When a clause in a contract is not clear, Tribunals can make a ruling as to what the clause means. In Driver v Air India Ltd, the Court of Appeal held that where a contractual entitlement to overtime payments was challenged because no specific rate or method for authorisation had been expressly specified or implemented, the law may imply a reasonable sum.
Mr Driver worked as a catering services manager from 1972 to 2007 for Air India. Clause 10 of his contract stated that the provisions for overtime and shift pay were “set out in notices and circulars issued by Air India from time to time”. Clause 11 stated that “you will be required from time to time to work overtime, both on a rostered basis and ad hoc basis”.
However, although Mr Driver had historically been paid for overtime and shift work, these payments ceased in December 2001 and December 2002 respectively, after which he wrote a series of grievance letters in which he claimed he was entitled to be paid for ad hoc overtime which, he said, was required of him. Despite his grievance apparently being upheld in 2005 and instructions issued by the Chairman of the company to pay him, no payments were actually made.
Things dragged on until June 2006 when his contract required him to retire. However, as the company wanted him to stay on it issued a new contract which said “overtime may be paid at Air India’s discretion”. In November 2006 his manager at the time, Mr Joseph, signed his overtime sheets dating back to August 2003.
Air India resisted his claims, saying that it had never issued any “notices or circulars” regarding overtime or shift work and that the term of the contract amounted to an “agreement to agree”. It could not however explain the payments it had made to him in the past nor why they had ceased.
High Court decision
It decided he was not entitled to be paid for overtime for two main reasons. Firstly because the original contract did not contain a provision for overtime payment and Air India had not issued any “notices or provisions” in relation to it.
Secondly, because the company was only liable to pay him for undertaking overtime duties if it had asked him to “perform such duties. On the evidence, it had made no such request”. As he had not been authorised to do the overtime, he was not entitled to payment for it.
It dismissed the fact that Mr Joseph had signed over three years worth of claims saying that his signature was merely an acknowledgement that the statements had been shown to him.
Court of Appeal decision
The Court of Appeal, however, disagreed. It said that the combination of clauses 10 and 11 gave Mr Driver a contractual right to be paid for overtime where overtime was "required", even though there were no notices or circulars to that effect.
Otherwise, the overtime promised in clause 10 would be nothing more than a mere “chimaera”. That was very unlikely, and “contrary to the general position that where a contractual payment is not specified, the law implies a reasonable sum. ... “.
It said that although a contract should not be “construed by subsequent conduct ... it is nevertheless ... highly relevant that overtime was in fact being paid to Mr Driver until the end of 2001, and then ceased without any explanation”.
As a trusted manager, it held that Mr Driver could be left to exercise his own judgment as to whether he needed to do overtime to carry out his responsibilities in the sense of whether it was “required”. It was then up to his managers to decide whether his claim was justified, although that did not mean that they had a discretion as to whether to pay him or not.
The Court of Appeal clearly felt that the High Court Judge had interpreted the documentary and oral evidence in a distorted manner. It had more sympathy for him and the fact that not only did his contract indicate a contractual entitlement to overtime, he had received it for a period of time. After it was withdrawn in 2001/2 he had consistently attempted to pursue the matter, raising over nine grievances before apparently persuading the company Chairman of his entitlement. Despite this and the fact that his manager had signed to authorise the overtime worked, he had, without any adequate explanation, still not been paid.