Appeal No. EAT/676/01

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	                   At the Tribunal
	                 On 26 July 2002
Judgment delivered on 31 July 2002

Before
HIS HONOUR JUDGE PETER CLARK
MR W MORRIS
MRS D M PALMER

GOVERNING BODY OF THE PLUME SCHOOL	APPELLANT

MR P LANGSHAW & MISS F THOMAS	RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR M LANE
(of Counsel)
Instructed by:
Essex County Council
County Secretary
Duke Street
Chelmsford CM9 6AB	
For the Respondents	MR G CLAYTON
Solicitor
Graham Clayton 
Solicitors
Mabledon Place
London WC1H 9BD	

JUDGE PETER CLARK

1	This is an appeal by the Governing Body of the Plume School, the Respondent before an Employment Tribunal sitting at Stratford under the chairmanship of Mr Patrick Milmo QC, against that Tribunal’s Reserved Decision, promulgated with Extended Reasons on 3 April 2001, upholding the Applicant teachers, Mr Langshaw and Miss Thomas’ complaints of unlawful deductions from wages contrary to section 13(1) of the Employment Rights Act 1996 (ERA).

Background
2	The Applicants were employed by the Respondents at the Plume School, a large comprehensive school in Maldon, Essex.  Mr Langshaw was, at the relevant time, employed in the Arts Faculty and Ms Thomas in the Modern Languages Faculty.  

3	In March 1997 the Respondent received an Inspection Report which led to a review of the organisation of the teaching staff and some proposed restructuring which would involve the possibility of redundancies, alternatively some teachers’ posts being downgraded with a consequent reduction in their rates of pay.  

4	Consultations took place with the relevant trade unions, and one topic discussed was that of ‘salary protection’, that is to say, where a teacher accepted a new slot which would attract a lower level of pay, that teacher’s existing salary may be protected.  The Respondent proposed that such protection should be put in place, but for a limited period of one year; the unions, in January 1999, proposed three - four years’ protection, but later trimmed their aspirations to two years’ protection in a letter dated 23 March.

5	Meanwhile, by letters dated 5 February, the Respondent offered to each Applicant a post carrying lower responsibility and consequently lower pay on the payscale than their previous posts.  Those letters made no mention of salary protection.  

6	In July each Applicant received a letter offering a post of lower responsibility at the rate of pay which they had previously enjoyed in their former posts limited to one year until 31 August 2000.  Thereafter they would be paid in accordance with the point on the teacher’s salary scale which the new posts attracted.  There would be a one point reduction in each case.  Each Applicant signed his/her respective letter from the Respondent and thus continued to receive his/her old salary until 31 August 2000.  Having then moved to the lower point in the salary scale each presented a complaint of unlawful deductions from wages to the Tribunal.  

The Law
7	Teachers’ contracts of employment are strictly regulated by statute.  The relevant provisions are these.

8	By section 2(7) of the School Teachers Pay and Conditions Act 1991 (the 1991 Act) subject to an immaterial provision in section 3 of the Act, it is provided that the contract of employment of a school teacher shall contain no terms other than those which have effect by virtue of a pay and conditions order.

9	The Tribunal proceeded on the basis that the relevant pay and conditions order for present purposes is the School Teachers Pay and Conditions document 1999 (the 1999 Document).

10	Attention is focused on paragraph 32 of the 1999 Document and in particular paragraphs 32.1.1 and 32.1.2.  Before us it was agreed between the parties that the relevant pay and conditions document was that published in 1998, however, nothing turns on the point since paragraphs 25.1.1 and 25.1.2 of the 1998 document are in all material respects identical to the equivalent provisions in paragraphs 32.1.1 and 32.1.2 of the 1999 document.

11	Paragraph 25.1.1 provides for salary protection in circumstances which, it is common ground, do not arise in the present case.  

12	Paragraph 25.1.2 provides, so far as is material:

“where, in circumstances other than those mentioned in paragraph 25.1.1, ….. such a teacher loses his post or would (but for this paragraph) suffer a diminution in his remuneration, and is thereupon employed full-time as a teacher in the provision of primary or secondary education:
(a) in a post (whether or not at a school) in which his remuneration is paid by the same authority as before; …..
 ..….he may, at the discretion of the authority or (as the case may be) the governing body of the ……..school by whom he is paid, be deemed for all salary purposes to continue to hold the post he held, and to be entitled to those allowances listed in paragraph 25.1.4 to which he was entitled immediately before the circumstances occurred; and the authority or such a governing body shall not unreasonably refuse to exercise their discretion in this matter in favour of the teacher;”
The ‘authority’ for present purposes is the Respondent.  

The Tribunal Decision
13	In a carefully reasoned Decision the Tribunal reached the following conclusions:
(1) The Respondent was not empowered, under paragraph 25.1.2 of the 1998 Document, to impose a temporal limitation on the salary protection granted to the Applicants.  It was an “all or nothing” provision.  

(2)  The Respondent had exercised their discretion under paragraph 25.1.2 in favour of granting pay protection to the Applicants.

(3)  The temporal limitation was unlawful and could properly be excised, leaving the Applicants with unlimited pay protection in their new posts.  

(4)  The written agreement reached between the Respondent and Applicants in July 1999 was of no effect, since it contravened the 1998 Document, paragraph 25.1.2 and hence section 2(7) of the 1991 Act.

(5)  In these circumstances the Respondents’ failure to pay the protected salaries to the Applicants after 1 September 2000 constituted an unlawful deduction from wages, there being no valid contractual authorisation nor written agreement to the deductions by the Applicants for the purposes of section 13(1) ERA.

The Appeal
14	It is convenient to consider Mr Lane’s submissions in support of the appeal under three heads; construction, severance and waiver.  

Construction
15	Mr Lane challenges the Tribunal’s finding that the discretion granted by paragraph 25.1.2 of the 1998 Document was “all or nothing”, that is to say, that either pay protection was granted or it was not.

16	He submits that, in the absence of any express words permitting or prohibiting a temporal limitation on the grant of pay protection it was lawful for the Respondents to impose such a limit.  If that be right the parties agreed to a lawful variation in the Applicants’ contracts of employment in writing.  There was no unlawful deduction from wages after 1 September 2000.

17	In support of that submission he points to the express provisions of paragraph 10 of the 1998 Document.  There, a distinction is drawn between, for example, points in the pay scale awarded to a teacher for possessing a good honours degree, which are permanent (paragraph 10.2.3) and points awarded for responsibility which may be temporary or retained while the teacher remains in post.  (Paragraph 10.3).  No such indications are given in paragraph 25.1.2.

18	Secondly, he relies upon my judgment in Wareing and Chidwick -v- Anfield Community Comprehensive School and Another [EAT 890/99. 18 December 2000 Unreported].  That case involved consideration of paragraph 24.1.2 of the 1997 Document in similar terms to paragraph 25.1.2 of the 1998 Document.  He relies particularly on one sentence in the judgment, at paragraph 28, where I said, in relation to the case of Mr Wareing:
“We cannot accept that the temporal limitation was itself unlawful.”

19	We reject those submissions  In our judgment, read as a whole, paragraph 25.1.2 is, as the Tribunal held, an all or nothing provision.  Either discretion is exercised by the authority in favour of treating the teacher as continuing to hold his former post for all salary purposes or it is not.  If the latter, then the question arises as to whether such refusal was unreasonable.  That pay protection continues whilst the teacher holds the new post; it cannot be arbitrarily limited in time as in the present cases.  

20	Paragraph 10 of the 1998 Document is concerned with the awarding of points on the pay scale.  That is a different exercise to that of pay protection under paragraph 25.  It is concerned with the calculation of pay, not the protection of salary once calculated.

21	As to the case of Wareing and Chidwick, Mr Chidwick received pay protection without limited of time.  Mr Wareing’s pay was protected for a period of four years in the first instance; it was then to be reviewed, at which point the reasonableness criterion applied.  In these circumstances both cases were factually different from the present cases.  We expressed the view, in Mr Wareing’s case, that the temporal limitation in those circumstances was not unlawful.  However, that observation was made in the context of our finding that it was not open to Mr Wareing to challenge the lawfulness of he Respondent’s limitation, the point not having been taken below.  It follows that that observation did not form part of the ratio in that case.

Severance
22	Next it is submitted by Mr Lane that if the temporal limitation in these cases was unlawful then the proper course is to declare the whole exercise of discretion invalid.  He relies upon the principles stated in Thames Water Authority -v- Elmbridge Borough Council [1983] 1 QB 570: Dunkley -v- Evans [1981] 1 WLR 1521.

23	In our judgment it is necessary to look at the factual matrix as found by the Employment Tribunal.  It was clear from the outset that the Respondent was minded to exercise its discretion in favour of granting pay protection to the Applicants, but, impermissibly we find, limited to a one year period.  That is apparent from the initial offer made to the trade unions and recorded at paragraph 4 of the Tribunal’s Reasons.  

24	In these circumstances we agree with the reasoning expressed by the Tribunal at paragraphs 14-15.  The unlawful part of the Decision taken by the Respondents can be severed, leaving the lawful exercise of discretion to grant pay protection intact, as happened on the facts of both Thames Water and Dunkley.  No textual modification to the remaining part of the Respondent’s decision is necessary.  Cf DPP -v- Hutchinson [1992] Act 783.  

Waiver
25	At a very late stage, one day before the hearing of this appeal, Mr Lane, who did not appear below, sought to add a further string to his bow by adding a further paragraph (paragraph 17) to his Skeleton Argument.  

26	His new contention was that even if the temporal limitation was unlawful, and could be severed, nevertheless the Applicants should be treated as having waived their rights under section 2(7) of the 1991 Act by agreeing, in writing, to limited pay protection in the letters of July 1999.  

27	Mr Lane accepts that this point was not taken below.  The Respondent’s case was there advanced on the basis that temporal limitation on pay protection was lawful; not that if it was unlawful under section 2(7) the Applicants had waived their statutory right not to have a term of their contracts other than those having effect by virtue of the relevant pay and conditions document.  

28	Mr Clayton opposes the taking of this new point.  Ought it to be permitted? 

29	The point which Mr Lane seeks to argue gives rise to a question of public policy.  Would waiver in this case frustrate the overall purpose of the statutory right contained in section 2(7) of the 1991 Act?  

30	This is not a point which goes to the Tribunal’s jurisdiction.  No exceptional circumstances requiring us to hear this new point are advanced.  Even if the point requires no further findings of fact by the Employment Tribunal we can see no grounds for allowing it to be taken for the first time on appeal, applying the Court of Appeal’s guidance in Glennie -v- Independent Magazines (UK) Ltd [1999] IRLR 719.  In these circumstances we shall not entertain this point.  

Conclusion
31	If follows, in our judgment, that the Tribunal was correct to find that there was here unlawful deductions from wages.  The appeal is dismissed.