally conclusive:  at most, they place a heavy burden on the employer to show that the actual terms of the contract are different from those which he has set out in the statutory statement". 

	Lord Justice Ackner gave the approval of the Court of Appeal to that statement at page 355 just above (C) where he says:

		"I am quite satisfied, with respect, that Browne-Wilkinson J. has properly stated the law in those parts of his judgment to which I have referred".  

	It is those passages on which Mr Van Hee relies to support his submission that the Industrial Tribunal would be wrong to give the statutory statement the status of the contract of employment.  It is clear, in our judgment, that they would have been wrong to do so if that is what they did, but we are not satisfied that they did any such thing.  

	Mr Van Hee complains that the decision of the Industrial Tribunal was so brief that one cannot really tell what the reasoning was.  We have some sympathy with that criticism but we do consider that the Reasons, although brief, are adequate.  

	What the Industrial Tribunal found was that the preamble to the statutory statement was a term of the contract.  Was there material on which they were entitled to come to that conclusion?  In our view there was.  The Industrial Tribunal had all the appendices to the statutory statement before them.  They had the detailed terms document.  In our judgment, they were entitled to conclude that the contract of employment did not appear as any one document, but that some of its terms were in the statutory statement.  Paragraph 6 of the Decision says no more and no less than that. 

	Next, Mr Van Hee submitted that because the Industrial Tribunal had referred to Robertson's case in the second part of paragraph 6, it is to be inferred that they had concluded that the Reduction Agreement should automatically be incorporated into the contract of employment.  Robertson is not authority for that proposition.  It is well established and confirmed by Robertson that a collective agreement, although not enforceable itself, may be incorporated into the contract of employment and become enforceable, as between employer and employee.  One must construe the contract to see whether that is so.  
	That, in our judgment, is what this Industrial Tribunal has done albeit in very short form.  We are not prepared to assume that the Industrial Tribunal has misread and misunderstood the authority to which they have properly referred themselves.  We consider that the Industrial Tribunal was entitled to reach the conclusion that they did, and we do not consider that they misdirected themselves in law.

	That disposes of Mr Van Hee's main argument.  However, it is not the end of this appeal.  Mr Van Hee raised a second point.  Even if, as we have now found, the preamble was a term of the contract, it does not provide, he submits, that the remuneration should be governed by the collective agreement in force from time to time.  I shall read the preamble again to illustrate the point he makes.  It says:

		"The basic terms and conditions of your employment by this Company are in accordance with, and subject to the relevant provisions of the collective agreements currently in force and made between [and I paraphrase] and on behalf of the Company and the Trade Unions ...".

	Mr Van Hee submits that the preamble provides that the basic conditions, which would include remuneration, should be governed by the collective agreement currently in force at the date of the signing of the statement, and not by any agreement that might come into force at a later date.  He submits in short that, "currently in force", means "now in force", that is, at the date of signing.  It is common ground and clear that the Reduction Agreement was not in force at the date of the signing of the statutory statement.  Therefore, it cannot, he submits, have been incorporated into the Appellant's contract when the Reduction Agreement came into force.

	Today, before us, Mr Van Hee has submitted that the word "currently" in this preamble is ambiguous.  He submits that it could mean "currently at the date of signing".  Indeed, he submits, that is what it does mean, but he accepts that it could also mean "currently from time to time".  If it is ambiguous, he submits, it should be construed contra proferentam; that is, in this case, in favour of the Applicant.

	We have given very careful thought to this problem and have sought to examine the words in context to see whether we think it is clear what the parties must objectively have been taken to mean by this clause.  We note in passing that neither side suggested, to the Industrial Tribunal below, that the phrase "currently" meant "at the time of signing the statement".  It appears to have been assumed that it meant "from time to time".  We have allowed this point to be argued, although it was not raised below, as it is purely a point of law and is not, in any way, dependent on a finding of the Industrial Tribunal.  

	In the event, we have come to the conclusion that the meaning is clear and that the words of the preamble are intended to provide that "currently in force" means "in force from time to time".  If it had been intended to mean "now in force" as Mr Van Hee contends, it would have been very easy to express that intention by using the words "now in force" as opposed to "currently in force".

	We have reminded ourselves of other examples of the way in which the word "current" or "currently" is commonly used and understood.  For example, an article which is offered for sale according to the price list "currently in force" would be for sale at whatever the price was at the time when the question arose.  We think it is plain, from this document, that what was intended by the preamble was that the terms and conditions of this Appellant's employment by the company, would be subject to the relevant provisions of the collective agreements currently in force from time to time; in other words, at the time when a question arose.

	Consequently, and for that reason, we reject Mr Van Hee's second argument.  His third argument, which related to the question of whether it would be possible for this contract to be varied by notice, under Clause 12 of the statutory statement, is one which in the light of 

our findings already made, does not arise and we propose to say no more about it.

	For the reasons we have given, therefore, this appeal must be dismissed.