Appeal No.   UKEAT/0548/07/ZT

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 18 April 2008

Before
MR JUSTICE LANGSTAFF
MS K BILGAN
SIR ALISTAIR GRAHAM

MR M SAVAGE	APPELLANT

NESTLE WATERS POWWOW LIMITED	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MS A MACEY
(Free Representation Unit Representative)	
For the Respondent	MR D CHARITY
(Consultant)
Messrs Qdos Consulting Limited
Qdos House
Rossendale Road
Earl Shilton
Leicestershire LE9 7LY	

SUMMARY
UNFAIR DISMISSAL
  Reasonableness of dismissal

CONTRACT OF EMPLOYMENT 
  Implied term/variation/construction of term

Construction of a contact as to whether overtime would be paid for. The Employment Tribunal’s error on this (if based on the written contractual terms, and in the absence of any cogent evidence that those terms had been amplified or varied by practice or further agreement) underpinned its findings as to the fairness of dismissal, purportedly for disobedience to a reasonable instruction, since if overtime was not to be paid for the instruction to work it might not be reasonable, or, if reasonable, the refusal to work it might, in the circumstances, not have merited dismissal.  Unfairness remitted to a fresh Tribunal.

MR JUSTICE LANGSTAFF

1.	This is an appeal from the decision of the Employment Tribunal sitting at Croydon whose decision was entered on 28 February 2007.  That Tribunal dismissed all the claims made by the Claimant except one which was conceded by the Respondent which claimed arrears of holiday pay.  Therefore, it dismissed claims which the Claimant had made that he had been wrongfully dismissed from his employment as a delivery driver.  That was, in essence, a breach of contract claim for pay during the notice period and for arrears of pay in relation to overtime which the Claimant said he had worked and which, his case was, should have been remunerated, but was not.

2.	No decision was made on any claim, if indeed a claim had been advanced to that effect, that the dismissal of the Claimant by the Respondent was automatically unlawful because he had asserted a statutory right.

Background
3.	The background is that the Claimant was a delivery driver.  He delivered water for the Respondent.  The Tribunal, in its decision, set out the terms of the contract derived from statements of terms and conditions of employment, the first of which was dated 11 December 2000, the second February 2003 and the third, 1 April 2004.  Since that of 1 April 2004 purports to be a contract of employment, and is expressed in comprehensive terms, we have taken that as superceding the two earlier contractual documents. 

4.	The Tribunal found that there had been a number of occasions when the Respondent said that they had problems with the performance of his duties by the Claimant.  He was subject to an informal warning in December 2005.  A formal warning on 13 December 2005 followed with further informal warnings on 4 January and 5 January 2006.

5.	On 13 January 2006, a Mr Fleming, the senior manager, took up the concerns which he had with the Claimant’s performance with him.  A disciplinary hearing followed on 31 January 2006.  A written warning was issued on 7 February.  It was followed by a further written warning for a traffic offence.  The warnings were in the nature of final warnings.  However, it was not in issue before the Tribunal (because the Respondent agreed that this was the fact) that the Claimant had objected to the final written warning which he had received in respect of his performance of his duties and had sought to appeal that further.  It is common ground that no action was taken in pursuing that request.

6.	As it happened, the Claimant was ill and absent from work for that reason from 3 March until 13 July.  Matters then came reasonably swiftly to a head.

7.	On 1 August, the Tribunal found the Claimant returned in the afternoon to the depot with seven deliveries uncompleted.  His supervisor, a Mrs French, asked him to complete those deliveries.  He refused that request.  Instead he went home.  She had asked him to wait in the canteen.  He did not do so.  He took the view that it was not for his employer to tell him where he might take a break.  He was entitled to a break.  He was not going to work beyond the eight hours which he regarded his contract as providing for.  He went home.

8.	Indeed the Tribunal, at paragraph 18, accepted that notes of a hearing before Mr Fleming, which followed, taken on 22 August, are an accurate record of the main points discussed.  Those notes show that the Claimant maintained first to Mrs French on the day after 1 August and two days later, and when he was disciplined for it by Mr Fleming, that the request which he had had to work on, to complete his deliveries, was not reasonable.

9.	His first ground for saying so was it would mean that he had worked too many hours.  He complained that he had not had a break during the hours that he had worked and, therefore, would, on any showing, be entitled to at least a 45 minute break before going out again.  He complained that the loads on his lorry were too heavy for their delivery to be completed within a reasonable time and he raised, though rather more quietly, the overtime pay issue to which we shall come later in this judgment.  He maintained that he had worked a number of hours overtime which should be paid for.  The employer did not consider that it was under any duty to make such payments, given the terms of the contract.

10.	The Tribunal found that Mr Fleming had a hearing at which he concluded that the Claimant’s explanation for not having gone out again to complete his round, and thereby to fail to comply with a reasonable request by Mrs French, was unsatisfactory.  He himself conducted investigations to see how long it would take to do the further deliveries and in the light of the findings that he had made, concluded that the Claimant was guilty of gross misconduct and that the appropriate penalty was summary dismissal.

11.	It may already be obvious that there were three matters which were linked to which we have to pay particular regard given the grounds of appeal.  Those are the dispute, for such it turned out to be, maintained at the Tribunal between the Claimant and the Respondent as to that which the contract properly required of him.  Second, whether in the light of those contractual obligations the instruction to complete his round was properly categorised as a reasonable instruction, and thirdly, whether if it was thought that it was a reasonable instruction which he had unreasonably refused, dismissal fell within the range of reasonable responses.
12.	Before us, a number of points are taken about the decision of the Tribunal on those and other matters which require first that we set out in essence what the Tribunal found.

The Tribunal Decision
13.	The Tribunal applied the familiar law deriving from British Home Stores Limited v Burchell [1978] IRLR 379.  It concluded that Mr Fleming had a genuine belief that the Claimant had committed the misconduct alleged, that the Claimant had refused, therefore, to obey a reasonable instruction as he saw it.  It concluded that that belief was held on reasonable grounds following a reasonable investigation.

14.	It next and separately considered that dismissal was within the range of reasonable responses of a reasonable employer.  It did so in these terms:

“Having regard to the fact that the Claimant had received previous warnings and that he was subject to a final written warning, in our view the decision to dismiss was within the range of reasonable responses of a reasonable employer.”

15.	Mr Charity, who appears today as he did before the Tribunal for the employer, accepted that given the opening words of that sentence, the decision to dismiss may not have been within the range of reasonable responses as the Tribunal viewed it, if it had not been for the previous warnings and the final written warning.

16.	The Tribunal dealt with the issue of the contract at paragraph 30.  The material before the Tribunal was, as we have indicated, derived from a number of different, written documents.  It may also have been influenced by oral evidence, but the Tribunal do not say so.  The terms and conditions of employment dated 1 April 2004 provide at paragraph 1.6 under the heading, Hours of Work, as follows:
“Your normal hours are 40 hours per week
You may be required to work additional hours as necessitated by the needs of the business and for the proper performance of your duties.  If additional hours are necessitated and authorised by your manager you may receive overtime payments as follows:”

17.	There is then set out a grid in which overtime rates in respect of particular days worked, weekdays, Sundays, bank holidays et cetera, are shown.  The clause continues:

“Your normal pattern of working hours are as agreed with your line manager.  Once agreed any request to vary these hours requires the written agreement and consent of your manager.  The Company may require you to vary your working hours from time to time in accordance with business requirements.  Any variation will not normally be outside your normal working hours although your start and finish time may vary.  Such variations will only be implemented following agreement between you and your line manager and will be confirmed in writing.”

18.	There are further provisions which are immaterial as to shift patterns.  The Tribunal said of that as follows at paragraph 30:
“We next considered the claim for damages for breach of contract in respect of wages.  In our view the proper construction of the Claimant’s contract of employment concerning hours of work is that while the normal hours of work were 40 per week, he was permitted to cease work each day if he had completed his deliveries in a lesser time.  He could be required to work reasonable additional hours as necessitated by the needs of the business.  This means that the Claimant could not both enjoy the benefit of being able to finish his work in less than 40 hours a week, and at the same time insist that he was entitled to overtime on every occasion when he was not able to finish his work within 40 hours.  We cannot accept the Claimant’s submission that he was automatically entitled to overtime whenever he exceeded 40 hours a week.”

19.	Miss Macey, who appears instructed by the Free Representation Unit on behalf of Mr Savage before us and who did not appear below where Mr Savage was in person, suggests that in saying as they did, the Tribunal were in error of law.  The construction of a written contract, at least where the contract contains all or most of the contractual terms applicable, is a matter of law.  Here, by using the words “The proper construction of the Claimant’s contract … is …” the Tribunal suggest that they are looking at a written document in order to construe it.  They do not say that they were taking into account any oral evidence which touched upon the contractual obligations that the employer owed to the employee and vice versa.

20.	Accordingly, the document at page 53 and 54 of the bundle which we have already quoted, paragraph 1.6 of the terms and conditions of 1 April 2004, is of primary significance.  We are unable to accept the Tribunal’s construction of this contract.

21.	It is said by Miss Macey that the clause envisages a working week of 40 hours, albeit that it may on occasions consist of a working week which goes beyond those hours where the needs of the business necessitate it.  She does not accept that the words “If additional hours are necessitated … you may receive overtime payments …” provides by use of the word “may” that the employer has a discretion about this which can be operated on any capricious or whimsical basis.  We consider that she is right.

22.	Mr Charity began his argument by suggesting that there was no obligation on the employer to pay for overtime hours but he rapidly accepted that if the hours were more than 40 hours per week as a regular pattern at any rate, the contractual expectation of the employee would be for payment because, as he put it, the contract does specify normal hours of 40 per week and, therefore, regularly to depart from that figure by requiring in excess of it would be to deprive the words “normal hours” of any meaning.  If the contract provides for normal hours of 40 hours per week, that is what the contract provides.  It does not provide for normal hours of 44 or 48.

23.	He was also inclined to appreciate that if the system of work was such that it would require regularly in excess of 40 hours per week for an employee to do the work required of him, it would be both necessitated by the demands of the business and could be said to be authorised by the manager both, as we would put it, because the manager was either impliedly authorising the overtime by making arrangements, the effect of which would be to exceed the 40 hours per week norm or because again, as we would put it, the contract must be subject here to an implied term that the authorisation would not unreasonably be refused in any case.  For instance, we cannot read this contract as providing that an employee might work regularly 48 hours per week because that was reasonably necessary to fulfil the demands placed upon him by his line manager and not be paid for the additional 8 hours upon the basis that, although necessitated by the business, the hours were not “authorised” in advance by the manager.  To do so would be to allow the payment to be made on a whimsical basis which does not appear to be, to us, the contractual intention.

24.	Thus we had three reasons for construing this clause as providing that if overtime is worked in excess of an average of 40 hours per week, the employee will be paid for it.  The first is there is otherwise no point, as it seems to us, in having the formal grid prominently placed in the terms and conditions of employment, if indeed in truth it is up to the employer to pay as much as he wishes, when he wishes and if he wishes.

25.	Secondly, we cannot construe any provision introduced by the word “may”, which, on the face of it, is permissive as providing an unfettered discretion because the natural contractual expectation of the parties, particularly in a contract of employment, is that a discretion conferred upon the employer, if truly a discretion, would not be exercised on any whimsical basis.

26.	It may well be that there are some cases, we can see, in which there may be arguments about whether the needs of the business truly necessitated additional hours of work.  It may be, for instance, that an employer has the view that an employee is deliberately working slowly during the first eight hours of his regular day in order to obtain overtime payments for the remaining two hours.  It seems to us that those considerations might entitle an employer, under this contract, to withhold overtime payments, but as a general proposition, where those matters cannot be properly said, the contract provides, as we see it, for overtime payments.

27.	Thirdly, we accept the point which Mr Charity makes that the expression “normal hours” has a force which, in this contract, leads to the expectation that hours beyond that will not, as a matter of rule, be worked.  If, as a matter of rule, they are worked, the contract, it seems to us, upon the way we construe it, to require payment.

28.	We appreciate that we have not, in taking this approach to the contract, taken account of any oral evidence.  This is because this is not a court in which such oral evidence is admissible.  We are bound by the findings of fact made by a Tribunal.

29.	It is possible, we recognise, that the way in which an employer and an employee conduct themselves may have the effect of modifying a contractual term or for that matter having contractual effect at least where a written contract is silent.  The dynamic nature of a contract of employment is indicated in cases such as Carmichael v National Power, see the speech of Hoffman LJ.

30.	It is thus possible that there might be oral evidence which would touch upon these issues.  As we say, none is mentioned by the Tribunal here.  However, we should observe as follows.  The clause, as we read it, distinguishes between the weekly hours, the normal hours, and the normal pattern of working those hours.  The expression “Your normal pattern of working hours” in our view does not refer to whether or not an employee may be required to work in excess of 40 hours in any week, but how those 40 hours are to be divided within that week or, as it may be, over a period, which, when averaged, produced a norm of 40 hours.

31.	Indeed, that may be thought to be clear if one considers the sentence,
“The Company may require you to vary your working hours from time to time … Any variation will not normally be outside your normal working hours although your start and finish time may vary.”

32.	There is, however, no express provision within the contract as to what the pattern of working hours in the Claimant’s case was specifically to be.  He worked for a while upon the “job and finish” basis, that is, as we understand it.  Once he had completed the deliveries he was asked to perform when first attending at about 7.00am in the morning for his shift, he could go home.  But the corollary of this would be that he would be expected to finish those deliveries.

33.	If this was a pattern of working then as we construe the contract it was to be within the normal hours of 40 per week, and was not to be a reason for regularly exceeding it.  Having expressed our view as to the proper construction of the contract, insofar as we can here determine it, we look at what the Tribunal itself said.

34.	When, in the second sentence of paragraph 30 the Tribunal purport to construe the contract as permitting the Claimant to cease work each day if he had completed his deliveries on what was in effect a job and finish basis, this is not based upon any written document which was currently in force.  There was a contract in 2003 which would have permitted it, but that was not the contract which operated at the time which is relevant.  This, therefore, seems to us to be an error of law unless it was based upon something said or agreed in evidence as to which we have no proper material, and the Tribunal, not having identified any such oral evidence, it is plain there is an error of law here.

35.	Next, the Tribunal say that the Claimant could be required to work reasonable additional hours as necessitated by the needs of the business.  Insofar as that derives from the contractual provision we have quoted, it is correct.  But the Tribunal goes on to say:

“This means that the Claimant could not both enjoy the benefit of being able to finish his work in less than 40 hours a week, and at the same time insist that he was entitled to overtime on every occasion when he was not able to finish his work within 40 hours.”

36.	This appears to be looking at the suggestion that the 40 hours a week was not to be an average, but was to operate so that if, for example, the Claimant worked for 20 hours in one week but 60 hours in the next, that he would be claiming 20 additional hours.  On that basis, the Tribunal, it appears, continued to say that they cannot accept the Claimant’s submission that he was automatically entitled to overtime whenever he exceeded 40 hours a week.

37.	The problem with this is that there is no material which allows us to see that the Claimant was boxing and coxing, as these comments might suggest.  His case, made very clearly to his employer (see the notes of the disciplinary meeting which the Tribunal thought reasonably accurate and complete) was that he was regularly working in excess of 40 hours.  We, accordingly, think that there is an error here too.

38.	If we are correct in our approach to the contractual obligations, then the question is whether or not that might affect the Tribunal’s view of the correctness and fairness of the approach taken by Mr Fleming when he disciplined the Claimant.  Central to the view which the Tribunal took of Mr Fleming’s approach was that he was entitled to regard the instruction which Mrs French had given to the Claimant to finish his round as being a reasonable instruction.  The notes which were before the Tribunal show that she had said to him that the job did not finish at any set time but when the route is finished.  See page 61, notes of the investigation of 4 August.

39.	It is plain that Mr Fleming took a similar view, see page 69, the seventh page of the notes made of his disciplinary meeting, in which when he was asked by the Claimant, “Can I just ask what is reasonable and unreasonable?  What is the reasonable amount of unpaid overtime to work?” replied to the effect that “We are paid a salary and the contract states, ‘You may be required to work additional hours as necessitated’ et cetera”, he was taking the point that the Claimant had to work overtime.  He did not, it seems, there address the question of whether that overtime was to be paid or unpaid which it appears to us was important to the Claimant.

40.	We can well understand that the Tribunal might have taken the view that where the Claimant was subject to an obligation to comply with the needs of the business and to work flexibly within his 40 hours per week, and could be required to work overtime, at least if paid for, that it might have been thought disobedient to a reasonable instruction to refuse to complete his round.  But we can also see that the reasonableness of that instruction may well have depended, at the time when it was given, upon the hours which the Claimant was then working without remuneration, although entitled to such payment on the contract as we understand it.

41.	In short, if the Tribunal had taken the view that Mr Fleming should have realised that the contract provided for payment, and that what Mrs French was asking him to do might well have been to work some extra hours for which he would simply not be paid, in excess of the 40 hours which he was otherwise generally committed to, her instruction might not have been thought so reasonable.  This is not a conclusion for us.  It is a simply a conclusion that given the approach we take and think correct to the contract, the Tribunal’s error as to what the contract required might very well have affected their approach to what Mr Fleming did and how reasonable it was.

42.	Put another way, they did not take into account when assessing Mr Fleming’s actions that there may have been a breach of contract by the employer in what they were asking the employee to do.  If they were asking him to fulfil his part of the bargain, it might only have been fair for him to demand that they fulfil their part and that, as is apparent from the stance taken at the Employment Tribunal, was something which they steadfastly refused to do.

43.	It seems to us, therefore, that the points taken by Miss Macey that the finding of unfair dismissal was not reached taking into the account the matters which the Tribunal should have taken into account or may have been approached on a false basis, are valid criticisms.

44.	We turn now to the question of the final written warning.  We have already quoted what the Tribunal said at paragraph 28 about this.  At no point in its decision did the Tribunal recognise what was agreed before them namely that the Claimant had objected to the final written warning and his appeal against it had not been heard, let alone determined.  Although it might have been open to an employer to rely upon a final written warning, albeit under challenge, the fact that it was under challenge is, in our view, relevant.  If the Tribunal in reviewing the employer’s conduct were to think it overall fair and reasonable, it would have to take into account at least the possibility that the final written warning might not have withstood the heat of an appeal.  This is all the more the case here where, as best we can understand the papers, there was an ongoing issue between the Claimant and the employer as to the hours of work and, in particular, those which would remunerated by overtime payment.

45.	The Claimant, as we read some of the material we have seen, and which was before the Tribunal, suggested that in 2006 he was regularly required to work more than 40 hours per week so that it was no longer his normal hours of work, but that some rather greater figure was instead.  We are not in any position to, nor do we try to, determine that issue but it emphasises, as it seems to us, that the Tribunal would need to indicate that, in reaching a conclusion, it had at least taken into account and evaluated the fact that the written warning might be suspect.

46.	Two other complaints were made to us about the proceedings and the decision of the Tribunal.  The first of those was that the Tribunal were not entitled to accept the evidence of Mr Fleming that he had examined the Appellant’s tachograph from his cab and seen that it showed that he had taken three 15 minute breaks during 1 August, such that his insistence that he would not go out for a further journey without having a 45 minute break was misplaced.  The argument is that the tachograph itself was a document which should have been in the possession of the Respondent.  The Appellant asked for it in advance of the hearing.  It was not supplied.

47.	It is said by Miss Macey that the Tribunal, in the light of that, and in the light of the fact that the disciplinary notes do not record Mr Fleming having challenged the Claimant to the effect that the tachograph record showed three breaks, should have led them to conclude that his decision was simply wrong.  We think the answer to this is that given by Mr Charity for the Respondent.  It is two-fold.  First it was open to the Claimant to make a formal request to the Tribunal for such records.  Although he had made a request of the Respondent before the hearing, he did not make any such request for disclosure of it.  Secondly, Mr Fleming gave evidence that he had looked at the tachograph.  The Tribunal were entitled to accept or reject that evidence.

48.	However much someone wishing to convince a Tribunal of the contents of a document may be at a disadvantage without having the document to show to the Tribunal, that does not mean to say that the Tribunal cannot properly accept the evidence.  It seems to us that is what this Tribunal did and it seems to us they were entitled to do so.  However, in the light of our other conclusions, this point is no longer of any central significance.

49.	Next, it is said that the Employment Tribunal reached a flawed decision because they did not consider that the Appellant was claiming automatically unfair dismissal by reason of having made a protected disclosure or for asserting a statutory right pursuant to section 103A and/or section 104 of the Employment Rights Act 1996.

50.	In his originating application, the Claimant said at paragraph 5.1:

“I refused to do unpaid overtime which would have meant at least a 10 hour day without a break.  When I said I have a right to a break, I was told I should have taken one earlier and I could manually alter my tachograph to show breaks.  I was disciplined and fired without notice for ‘failure to carry out a reasonable request’.”

51.	It is said that that coupled with a reference in his witness statement to the Tribunal (page 2) in which the Claimant said that the request which had been made of him was not only unreasonable, but also illegal, because he had been asked to falsify his tachograph and his right to a break had been ignored, should have led the Tribunal to conclude that this was a claim which they had to resolve. 

52.	We do not agree.  We are told that, at the outset of the hearing, the Tribunal chairman, as befits the chairman of a Tribunal hearing the claims brought by a person representing himself, clarified what it was that the Tribunal was to determine.  There is a reflection of that in the opening paragraphs of its decision.
53.	At no point was it clearly said to the Tribunal that the Tribunal was being asked to decide that the Claimant had been dismissed by reason of the fact that he had made a protected disclosure or had asserted a statutory right.  In his witness statement, he does not go quite so far, as we understand it, as saying that it was because he had been asked to falsify a tachograph, as his evidence was, and had refused to do so, that he was dismissed.  Indeed, that would be entirely inconsistent with the approach taken by the employer on the basis of which the Tribunal dealt with the case, namely that the reasonable instruction was not an instruction to falsify a tachograph but was an instruction to complete his delivery round.

54.	As to breaks, again, there is no material before us which shows that the Tribunal was asked to deal with the matter upon the footing that the employer had sacked the Claimant because he had insisted that he was entitled to a break.  Plainly his insistence on this, if it happened, was interlinked with the question of whether or not he had refused a reasonable instruction in that it is capable of influencing the reasonableness or otherwise of that instruction.  But that is not the way in which the claim appears to have been advanced.

55.	It seems to us, therefore, that bearing in mind that a Tribunal can only deal with the claim as advanced before it, even in the case of an unrepresented party, and given that the Tribunal dealt with the substance of the issue in any event, this point is not well founded.  We have no hesitation, therefore, in dismissing the appeal insofar as it relies upon that ground.

Conclusion
56.	In conclusion, we have come to the view that the contractual position (subject only to the possible impact of further oral evidence upon it if that evidence establishes that additional contractual terms operated or there had been any contractual variation) is other than the Tribunal here decided.  On the footing, therefore, that ours is the proper approach to the contractual relationship between the employer and the employee, the case will have to be remitted for rehearing so that a Tribunal may decide whether or not the dismissal on the ground that the employee failed to comply with an instruction - I omit the word “reasonable” because that is in issue - to continue making deliveries on 1 August 2005 was or was not unfair.

57.	The claim in respect of overtime will require further evidence to establish whether there was any hour which was not paid for.  That is the implied assertion underlying the Claimant’s case.  He was unsure at the Tribunal as to the amount of damages which he claimed under this heading, see paragraph 2.  It seems to us plain that directions will have to be given by the Employment Tribunal to assist in resolving what sum may be at stake to which, on our view of the contract, the Claimant might be entitled.

58.	It seems to us, therefore, that the claim must be remitted for rehearing on the question of unfair dismissal, that is straightforward unfair dismissal, as one might put it, and determination of the amount payable, in respect of the contract unless, as we have said, there is cogent evidence that the contract is other than that apparent from the 2004 document.