Glendale Managed Services v Graham & Ors

Where employment terms provide that pay will normally follow National Joint Council rates, each national pay award does not require prior positive approval before becoming payable. The employer may decide to depart from that normal position, but must inform the employee of the departure. Written particulars are ordinarily evidence of the agreed terms, not the whole contract or conclusive evidence of its contents. Because the employment agreement is not purely written, the parties’ conduct may assist interpretation. The notice requirement is supported by the implied obligation of mutual trust and confidence.

The respondents were employed at a swimming centre originally operated by Southend-on-Sea Borough Council. Following a transfer of undertaking to Glendale Managed Services, the employees claimed unlawful deductions because Glendale did not pay National Joint Council pay increases effective in April 2000 and April 2001. The Employment Tribunal upheld their claims. The Employment Appeal Tribunal rejected Glendale’s appeal at a preliminary hearing. The central issues before the Court of Appeal were whether the contractual particulars required prior adoption of each national award and whether the Tribunal had been entitled to consider evidence of the parties’ conduct when interpreting the employment arrangements.

The Court of Appeal unanimously dismissed the appeal. Keene LJ gave the first judgment; Tuckey LJ and Peter Gibson LJ agreed.

1. Nature of the employment particulars. Written particulars supplied under the statutory duty in the Employment Rights Act 1996 are ordinarily evidence of the agreed terms, rather than the contract itself or conclusive evidence of its contents. The contractual arrangements were not purely written. The Tribunal was therefore entitled to consider the parties’ conduct. System Floors UK Ltd v Daniel [1981] IRLR 475, approved in Robertson v British Gas [1983] IRLR 302, supported that approach.
2. Construction of the pay term. The words providing that pay would normally accord with National Joint Council rates, as adopted by the authority from time to time, established those rates as the norm. Prior positive approval of every award was not a pre-condition to payment. The wording differed materially from Glendale Grounds Management v Bradley EAT 484/97, where prior approval was expressly required. The word as could not be read as if it meant if.
3. Use of conduct. The regular payment of earlier National Joint Council increases without formal approval was relevant background and demonstrated how both parties understood their obligations. The rule in James Miller & Partners v Whitworth Street Estates (Manchester) Ltd [1970] AC 583 concerned purely written contracts and did not prevent consideration of conduct here. Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 and Carmichael v National Power Plc [1999] ICR 1226 were consistent with that conclusion.
4. Implied notice requirement. Although the employer could positively decide to depart from the normal National Joint Council rates, the employment contract implicitly required it to inform the employee of the departure before withholding an increase. This followed from the obligation of mutual trust and confidence, identified in Malik v BCCI International [1998] AC 20, and the related principle concerning arbitrary, capricious or inequitable pay treatment in FC Gardner Ltd v Beresford [1978] IRLR 63. The term was implied on the obvious bystander test. No notice had been given, so the respondents were entitled to the 2000 and 2001 increases.

1. Court of Appeal (Civil Division): Dismissed Glendale’s appeal from the Employment Appeal Tribunal on 16 May 2003.
2. Employment Appeal Tribunal: At a preliminary hearing, rejected the employer’s appeal and held that no full inter partes hearing was required.
3. Employment Tribunal: Uphheld the employees’ claims for the National Joint Council pay increases.