The Employment Tribunal between:

Applicant: Ms. S Ralton & Others

Respondent: Havering College of Further and Higher Education

 

 

DECISION OF THE EMPLOYMENT TRIBUNAL

 

HELD AT: Woburn Place (Stratford)

ON: 26, 27,28,29 & 30 July 1999, 2 August 1999, 13,14,15 & 16 December 1999,

13 January & 29 February 2000 (In Chambers)

 

CHAIRMAN: Mr DA Pearl

MEMBERS: Mr M Cunningham, Mr C C Goldwater

 

 

Appearances:

 

For the Applicant: Ms E Sharpston QC and Mr P Moser (Counsel)

For the Respondent: Miss M Tether (Counsel]

Case Number: 66244/94

 

DECISION

 

The unanimous decision of the Tribunal is that:

 

1. The claims for a declaration under section II of the Employment Rights Act 1996 are dismissed.

 

2. There is no jurisdiction to entertain Ms Humphrey's contractual claim.

 

3. Ms George's contractual claim fails and is dismissed.

 

 

EXTENDED REASONS

 

1. This claim involves a series of cases which have been brought against the Respondent College by some of its lecturers. The leading case (No. 66244/94) is the claim of Ms S Ralton, although she did not otherwise feature during the hearing of the claim. The Applicants whose cases have been lodged with the Tribunal are Ms S Ralton, Ms S Braithwaite, Ms M Jesson, Ms H Taylor Mr S Wear, Mr V Crofts, Ms M Humphrey, Ms L Allen and Ms C George. There has been some confusion as to the precise identities of the Applicants who continue to pursue their claims. This is not a great matter of consequence, because it is common ground that the Applicants include Ms George, Ms Allen and Ms Humphrey who presented their cases to the Tribunal. The parties are content that the issues be canvassed via the hearing of these three cases.

 

 

Issues

 

2. The Applications all raised the same set of issues, although the precise facts admit of some variation between one Applicant and another. The College became incorporated on I April 1993 as a consequence of the Further and Higher Education Act 1992. This Act removed Colleges of Further Education from local authority control. By Section 26 existing employees of the old colleges were transferred to the new Further Education Corporations. It is conceded that the Respondent is an emanation of the State. It is further conceded that incorporation of the Respondent constituted a relevant transfer. The claims that are advanced are for:-

 

(i) a declaration of the terms and conditions of employment under Section II of the Employment Rights Act;

 

(ii) damages for breach of contract.

 

3. Before transfer, lecturers at the College were employed on contracts that incorporated the relevant terms of collective agreements. These collectively negotiated terms have been known throughout as the 'Silver Book'. The first issue in this case is, therefore, whether or not the Applicants should be granted a declaration pursuant to Section II of the Act that their pre-transfer terms and conditions of employment have continued and will continue to apply to their employment with the Respondent. The declaration sought by Ms Sharpston includes a declaration that the Applicants are entitled to the increased pay to which they would be entitled under the pre-transfer Annual Pay.

 

Review System. The second issue is entitlement to damages in contract. A third and general issue that has arisen during the case is whether or not this Tribunal should seek to make a reference to the European Court of Justice in order to resolve questions of Community Law that may arise.

 

4. In resolving the various issues, we have heard evidence from Mr David Evans, Mr John Skinner, Ms Marian Humphrey, Ms Linda Allen and Ms Christine George; and from Mr Kenneth Clarke, the Principal of the Respondent. We have studied the Bundles A1, A2 and A4 as well as the pleadings bundle which has been marked A3. Late in the case, during final submissions, the letter of 15 October 1992 was admitted as Rl.

 

 

Facts

 

5. Ms Humphrey was first employed by the College between September 1991 and 31 August 1993 on one year, fixed term contracts. Page 54 of A4 is the letter offering her "a temporary 0.5 post as Lecturer", from I September 1992 to 31 August 1993. Her contract at the time of the offer was a fixed term contract that expired on 31 August 1992. On 25 June 1992 she accepted the contract from I September 1992 to 31 August 1993. On 16 September 1993 she accepted a one year, full-time Lecturer's post, described in the letter of offer as a 'temporary appointment (pages 57 to 58 of A4). Ms Allen has been employed at the College since 1987 and was part-time until September 1990 when she began working full-time. On 18 June 1992 she was offered a full-time post as Lecturer in the Office Technology and Administration Department from I September 1992 to 31 August 1993: see page 90 of A4. She accepted on 25 June 1992. On 13 July 1993 she accepted a further temporary one year appointment expiring on 31 August 1994 (pages 92 and 93 of A4). Ms George has been employed at the College since 1983. Her employment was continuous, and was not on a fixed term basis. We deal below with the changes that occurred in 1993 and 1994 in the case of Ms George.

 

6. Mr Clarke has been the Principal of the College since September 1982 and, since incorporation, has also held the post of Chief Executive. The College currently has about 400 employees, of whom some 226 were full-time or part-time teaching staff. The staff were employed by the London Borough of Havering before transfer. Their contracts incorporated National Conditions of Service, the Silver Book. The relevant term can be taken, as an example, from the letter of 8 July 1991 to Ms Humphrey (A4, page 51), which includes the following "your other terms and conditions of employment ... are covered by two sets of documents: National Collective Agreements negotiated between the Council of Local Education Authorities and the recognised union for Teachers in Further Education, or any successor body that may be set up by joint agreement to conduct such negotiations; and secondly, local collective agreements negotiated by the Local Education Authority with a Teachers' union or unions recognised by them for collective bargaining ..." The Collective Agreement incorporated into contracts of employment was the Scheme of Salaries and Conditions of Service of Lecturers in Further Education in England and Wales: The Silver Book. These Conditions included provisions that governed lecturers' contractual duties, which Mr Clarke in his witness statement referred to as "very detailed and highly prescriptive" provisions. It is not necessary to deal with these in detail, but we note that they included the following matters: lecturers could not be required to work for more than 38 weeks per year and could only be required to teach for 36 weeks per year; there was a right to take at least seven weeks' continuous holiday between I July and 30 September; no lecturer could be asked to teach for more than 14 continuous weeks; staff could not be required to attend the College for more than 30 hours per week; the maximum number of permitted class contact hours was carefully defined, so that a lecturer could only be required to teach a maximum of 756 hours a year, and could only be required to attend the College on 10 sessions during a week. We accept that there were many members of staff who voluntarily exceeded these permitted working hours, or otherwise worked outside the defined conditions of service.

 

7. It is evident that some members of staff resented the prospect of any change whatsoever to existing terms and conditions which had been the subject of collective bargaining. Other lecturers did not take the same view. In the case of management staff, it appears that contractual changes were made before the transfer, although again via the mechanism of negotiations.

 

8. The Further and Higher Education Act 1992 is the fundamental legislative reform in this sector. It removed Colleges from the control of local authorities, and the funding of the new corporations was achieved through the Further Education Funding Council (FEFC). The Act established the corporations. Section 26, which appears below, in effect put Regulation 5 of the Transfer of Undertakings (Protection of Employment) 1981 into statutory form. The date of transfer was I April 1993.

 

9. The documentary evidence that we received gives a clear indication of government policy in the years leading up to this important reform. For example, on 21 March 1991 (page15 of Al), the Secretary of State for Education and Science announced the plans for the Colleges to become self-governing after I April 1993. The detailed proposals were set out in a White Paper in May 1991. Reference is made (for example page 29 of Al), to the freedom required for Colleges to respond to the demands of students and the labour market. The new funding regime (page 30) was designed "to provide a powerful incentive to recruit additional students and reduce unit cost." Efficiency gains were referred to. As to employment, it was stated (page 67), that staff in the Colleges would "initially be transferred to the employment of the institutions in the new Sector on their existing pay and conditions"

 

10. On 19 February 1993 all staff at the College were written to and told that their employment with the London Borough of Havering would cease on 31 March 1993 and that thereafter employment would be transferred to the new corporation. They were told that their contracts would automatically transfer and that existing terms and conditions would be preserved; and that the transferor local authority would take no steps to terminate employment because of the transfer (see page 169 of A1).

 

11. The General Secretary of NATFHE wrote to the Principals of the new corporations on 19 February 1993: page 171 of Al. The letter included the following: "My purpose ... is to seek an assurance ... that you will not pre-empt any national negotiations by introducing contracts for new starters and promotees after I April 1993 that depart from the nationally agreed arrangements that exist between the current employment authority and your academic staff." In the absence of such an assurance there was a threat of industrial action. Mr Clarke responded on 2 March, page 172. He referred to current discussions "in regard to the many changes that corporation introduced."

 

12. A Staff Bulletin on 3 March 1993 (page 173 of A1), referred to current consultation in respect of possible new contracts for "newly appointed or promoted staff only." Mr Clarke wrote to staff on 9 March 1993, page 175 of Al, and reiterated that terms and conditions of employment would transfer and include the provisions of collective agreements.

 

13. On 23 March 1993 the Under Secretary of State for Further and Higher Education wrote to the College's Employers Forum ('CEF') and referred to the need " ... to examine the conditions of service of your employees and to secure the changes that are necessary for you to provide a more flexible and responsive service. In particular, you will need to examine how far the Silver Book terms for Lecturers are consistent with the best modem practice, and the interests of the Colleges themselves." Further reference was made for the need for flexibility. He referred to an expectation "to see rapid movement towards more flexible conditions of service" in the future. This is one of a number of pieces of evidence relied upon by the Applicants as showing that the sole or main purpose of the incorporation of the new Colleges was the breaking of Silver Book terms. We consider that this is an over-simplification of the situation and that there were many policy objectives behind the 1992 Act. These included the principal aim of removing Colleges from local authorities and setting them up as self-governing institutions that would be able to make their own decisions in a competitive and fast-expanding market.

 

14. The Employment Policy and Finance Committee of the Respondent met on 10 May 1993 and the minutes at page 182 of A1 show that new contracts were to be drawn up in the event that no agreement was achieved nationally with the Union. "Most temporary lecturing staff will need to be reassured that a position will be available for them but not on Silver Book conditions." On 21 June 1993, Mr Clarke informed this Committee that there was national and local uncertainty; and that some staff were adamant that no changes should take place in contractual terms.

 

15. Mr Clarke was of the view that Silver Book terms were far too inflexible. He refers in his evidence to disputes that arose concerning the definition of classroom contact, as well as other problems. The main contractual changes that were proposed were these: the working year would increase from 38 to 42 weeks and staff would be required to work outside term time; annual teaching hours were to increase to 930 hours per year (this has subsequently been revised to 864); staff should remain on the campus for 36 hours per week; continuous holiday entitlement during the summer vacation would be reduced to four weeks.

 

16. The CEF produced A Guide to Introducing New Contracts of Employment on I July 1993. This refers, inter alia, to central pressure for change from the Government (page 188 of Al) and to the 2% claw-back (or hold-back) mechanism. The Guidance made reference (page 189) to transferring staff onto new contracts if they were new starters or promotees. In the same month, a National Recognition and Procedure Agreement was concluded between the CEF and two Unions including NATFHE. This set up national consultation and negotiation machinery. However, as the months passed it became apparent that little progress was being made. By the end of 1993 the employers' side understood that the differences between the two sides to the negotiations could not be resolved. It had also become clear by about October 1993 (see page 222 of Al) that the employees' side was referring to Article 3(2) of the Acquired Rights Directive.

 

17. In or about November 1993 the Secretary of State informed employers that £50 million of grant would be held back in 1994/1995 pending satisfactory progress made within Colleges towards greater flexibility in contracts of employment. This is the hold-back mechanism to which reference has been made in the case. We have no doubt that it was Government policy to encourage all the corporations to introduce new employment terms, which differed from the Silver Book. The Under Secretary of State wrote to the CEF on 8 February 1994 and made further reference to the hold-back being released when satisfactory progress toward more flexible contracts of employment had been made. He said that Colleges "will need to confirm that all contracts of employment entered into with newly appointed lecturers from I April 1994 are significantly different from those used by the maintaining, or assisting LEA1mmediately before the College entered the Further Education Sector." This letter refers (page 253 of AI) to "a number of restrictive practices embodied in the Silver Book concerning limits on weekly and yearly teaching hours, the overall working week and year, the period of notice and the content of lecturers' jobs." It was his opinion that the CEF's model contract eliminated those restrictive practices..

 

18. By 16 February 1994 it was clear that NATFHE had rejected the proposed national settlement and proposed new model contracts. The other smaller union, ATL, adopted a different stance and did come to an agreement with the employers.

 

19. On 21 February 1994 the Employment Policy and Finance Committee of the College met and decided that the new contracts would be introduced after I April 1994. Staff on Silver Book contracts were to be given the choice as to whether or not to accept the new contracts. Those wishing to remain on Silver Book terms would not receive a cost of living increase in 1994.

 

20. Mr Clarke presented a paper to the Governing Body (pages 274-277 of AI). He set out the benefits of the new contractual arrangements, as he saw them. He concluded that: "all future teaching staff appointments will be made on the new model contract. Existing staff, either temporary or permanent, will be approached between March and the end of the academic year and asked to move on to the new contracts." We find that Mr Clarke saw the new contracts as an essential development if the College was to survive in the medium to long-term. The Governing Body did not disagree with his view, and the objective of moving to new contracts was agreed. Before the vote was taken on 10 March 1994, Mr Evans reported to the Governors that there was considerable concern among the lecturing staff regarding the contracts.

 

21. Mr Clarke held meetings with staff and gave reasons for the proposed changes. He wrote to them in April (pages 288-290 of Al). He explained the position concerning the 2% holdback and the reasons why contractual terms should change. A lump sum payment in compensation was proposed. It was made clear that existing staff could remain on the old contracts if they so wished. They would not receive any cost of living increase. By September 1994 there were 124 staff remaining on the Silver Book and 96 who had opted for new contracts. By the time that this case began to be heard in August 1999, there were just 15 employees on Silver Book terms. These employees have been awarded no salary increase since the transfer.

 

22. Ms Humphrey and Ms Allen were two of 26 Lecturers who, by November 1993, were employed on one year fixed term contracts. The Department in which they worked was in the process of being merged into a new Department of Business Education. This process began in September 1993. A Director of the Department was appointed in January 1994 (Mr Smith). Shortly after incorporation, on 14 May 1993, Mr Clarke wrote to Ms Humphrey and Ms Allen saying that it was the Respondent's intention to offer a further contract, but that no contract could then be proposed, as there were discussions at national level concerning its terms. (See pages 55 and 91 of A4). On 8 September 1993, Mr Clarke wrote to Ms Humphrey and on I July 1993 he wrote in similar terms to Ms Allen (pages 57 and 92 of A4). As we have set out in paragraph 5, Ms Humphrey and Ms Allen accepted fixed term contracts for one year to 31 August 1994. Reference was made in the offer letters to a new contract of employment, which was under discussion with the unions. On 8 March 1994 Mr Clarke wrote to both Ms Humphrey and Ms Allen (pages 59 and 94 of A4) enclosing the new model contract. On I March 1994 (page 98) the Personnel Manager, Ms Jones, enquired of the Department "whether or not you would wish to continue the employment of the above" and sought reasons. The employees who were the subject of this enquiry included Ms Allen and Ms Humphrey. On 29 and 30 March 1994 the two employees received copies of the new contracts that were proposed. Ms Humphrey signed her contract on 20 June 1994 and Ms Allen signed on 16 August 1994: pages 45 and 77 of A4. Each contract was to commence on I August 1994 and each was for an indefinite period, terminable on notice as provided by the contract. Therefore, the fixed term contracts did not run their course, but were replaced for each employee by the new indefinite contracts approximately four weeks (Ms Humphrey) and two weeks (Ms Allen) before they would otherwise have expired. In Ms Humphrey's case she was interviewed for the job in July.

 

23. In the case of Ms George, she was a Temporary Senior Lecturer from I October 1993. This post was a fixed term contract until 31 August 1994 at which time she was to revert to her original post. (See page 19 of A4). She was informed of the new contract of employment in April 1994 in the same way as were other employees. In May 1994 the Respondent advertised for a Manager of the Economic and Business Courses and Ms George applied. After interview, she was offered this post (also referred to as Course Co-ordinator Economic Provision) on the new contractual terms: page 27 of A4. We think it likely that she was told, at interview, that the post would be on the new terms. However, we consider that nothing turns on this point, which was disputed by Ms George, because she was fully aware thereafter that the new contractual terms were the only terms on offer. She accepted the contract on 26 August 1994. The job description is at page 29 of A4 and commences by noting that: "this is a Management level role within the Department of Business Education with line responsibility for a number of courses and academic staff." Ms George was also expected to act as Course Leader. Her responsibilities included marketing, together with those other matters set out in the job description. Ms George commenced her post in the newly organised Department. She appreciated, when she took the new post, that this might be her last opportunity for promotion. We find that the new responsibilities of the post commenced at the outset, although we also accept that, as time went on, she assumed greater and additional managerial responsibilities.

 

24. All three Applicants were among the signatories to a petition at page 364 of A1, which bears the date 28 September 1994. This recited the fact that legal advice had been received that the new contractual terms "... represent a serious breach of the whole spirit and purpose of the Acquired Rights Directive ..." and may be unlawful under Community Law. The Applicants maintain that they were working to the new terms under protest. They told us that they wished to revert to their old terms and conditions. Ms Humphrey said in evidence that she accepted a need for change, but that it should be negotiated and not imposed.

She found it difficult to choose between the Silver Book terms, including the 1994 level of pay, and the current terms and pay. Her preference was for a reversion to the old terms, but with the right to review the pay. Ms Allen and Ms George were of a similar view. All three have been awarded the post- 1994 pay rises which their colleagues who remain on Silver book terms have been denied. They each accept that they have been working to the new terms and conditions, but believe that they have been substantially disadvantaged by doing so. We accept that the new terms were fundamentally different from the terms and arrangements under which they had hitherto worked.

 

 

Submissions

 

25. Counsel for the Applicants submitted a written submission dated 12 October 1999. Ms Tether relied upon her revised submission dated 14 December 1999. Both she and Ms Sharpston elaborated upon their submissions. The following points are extracted from the submissions and are not intended to be exhaustive, indeed are only the more prominent of the parties' contentions.

 

(i) Ms Sharpston maintains that it is of the essence of the Applicants' case that Silver book terms applied at all times and that those terms could not validly have been replaced, in connection with the transfer, in the absence of collective agreement. The transfer is the sole or main reason for the change in terms. In Ms Humphrey's and Ms Alien's cases, they had 'roll-on' contracts which were automatically renewed, year after year. The Applicants only worked to the new contractual terms under protest. They are, accordingly, entitled to declarations as to the true basis upon which they are now employed, ie., the old Silver Book terms. The Applicants do not rely upon there having been a dismissal. Reliance is placed on Article 3 of the Acquired Rights Directive (Council Directive No. 77/187/EEC) ('the Directive'). Article 4(2) is also relied upon, so that the rights of employees at the time of the transfer cannot subsequently be diminished as a result of the transfer. The Applicants protested about the new terms and did not waive their Community rights. As well as the declarations, they are entitled to damages for breach of contract and it is within the Tribunal's jurisdiction to award the same.

 

(ii) Ms Tether submits that the Directive cannot be understood without first considering the employees' rights in domestic law. Ms Humphrey and Ms Alien had no global or umbrella contracts and, on expiry of their fixed term contracts, the employer was free to employ them on different terms. The Silver Book terms are not, in themselves, a legally enforceable contract. A failure to renew a contract, on expiry of a fixed term, on the old terms might constitute a dismissal, but would not be a breach of contract. The protection that Ms Humphrey and Ms Alien enjoyed under Article 3 ended on expiry of their fixed term contracts on 31 August 1993. In the alternative, if this last submission is not upheld, Ms Tether contends that the acceptance of the new contracts amounted in law to much more than mere variation of their existing contractual terms. The new contracts, further, were not entered into by reason of the transfer. In the further alternative, the two employees have affirmed the new contractual arrangements. As to Ms George, the acceptance of new terms upon her promotion was not a variation of her existing contract, but a new contract. In the alternative, she has also affirmed the new contract. There is no jurisdiction to entertain any contractual claims.

 

Ms Sharpston submits that we may require the assistance of the European Court of Justice and has drafted certain questions that we may wish to pose. Ms Tether submits that there is no need to refer the case.

 

26. The Law Section 11 of the Employment Rights Act 1996 provides that:

 

"(1) Where an employer does not give an employee a statement as required by section 1, 4 or 8 (either because he gives him no statement or because the statement he gives does not comply with what is required), the employee may require a reference to be made to an employment tribunal to determine what particulars ought to have been included or referred to in a statement so as to comply with the requirements of the section concerned.

 

(2) Where:

(a) a statement purporting to be a statement under section I or 4, or... has

been given to an employee, and

 

(b) a question arises as to the particulars which ought to have been included or referred to in the statement so as to comply with the requirements of this Part,

 

either the employer or the employee may require the question to be referred to and determined by an employment tribunal."

 

Section 26 of the Further and Higher Education Act 1992 provides that:

 

"(1) This section applies to any person who immediately before the operative date in relation to a further education corporation established to conduct an institution which, on the date the corporation was established, was maintained by a local education authority or was a grant-maintained school ñ

 

(a) is employed by the transferor to work solely at the institution the corporation is established to conduct, or

 

(b) is employed by the transferor to work at that institution and is designated for the purposes of this section by an order made by the Secretary of State.

 

(2) A contract of employment between a person to whom this section applies and the transferor shall have effect from the operative date as if originally made between that person and the corporation.

 

(3) Without prejudice to subsection (2) above -

 

(a) all the transferor's rights, powers, duties and liabilities under or in connection with a contract to which that subsection applies shall by virtue of this section be transferred to the corporation on the operative date, and

 

(b) anything done before that date by or in relation to the transferor in respect of that contract or the employee shall be deemed from that date to have been done by or in relation to the corporation.

 

(4) Subsections (2) and (3) above are without prejudice to any right of an employee to terminate his contract of employment if a substantial change is made to his detriment in his working conditions, but no such right shall arise by reason only of the change in employer effected by this section."

 

Council Directive 77/187/EEC on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or part of businesses includes a preamble that is here omitted.

 

Article 3 of the Directive provides that:

 

"I The transferor's rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer within the meaning of Article 1(1) shall, by reason of such transfer, be transferred to the transferee...

 

2 Following the transfer within the meaning of Article 1(1), the transferee shall

continue to observe the terms and conditions agreed in any collective agreement on the same terms applicable to the transferor under that agreement, until the date of termination or expiry of the collective agreement or the entry into force or application of another collective agreement.

 

Member States may limit the period for observing such terms and conditions with the proviso that it shall not be less than one year."

 

Note:.................This is NOT the complete published decision. There is more text yet to be added, including cited case references, which will shortly be included as soon as time permits (DirCom).

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