Lozaique v Tesco Stores Ltd

An express incorporation of a collective agreement does not automatically incorporate every provision of that agreement into an individual employment contract. Each provision must be construed with the words of incorporation to determine whether it is apt for incorporation.

A collectively agreed overtime-premium term confined to voluntary overtime was not apt to displace an express individual term requiring an employee to work guaranteed overtime at a specified premium. Collective bargaining could still determine the applicable basic hourly rate and the premium for overtime worked voluntarily beyond the guaranteed hours.

The claimant was employed by the respondent and, on transferring to a CCTV operator role in 2005, received a letter guaranteeing 20 overtime hours each week. It required eight Sunday hours and 12 other hours, with a premium of 1.5 times the applicable hourly rate.

Following a 2016 agreement between the respondent and USDAW, the respondent paid the 12 non-Sunday guaranteed hours at single time. The Employment Tribunal dismissed the claimant’s unlawful-deduction claim, holding that the incorporated Partnership Agreement reduced that rate.

The claimant appealed. The central issue was whether the collectively agreed overtime-premium provisions were incorporated so as to vary the express terms of the 2005 letter.

1. Appeal allowed. The Employment Tribunal erred in treating general incorporation of the Partnership Agreement as meaning that every one of its provisions formed part of the claimant’s individual contract. The correct question was whether each relevant provision was apt for incorporation.

2. The 2012 written particulars generally incorporated the Partnership Agreement. That incorporation was qualified: a specific provision could enter the individual contract only if, construed with the incorporating words and the individual contract, it was apt to do so.

3. The unappealed Employment Tribunal decisions bound the Appeal Tribunal on the meaning of the 2005 letter. It obliged the respondent to offer, and the claimant to work, 20 hours’ guaranteed overtime each week, comprising eight Sunday hours and 12 other hours, at a premium of 1.5 times the applicable basic hourly rate.

4. The Partnership Agreement’s premium provisions concerned voluntary overtime. They were not apt to govern or displace the premium for overtime which the claimant was contractually obliged to perform. The 2016–17 pay review therefore increased his basic rate but did not reduce the 1.5 premium payable for his 20 guaranteed overtime hours.

5. The collectively agreed change did apply to overtime voluntarily worked beyond those 20 hours. Neither an implied term nor custom and practice could contradict the express terms of the 2005 letter. It was unnecessary to decide whether that letter also constituted a collateral contract.

6. The case was remitted to the Employment Tribunal to determine the appropriate remedy.

• Employment Appeal Tribunal: allowed the claimant’s appeal and remitted the case on remedy: [2019] UKEAT 0261_18_2305.
• Employment Tribunal, Watford: dismissed the claimant’s complaint of unlawful deduction from wages in a judgment sent to the parties on 10 July 2018.