Pete, Mark and Pauline work for Walford Engineering Ltd, a firm manufacturing rides for fairs.
During the last two years, there have been periods of short-time working. Two years ago, there was an industrial dispute and all the workforce were put onto a four day week for the period of the dispute, which lasted from February to March. Six months later, another dispute occurred, which lasted for five months, from September to January, and, again, the workforce were put onto a four day week. In both cases, the two unions at the factory, the CMU and the SWU, agreed to the cuts. In September last year, the CMU agreed that, in the event of future disputes, it would accept a three day working week if it became ‘economically necessary’. This agreement was stated to be binding in honour only.
Last month, there was another dispute and the company put the workforce on a three day working week for a month. Both Pete, a member of the CMU, and Mark, a member of the SWU, are claiming four days’ pay.
Pauline works as a typist in the typing pool at the factory. She started work four weeks ago. Last week, she fell ill and will be off work for a total of three weeks. Her statutory statement says that she is entitled to sick pay after two weeks of illness but her contract, which was sent to her home during her illness, states that sick pay will be paid only after three weeks of illness. In addition, when she applied for her job, the advertisement said that the position was that of ‘personal assistant/typist’, however, the title of the job on her contract is ‘typist’. She feels that she would not have taken the job if she had known that it would only involve typing.
Advise Pete and Mark as to the likely success of their claims and Pauline in relation to her sick pay and the nature of her job.
Answer Plan
This question raises the issue of collective agreements and their enforceability at the individual level. It raises issues as to whether there is an implied term, irrespective of the collective bargain. To some extent, in relation to the first two parties, there needs to be some discussion in relation to implied duties. In addition, it addresses the problem of a conflict between the written terms of the contract and the statutory statement, and whether terms implied from sources outside the contract can modify the express terms within it.
The issues to be considered are:
Answer
Pete and Mark have in the past accepted a four day working week when there has been an industrial dispute. This is evidenced by the fact that they are both only suing for four days’ pay in relation to the last four week lay-off. Generally, at common law, there is an implied duty to pay wages but not to provide work (Collier v Sunday Referee Publishing Co Ltd (1940)). This, however, is only a general proposition.
In some cases, there is a duty to provide work where, for example, the employee needs to develop his skill or where the work must be done to earn the wage, as in the case of piece workers (Devonald v Rosser and Sons (1906)). The implied duty to pay may be ousted by an express term in the contract (Hulme v Ferranti Ltd (1918)) or the practice of the industry may imply a term that there is no pay during lay-off and this will oust the general duty (Puttick v John Wright and Sons (Blackwall) Ltd (1972)).
The first question to ask in relation to Pete and Mark is whether there is a duty to pay during lay-off. In the past, both have accepted a four day week when there has been an industrial dispute. Whereas the general duty is to pay, this does not apply when the failure to pay wages is outside the control of the employer. In Browning v Crumlin Valley Collieries (1926), Greer J held that the duty did not apply when the employer had to close down the colliery when a land fault necessitated urgent repairs. In the case of Walford Engineering, it appears that the industrial disputes render it impossible to provide work for five days. If such impossibility is proved and further work cannot be provided for the last working day of the week, then, under the authority of Browning, it would appear that there is no breach of contract on the part of the employer and Pete and Mark will be unsuccessful in their claims.
If, on the other hand, it is deemed that it is not impossible to provide five days’ work, the question to be asked is whether there is a term in their contracts that allows for layoffs without pay. In the past, both men have accepted a four day week during disputes. In addition, both of the unions also accepted the reduction in pay, although it does not appear that this was done by collective agreement, merely an acquiescence. Could it be argued that the past conduct of Pete and Mark has now implied a term into their individual contracts that there will be a shorter working week when there is a dispute? It appears that until the recent lay-off, there were only two occasions in the past when there was a four day working week, although it lasted in toto for five months. In implying terms into the employment, the courts do not tend to rely on the old contractual tests of business efficacy or obvious consensus, but rather what is a reasonable term in all the circumstances. In Courtaulds Northern Spinning Ltd v Sibson (1988), a mobility clause was implied into the employee’s contract because he had been mobile between two sites during the relationship. Slade J said, ‘The court merely has to be satisfied that the implied term is one which the parties would probably have agreed if they were being reasonable’. Thus, it may be argued that because of the acceptance of the four day week without protest in the past, this has now become an implied term in both the parties’ contracts. A further argument that the employer may put forward is that lay-off without pay has now become a custom. It is submitted, however, that to show that a practice has become a custom and implied into the contract, it must be certain, general and reasonable. Smith and Thomas (Smith and Wood’s Employment Law, 9th edn. (2008)) state that this can occur in one of three ways. Either the custom is so notorious that there is judicial notice of it, or it is so well established that the employee must have accepted employment subject to it (Sagar v Ridehalgh and Sons Ltd (1931)), or the practice grew up while the employee was employed and he impliedly accepted it, although du Parcq LJ said, in Marshall v English Electric Co Ltd (1945), that mere continuance at work may not be enough to signify acceptance as it may be caused by other factors, such as a fear of dismissal. This is reemphasised in Samways v Swan Hunter Shipbuilders Ltd (1975).
Given that the practice in the problem has only been happening over the past two years, it would appear that the only way it could have become a custom and thereby implied into Pete and Mark’s contracts, is the fact that it arose during their employment and they have accepted the deductions. Given Samways, however, it would be possible to argue that their acceptance of the shorter week was due to a fear of losing their jobs and not because they accepted that they were contractually bound to do so.
Even if there is a term in both of their contracts, previous deductions have been in relation to one day’s pay and the disputed deduction is in relation to two days’ pay. Pete’s union, the CMU, has agreed to a three day week where there is a dispute if this is ‘economically necessary’. The agreement is stated to be ‘binding in honour only’ but this will have no effect on the enforceability of the term if it has become a term of the individual’s contract.
Where there is no express incorporation of a collective agreement at the individual level, it is possible that the agreement may be impliedly incorporated. From Joel v Cammell Laird (1969), it appears that for implied incorporation into a union member’s contract, there must be knowledge of the agreement, conduct on the part of the employee that shows he accepts the agreement, and some indication of incorporation into his contract. Duke v Reliance Systems Ltd (1982) adds that the employee must have knowledge of the existence of the term, if not its content, and, in Jones v Associated Tunnelling Co Ltd (1981), the EAT held that the fact that an employee continues to work does not imply assent to a change in terms, particularly if the change does not have immediate effect. In relation to Pete, therefore, if he is aware of the agreement made by his union and of the existence of a term relating to unpaid lay-off, the term will be part of his contract. Unless he can show that the three day week was not economically necessary, he will be unable to sue for the loss of four days’ pay. Mark, on the other hand, is not a member of the CMU. Even if he has varied his contract so that theemployer is entitled to put him onto a four day week, by Miller v Hamworthy Engineering Ltd (1986), he is not bound by the negotiations of another union. As such, Walford Engineering is in breach of contract by deducting two days’ pay, and his claim will be successful. Henry v London General Transport Services Ltd (2001) can be distinguished in Mark’s case as he is a member of a union that has, in the past, negotiated with the employer and that, in the case of the three day week, has not done so. On these facts, it is unlikely that a tribunal will find that there is a custom that the CMU negotiates on behalf of all of the employees, including those who belong to a different union.
In Pauline’s case, there is a discrepancy between her statutory statement and her contract in relation to sick pay. Although all employees should receive a statutory statement of terms and conditions within eight weeks of starting their employment, the statement is not contractual but merely evidence of what the terms of the contract are.
Browne-Wilkinson J, in System Floors (UK) Ltd v Daniel (1981), said of the statement, ‘It provides very strong prima facie evidence of what were the terms of the contract between the parties, but does not constitute a written contract between the parties’. Such an interpretation, however, does not help Pauline. While in some cases the courts have accepted that the statement does comprise the contractual terms, this is usually where there is no further written document and where the employee has signed the statement itself and not merely a receipt (Gascol Conversions Ltd v Mercer (1974)). We have no evidence of whether Pauline signed the statement itself. If she did, it may be possible to argue that by sending different terms in a later document, the employer is attempting a unilateral variation and there is no conduct on the part of Pauline that shows acceptance of the change. If, on the other hand, she has signed nothing or merely a receipt acknowledging that she has received the statement, then, relying on the judgment of Browne-Wilkinson J above, her contractual terms will prevail and she will not be entitled to sick pay during her illness.
Pauline is employed as a typist according to her contract, but the advertisement for the job described the post as personal assistant/typist. The normal contractual rule is that an express term cannot be overridden by an implied term (Deeley v British Rail Engineering Ltd (1980)). In Johnstone v Bloomsbury Area Health Authority (1991), Stuart-Smith LJ stated that an express term relating to hours was subject to the implied duty to ensure the employee’s safety, although Browne-Wilkinson VC, in the same case, stated that the exercise by the employer of his right to ask for extra hours over and above the obligatory ones, was subject to the implied duty in relation to safety, so leaving the contractual principle intact. Whether Johnstone is seen as an attack on the normal contractual principle or not, it is unlikely in Pauline’s case that a court would allow the written express term to be overridden by a term implied from an advertisement (Deeley) and, as such, Pauline is employed as a typist only.
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