City of Edinburgh Council v Brown [1999] IRLR 218
Enforcing implied terms from collective agreements into individual contracts of employment has, in recent years, been very difficult to achieve. Since the Employment Appeal Tribunal decision in Airlie v City of Edinburgh District Council (1996 IRLR at 516) the Courts have tended to the view that in order to enforce an implied contractual term - which the employer does not accept is an implied term - you need to look at the contractual intent at the time the agreement was entered into.
This can be especially hard where agreements may derive from collective bargaining arrangements where the written arrangements say that any benefits provided by an employer are at the control of management and within the policy of management as to their operation and effect.
Courts have also stated that policies which are only guidelines are often not contractual terms at all and can therefore be withdrawn by management without consent.
The decision of the Employment Appeal Tribunal (Scotland) in the recent UNISON backed case of Brown run by Thompsons, is therefore a crucial and welcome breakthrough in looking at and returning to the principle of agreed terms which cannot be unilaterally broken even though an employer wishes to do so.
Mr Brown worked in the council's Housing Department. Following re-organisation in 1989 he and other colleagues sought regrading.
At that time a successful regrading was backdated to the date of the original application, even if that was much later and after an Appeal. The EAT confirmed the original Employment Tribunal decision that the arrangement was introduced by collective agreement between the recognised Trade Union (NALGO at that time) and the employer.
The Union had originally suggested that the policy of the Council was unclear and suggested a uniform policy. This was agreed at a JCC, recommended to the council's Personnel Committee and endorsed by the Council in 1987.
So far as the Council Minutes were concerned, this was referred to as policy and there were no documents in the hands of the Council referring to it as a collective agreement.
Nevertheless, both the Employment Tribunal and the EAT had no difficulty in accepting that the way this procedure had been arrived at could effectively be regarded as a collective agreement. They went on to hold that it was incorporated into Mr Brown's Contract of Employment.
In 1992, the Council unilaterally changed the policy without agreement and despite objection from the union. They introduced what they described as a new policy doing away with backdating and allowing payment on re-grading only from the point in time the decision to re-grade was made. Given the length of time between a re-grading application and a decision, this could amount to many thousands of pounds in back pay being lost by the employee. There was a great deal of money at stake for individuals and the council.
They would not honour the old policy even for applications for regrading made before they changed the policy, such as in Mr Brown's case. The council maintained that as this was a matter of policy and not a binding agreement, it was not necessary to obtain express agreement to change.
The council argued it was simply conferring a benefit on an employee by means of a non-binding policy which was therefore capable of being removed without consent. The union argued it amounted to a legally binding contractual term which could not be unilaterally withdrawn.
In Brown's case there was no mention in the original policy of circumstances when the arrangement could be changed. In Airlie the arrangement referred to changes for operational reasons.
The Employment Tribunal and the EAT both held that the arrangement in Brown's case was a contractual term. This judgment reverses the trend set by the previous cases.
Equally importantly, the EAT accepted that "collective agreement" had a wide meaning. To come within the definition of Collective Agreement in the Trade Union and Labour Relations Consolidation Act 1992 there must be negotiation between the parties and agreement, but beyond that, there was no requirement for a particular way the agreement should be reached, the EAT said.
In Mr Brown's case there had been negotiation and agreement in 1987 which set up the re-grading backdating structure whereas the attempted change in 1992 had not been the subject of agreement and very little negotiation.
Significantly the EAT also said that even where an employer announced a detrimental change to a policy which impacts on the terms and conditions of an employee's contract - but which had not been agreed or expressly incorporated - the employee might have a legitimate right to complain because the contract had been effectively varied without his consent.
The variation would be of the implied condition that the employee has a right not to have his contract varied to his detriment without his consent.
The procedures of Local Authorities - generally involving consideration by the Council and recommendation of Committees - meant that for agreement to be reached the recommendations had to be endorsed. Once that was done, however, they could create a binding collective agreement from which terms and conditions applicable to individual contracts could arise and be enforced.
This case underlines the importance in collective bargaining of ensuring that when a change is agreed to by management - after negotiation and agreement with the Union - it can be regarded as an appropriately negotiated collective agreement. Where it has individual effect it can be effectively incorporated into employees' contractual terms and conditions. Negotiators should ensure, where possible, that clauses referring to management's power to withdraw benefits for operational reasons are kept out.
The end result for Mr. Brown happily was that he has received a back payment on his new grade covering a period of six years.