Appeal No. UKEATS/0044/11/BI

EMPLOYMENT APPEAL TRIBUNAL
52 MELVILLE STREET, EDINBURGH, EH3 7HF

	At the Tribunal
	On 19 June 2012

Before
THE HONOURABLE LADY SMITH
(SITTING ALONE)

DR STEVEN MORGAN	APPELLANT

GREATER GLASGOW HEALTH BOARD	RESPONDENT

JUDGMENT

	APPEARANCES

For the Appellant	MR B MORGAN
(Solicitor)
The Morgan Law Partnership
33 East Port
Dunfermline
Fife
KY12 7JE	
For the Respondent	MR I TRUSCOTT
(One of Her Majesty’s Counsel)
Instructed by:
NHS Scotland Central Legal Office
Anderson House
Breadalbane Street
Bonnington Road
Edinburgh
EH6 5JR	

SUMMARY
UNLAWFUL DEDUCTION FROM WAGES

Unlawful deduction from wages.  Terms and conditions of employment of Specialty Registrar in Psychotherapy.  Downbanding.  Pay Protection.  Appeal against finding that pay protection lost at the end of each of a junior doctor’s placements misconceived. Expenses.

THE HONOURABLE LADY SMITH 
Introduction
1.	Dr Morgan was a hospital doctor in training, employed by Greater Glasgow Health Board.  He complained to an Employment Tribunal sitting at Glasgow (Employment Judge SFR Patrick) that he had suffered an unlawful deduction from wages when his non-pensionable pay supplement was halved.  His complaint was not upheld and he now appeals to this Tribunal.

2.	I will, for convenience, continue to refer to parties as Claimant and Respondent.

3.	The Claimant was represented by Mr B Morgan, solicitor, before the Tribunal and before me.  The Respondents were represented by Mr I Truscott QC before the Tribunal and before me.

Background
4.	The Claimant began working as a Specialty Registrar in Psychotherapy for the Respondents on 6 August 2008, training with a view to becoming a consultant psychotherapist.  The training period was three years.  Separate contracts were issued for each year of training.

5.	Four terms were used in his contracts which are important.  One was ‘rotation’.  It is defined in the standard NHS Terms and Conditions (2007) as follows:

“21. …a rotation is a series of posts or placements forming part of a training programme which might be in any training grade.  Such a rotation may involve the trainee having a series of different employing authorities and contracts, but will not involve a new appointment panel.”

6.	The second was “placement” which, although not specifically defined was agreed by parties to refer to the placing, each year, of a doctor in training according to the decision of NHS Education for Scotland (“NES”) as to where the doctor was to work that year and in what post.  NES notify health board employers such as the Respondents of trainee doctors’ placements for the following year.  Placements usually begin in August.

7.	The third term was ‘post’ which is not specifically defined in the relevant contractual documentation but parties appeared to agree that it referred to the job or role that the doctor is appointed to perform within his placement.  Since a placement may involve only one post, the terms ‘placement’ and ‘post’ are often used interchangeably.

8.	‘Bands’ and ‘banding’ are also referred to in the Claimant’s contracts.  They relate to pay for out of hours work.  All that need be noted for the purposes of the present case is (a) that doctors such as the Claimant are paid a base salary plus a non pensionable supplement; and (b) that the pay band specified in a doctor’s contract determines the amount of the supplement, which is expressed as a percentage of base salary.

9.	The movement from one placement to the next is not automatic.  As a doctor is reaching the end of a placement, he is assessed and must have reached a satisfactory level before he can move to the next level of training.  He could, if his performance has been unsatisfactory, be held back or even not offered a further contract.  Thus, when a doctor in training is, at the end of one placement, offered a fresh placement, it is indicative of him having met the assessment criteria which enable him to move on to the next level of training.

10.	The Claimant’s contract for the year 5 August 2009 to 3 August 2010 (year two of his training) stated that he was appointed as Specialty Registrar in Psychotherapy based at Gartnavel Royal Hospital and:

“3…
(b)  You will receive a base salary…as detailed in Table 1, Appendix of the Terms and Conditions of Service.  
(c)  A non-pensionable supplement at the following payband will be payable in accordance with paragraph 22 of the Terms and Conditions of Service - 1B.  (For rotations, banding supplements may differ for each individual post).  
(d)  Banding supplements may be altered...(Pay protection will apply in accordance with paragraph 21 of the Terms and Conditions of Service).  
Pay

4  (a)  Your base salary will be £29,411 per annum, paid monthly and will progress by annual increments to £46,246 per annum in accordance with the national agreed salary scale for your grade (pay award pending).  These rates may be amended from time to time by National Agreement.  
…
(b)  You will receive, in addition to your standard salary, a supplement at the rate of 40% of your standard salary for duty contracted at the band set out in Paragraph 3(d) above, which will be payable monthly.  The rates may be amended from time to time by national agreement.”

11.	That contract had an express date of termination of 3 August 2010.

12.	The Claimant was issued with a fresh contract for the year 4 August 2010 to 2 August 2011 for the third year of his training in psychotherapy.  It stated that he was, again, appointed as Specialty Registrar in Psychotherapy based at Gartnavel Royal Hospital.  (I was advised that he in fact worked at the Western Infirmary in both 2009/10 and 2010/11 but nothing seems to turn on that).  Clause 3(b) was in the same terms as 3(b) above.  Clause 3(c) was in the same terms as the previous clause 3(c) except the pay band was stated to be 1C, which was a lower band than 1B.  Clause 4(a) was in the same terms as above but stated that his base salary would be higher, at £29,705 per annum with incremental progression to £46,708 per annum.  Clause 4(b) was in the same terms except that the supplement was stated to be 20%.

13.	The NHS Terms and Conditions to which both contracts refer contain the following provisions:

“21a. Full time practitioners in the training grades receive a base salary... An additional supplement will be paid according to one of the pay bands, in accordance with the assessment of their post as described in paragraph 22 below, at the rates set out in Appendix 1.  
…
Principles of Pay Protection
f. The principle of pay protection applies to practitioners in all bands for the duration of the post/placement or within a rotation subject to the conditions set out in sub- paragraphs 21.h to m.  
g. Pay protection applies to the base salary on the scale plus the supplement in payment at the time the post or placement is rebanded…
Pay Protection in New Deal Compliant Posts
h. Where a practitioner reaches agreement with his or her employing authority on a new or revised contract on or after 1 December 2000, the practitioner’s post shall be re-assessed in accordance with paragraphs 19 to 23, effective from the date of the change.  For so long as it is more favourable, and so long as the practitioner remains in the same post, the practitioner shall retain the overall salary applicable to the band he or she was placed in immediately before the change...”

14.	When the Claimant received his contract for the year August 2010 to August 2011, he complained that it did not afford him pay protection as it ought to have done.  He emailed the Respondents on 12 July 2010 and asked for an assurance that pay protection would apply to his salary from August 2010 onwards.  In a further email dated 26 August 2010, he asserted that he was entitled to pay protection “at Band 1B” because he had continued in the post he started in August 2009.  The Claimant did not sign that contract.  He did, however, work as a third year Specialty Registrar training in psychotherapy, from 4 August 2010 to 3 August 2011.

15.	The Respondents did not provide the assurance sought and the Claimant, accordingly, presented a complaint of unlawful deduction from wages to the employment Tribunal.

16.	The Claimant did not sign the new contract but he did carry on working for the Respondents at Gartnavel Hospital as a Specialty Registrar in Psychotherapy.

Tribunal’s Judgment and Reasons
17.	Before the Tribunal, the Claimant’s argument was that (a) he had not accepted the new contract issued for the year beginning 4 August 2010 – he had continued to work under the contract which was dated 3 August 2009; and (b) that if he was working under the new contract the effect of the pay protection provisions was that they applied because he was still working in the same post.

18.	The Respondent’s response was that the August 2009 contract did not still apply; it was a fixed term contract which had terminated.  It could, conversely, be implied from the Claimant’s actings that he had accepted the second contract albeit subject to a reservation regarding the matter of banding.  Further, the 2010 contract involved a fresh placement and a fresh post.  The Claimant was not in the same post as the previous year.  Pay protection did not, accordingly, apply.

19.	The Employment Judge rejected the Claimant’s claim founding, principally, on his interpretation of clause 21f.  He was satisfied that pay protection only applied until the end of each placement.  At paragraph 30, he explains:

“30. The wording of paragraph 21f is somewhat confusing.  On my understanding of the relationship between the post or placement in which a junior doctor is working and the rotation under which he is training the word “or” in the paragraph makes no sense.  I suspect it should not be there and the only way to make sense of the paragraph is to treat it as pro non scripto.  That is now I consider it appropriate to interpret it.  The question then arises whether the expression “post/placement” allows of the interpretation which would support the claimant’s case.  I do not think it does.  I do not find the term “post/placement” a particularly appropriate term to have been used in a document such as the Terms and Conditions of Service.  It may have been used interchangeably.  I noted that Mr Tracey in his evidence referred, for example, to the fact that it is only on the NES confirming future “posts” that doctors are offered a new contract.  I would have expected him to use the term “placements” in the context of what NES confirm to the Boards prior to the doctors being offered new contracts.  I find it significant that paragraph 21f does not apply the principle of pay protection “for the duration of the post or the placement”.  I do not read the expression “post/placement” as meaning that in the circumstances which applied to the claimant one can focus on the post and divorce it from the placement.  The fact is that the claimant was given a placement for the final year of his training which happened to be in the same post as that which he occupied in the placement he had for the penultimate year.  While that placement accorded with his own wishes it was still a placement instigated in the usual way by NES.  It was as a result of the NES confirming the placement for the claimant on 7 July 2010 of the contract covering the final year of his training.  The placement is the key thing.  In August 2010 one placement came to an end for the claimant and another came into being, albeit that both entailed his working in the same in the same hospital.  I interpret paragraph 21f as extending the benefit of pay protection to the claimant only until the end of the placement current when the revision to the banding was made.”

20.	The Employment Judge also considered that his interpretation was supported by the fact that the banding supplement did not relate to the nature of a doctor’s work but to the extent to which he was required to carry out work outwith normal hours.  If banding was altered downwards, that was because there was a reduction in the extent to which out of hours work was required.  It would plainly be unfair if a doctor such as the Claimant, whose fresh placement appointed him to the same post as he had had in the previous placement, retained the previous year’s banding irrespective of any re-banding which had occurred, when a colleague who was new to that post, had the lower pay band.

The Appeal
Submissions for the Claimant
21.	Mr Morgan referred to the facts (as referred to above), which were, he said, not in dispute.

22.	His first submission can perhaps best be summarised as being a “same post” argument.  It was confined to a consideration of paragraph 21f of the NHS Terms and Conditions.  He submitted that “post” was a reference to the particular job which was, in this case “Specialty Registrar” and “placement” was a reference to the fact that every year of a rotation, the doctor would have a different placement.  He stated that subparagraphs h to m did not apply to the Claimant’s case and therefore made the somewhat surprising submission that the part of 21f from “subject to…” to the end, should be ignored.  It seemed surprising because a plain reading of the clause shows that the “subject to..” section is an intrinsic part of the provision and ignoring it is obviously liable to lead a distortion of meaning.

23.	He submitted that paragraph 21f was not confusing.  He found it extremely straightforward.  The Employment Judge had concluded that what mattered was the placement but that was perverse.  21f was absolutely clear and the principle of pay protection applied to the Claimant.

24.	Mr Morgan referred to the case of Dr M Whitehouse v North Bristol NHS Trust [2006] UKEAT/06/1007 (a) for the reference in it to that part of the speech of Lord Hoffman in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 where he refers to:

“(5) The ‘rule’ of contractual interpretation whereby words should be given their ‘natural and ordinary meaning’….”

and (b) for the observations of HHJ Serota QC about pay protection in junior doctors’ contracts, at paragraph 34 that:

“34. The object of the system of pay protection, was I have noted, to mitigate the potential hardship that might be suffered by a Doctor who budgeted on the basis of his expected income in the expectation that he would receive not less than the amount payable for each post in the rotation at the time the rotation is agreed.”

25.	Mr Morgan referred to a passage in paragraph 19 of the Tribunal’s judgment as demonstrating that the Employment Judge had accepted that the Claimant had, in the year beginning August 2010 continued to work for the Respondents in the same post; that passage is, however, the Employment Judge’s note of Mr Morgan’s submission, not a statement of his own conclusions. Mr Morgan had, unfortunately, failed to appreciate that.

26.	Mr Morgan also referred to the penultimate sentence of paragraph 30 of the Employment Judge’s reasons and submitted that the Employment Judge had failed to appreciate that the Claimant’s pay was protected not by his contract but by the NHS Terms and Conditions which he seemed to regard as separate and distinct.  As for the Employment Judge’s other considerations regarding the disparate circumstances as between junior doctors in the same post that could ensue, it was not, he said, a matter of fairness.

27.	At one point in his submissions, Mr Morgan conceded that had the Claimant moved to a different hospital in the year 2010/11, he could not have claimed pay protection.  At another point, he indicated that he would accept that the import of clause 21f could be seen to be that whenever a doctor left a post, left a placement or left a rotation, pay protection would be lost.  Whilst, on one view, that concession undermined his argument – his focus was only on post and he did not suggest that the Claimant had not left his 2009/10 placement – he did not seem to see it that way.

28.	Mr Morgan had a fallback submission of “same rotation”.  If the Claimant was not in the same post in the year 2010/11 then he was still in the same rotation so, under 21f, pay protection applied.

29.	Mr Morgan’s second submission was that in the year 2010/11 the Claimant was still working under the contract issued in August 2009.  That was because he had not signed the fresh contract.  He had taken issue with his pay banding; he accepted that that was all that was at issue between parties.  The Respondents were, he submitted, allowing the old contract to continue; the Claimant believed that that was the contract he was working under.  He had thought that he was working under band 1B not 1C.

30.	Overall, the position was that the Claimant had been given a placement in year three which happened to be in the same post.  That totally supported his argument.  He was entitled to put that argument forward.

Submissions for the Respondent
31.	Mr Truscott QC submitted that the appeal should be dismissed.  There was nothing in the submissions for the Claimant that came within a whisper of being a point of law.

32.	The onus was on the Claimant to demonstrate entitlement, this being a claim under section 13 of the Employment Rights Act 1996 (see: New Century Cleaning Ltd v Church [2000] IRLR 27).  Mr Truscott also referred to a passage in the judgment of the EAT in the case of Great Ormond Street Hospital for Children NHS Trust for Children v Quasim UKEAT/0793/04/RN which the Employment Judge had set out in full in that part the judgment  recording his argument before the Tribunal:

“19…questions of this nature are primarily questions for the Tribunal dealing with the case to determine.  It is a matter of construction and analysis of the facts of the offer made and accepted in each individual case whether a particular practitioner has been appointed to a post in circumstances where band changes are subject to the pay protection under clause 21 of the Whitley agreement or not.”

33.	Mr Morgan did not take issue with the relevance of either of these authorities.

34.	Mr Truscott submitted that the Tribunal had accepted that the general aim of re-banding was to take account of reduction in hours of work required and that there was no question but that the re-banding exercise was properly carried out.  The Tribunal had found that rotations contain placements, that placements are made by NES (not by an individual health board such as the Respondents) and that posts were jobs at particular hospitals.  The Claimant was in a three year rotation.  There had been no commitment at the start of the rotation to keeping the Claimant on the same band.

35.	This case concerned the fresh contract that began in August 2010.  The previous year’s contract had not been open ended.  The failure of the Claimant to sign the fresh contract was not material.  He had worked under it.  None of the terms were at issue apart from banding.  The Claimant had benefited from undergoing a third year training contract on which he could rely and to which he could refer.

36.	Regarding the NHS Terms and Conditions, the Claimant’s contract referred to and incorporated them.  Pay protection flowed from his contract.  He had received pay protection accordingly, between the beginning of 2010 and August 2010, notwithstanding re-banding having occurred at the start of the year.  The Claimant’s problem was simply his perceived entitlement of a continuation of pay protection but it was an entitlement that he did not have.

37.	Mr Truscott referred to clause 21f.  There was no proper basis on which the part of it that began “subject to…” could be ignored.  The term “Duration of post/placement” was straightforward.  The sentence became more difficult when the words “or within a rotation” were turned to since there was no doubt that every post/placement would be within a rotation.  However, if the conditions to which the clause were subject were considered, such as 21h, it was plain that it was not intended that pay protection would continue to apply when a doctor began a new post.  He was not seeking to disagree with the Employment Judge’s analysis; there was, though, another way of looking at matters and the answer was still the same – the Claimant was not entitled to the pay protection he claimed.  The fixed term contract for 2009/10 had terminated.  That being so, the Claimant had begun not only a new placement but had entered a new post – albeit one involving the same job.

38.	Mr Truscott submitted that the Employment Judge’s analysis was well reasoned and thoughtful.  He was also correct about the practical consequences, as discussed at paragraph 31.  Banding was about payment for extra hours and it could not be fair for the Claimant to continue to be paid for band 1B hours when he was not working them in his third year.

Expenses
39.	Mr Truscott made a motion that in the event of the appeal being dismissed, expenses be awarded to the Respondents.  The appeal was misconceived (EAT Rules 1993 as amended, rule 34A(1)).  The Claimant’s argument on appeal was based on a paragraph of the NHS Terms and Conditions which was subject to other paragraphs but he had abandoned any submission that they were relevant.  The whole appeal was a misconception.  The Claimant’s argument that he was working under the contract for the year 2009/2010 ignored the fact that that contract had an express termination date of 3 August 2010.  Moreover, the appeal wholly lacked any analysis of the Employment Judge’s reasoning and despite the assertion that his decision was perverse, did not demonstrate how or why that was said to be so.  There was no reference to any authorities on perversity.  The appeal was based on the Claimant’s own firm view of his entitlement, nothing more.  That was not a responsible basis on which to have appealed.

40.	Mr Truscott indicated that the Respondent’s expenses which were mainly counsel’s fees, would amount to about £5,000.  They would be in a position to lodge an account if required to do so.

41.	For the Claimant, Mr Morgan opposed the motion relating to expenses.  The appeal had not, he said, been misconceived.  He had, he said, put forward a strong argument, strenuously and properly.

Discussion and Decision
42.	There is no merit in this appeal.  Mr Morgan’s submissions did not begin to explain how the Employment Judge was said to have erred in law in the interpretation of clause 21f which he reached after having heard evidence - on matters which were wholly uncontested- regarding the relevant factual matrix.  As a matter of law, there are times that it is open to a judge interpreting a contract to depart from the strict or literal wording.  If Mr Morgan had read on in the passage from Investors Compensation Scheme which he read out when making his submissions, he would have seen that Lord Hoffman added that the rule to which he was referring:

“...reflects the commonsense 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 requires 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 Cia Naviera SA v Salen Rederierna AB, The Antaios [1984] 3All ER 229 at 233, [1985] AC 191 at 201:
‘...if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense.’”

43.	Here, on the facts, rotations contained posts and placements (expressions which the Employment Judge found to have been used interchangeably at times), there was plainly an intention (evident not only from the terms of 21f but also from the terms of 21h) that pay protection should not extend beyond a post or placement, and to regard the words “or rotation” as allowing that to happen would have driven a coach and four through that clear contractual intention. As a matter of law, there is nothing wrong with the Employment Judge’s approach, given that factual matrix.

44.	Turning to the argument that the Claimant remained in the same post, the Employment Judge did not accept that that was, on a proper analysis of the facts, correct, for the reasons which he thoughtfully and carefully explains.  Mr Morgan pointed to no proposition of law on this matter except, perhaps, his statement that the Claimant had pay protection not from his contract but from the NHS Terms and Conditions (which may have been an attempt to get around the difficulty with which the fact of fresh yearly contracts faced him).  As an argument it does not, however, get off the ground.  The pay protection provisions of the NHS Terms and Conditions were expressly incorporated into the Claimant’s contracts.  As for the remarks that the Claimant thought he was still working under the year 2 contract, I note that no such case is made out in the Notice of Appeal and there are no findings in fact to that effect.  More importantly, even if he had thought that, it would not of itself, be demonstrative of the Respondents having agreed, notwithstanding the express terms of the year 2 contract, that it had not ended in August 2010 but had continued to govern the parties’ relationship.  There was no material either before me or before the Tribunal indicative of any such approach on their part.

45.	I have, accordingly, no difficulty in accepting that nothing in Mr Morgan’s submissions came close to demonstrating error of law on the part of the Employment Judge.

46.	As to the matter of expenses, in these circumstances, I am readily persuaded that the appeal was misconceived. Mr Truscott’s submissions were well founded in that regard. It is, therefore, open to me to make an award of expenses.

Disposal
47.	In these circumstances, I will pronounce an order dismissing the appeal and ordering:
a)	that the Respondents, within fourteen days of the seal date hereof, lodge with this Tribunal and intimate to the Claimant and his representative any account or schedule of expenses incurred on which they wish to rely in support of their motion for expenses;

b)	that the Claimant, within fourteen days thereafter
i. 	lodge with this Tribunal and intimate to the Respondents any written representations he seeks to make in respect of that account or schedule; and 
ii.	if he wishes this Tribunal to have regard to his means or ability to pay, an affidavit giving particulars accompanied by copies of any documents on which he seeks to rely in that regard. 

c)	that the Respondents, within fourteen days of any such affidavit, lodge with this Tribunal and intimate to the Claimant any representations they seek to make in respect of it or any documents accompanying it.