Newham v Skingle

LORD JUSTICE ALDOUS: I invite Lord Justice Jonathan Parker to give the first judgment.

LORD JUSTICE JONATHAN PARKER: This is an appeal by Mr Gary Skingle against an order made by Jacob J on 23 May 2002 allowing an appeal by The London Borough of Newham ("the Council") against a determination made by the Pensions Ombudsman (Mr David Laverick) on 30 January 2002 on a complaint by Mr Gary Skingle. Permission for a second appeal was granted by Robert Walker LJ on 21 June 2002, limited to a single ground of appeal the nature of which I shall indicate in due course.

From 1991 until his retirement on health grounds on 31 January 1998, Mr Skingle was employed by the Council as a Site Supervisor at Lister Community School. Prior to 1991 he had been employed by the Council as a school caretaker. In his capacity as Site Supervisor he regularly worked overtime, supervising out-of-hours lettings of the school premises. By a letter dated 5 February 1998, the Council notified Mr Skingle of his pension entitlements under the Local Government Pension Scheme ("the Scheme"), of which he is a member. The letter also informed Mr Skingle that if he was dissatisfied with any decision regarding his benefits under the Scheme he could appeal to the Chief Executive of the Council, and thereafter to the Secretary of State for the Environment, Transport and the Regions.

In calculating Mr Skingle's pensionable pay (that is to say his final earnings, on which his pension was based), the Council left his overtime earnings out of account. Mr Skingle was dissatisfied with that decision. He contends that, under the Local Government Pension Scheme Regulations 1995 ("the 1995 Regulations"), his overtime earnings must be brought into account in calculating his pensionable pay. He accordingly appealed to the Chief Executive. The Chief Executive, in a decision which was promulgated on 22 May 2000, concluded that under the terms of the 1995 Regulations the calculation of pensionable pay excluded payments for letting duties. He went on to say that that was standard practice which applied to all Site Supervisors who undertook such duties. Mr Skingle appealed to the Secretary of State. The Secretary of State agreed with the Chief Executive. Mr Skingle then complained to the Pensions Ombudsman, on grounds of maladministration. By his determination, the Pensions Ombudsman upheld Mr Skingle's complaint, concluding that under the terms of the 1995 Regulations Mr Skingle's overtime earnings were to be brought into account in calculating his pensionable pay.

The Council appealed against the Pensions Ombudsman's decision to the High Court pursuant to section 151(4) of the Pension Schemes Act 1993, which provides for an appeal to the High Court "on a point of law". The respondents to the proceedings in the High Court were Mr Skingle and the Pensions Ombudsman. The Pensions Ombudsman has taken no part in the proceedings. By his order dated 23 May 2002 Jacob J allowed the Council's appeal. That is the order against which Mr Skingle now appeals to this court.

The 1995 Regulations were replaced by the Local Government Pension Scheme Regulations 1997 (which came into effect on 1 April 1998), but it is common ground that there is no material difference between the two sets of regulations, and that the 1995 Regulations are the relevant regulations for present purposes. It is also common ground that the issue as to whether or not Mr Skingle's overtime earnings are to be brought into account in calculating his pensionable pay depends upon whether the overtime earnings are "remuneration" for the purposes of the 1995 Regulations. The word "remuneration" is defined in regulation C2 of the 1995 Regulations. Paragraphs (1) and (2) of regulation C2 are in the following terms (so far as material):

The 1995 Regulations contain, needless to say, no definition of the expression 'non-contractual overtime'.

The Council contends that Mr Skingle's overtime earnings were 'payments for non-contractual overtime', and thus excluded from the definition of 'remuneration' by subparagraph (2)(a) of the regulation. Mr Skingle contends that his overtime earnings were not 'payments for non-contractual overtime' since under the terms of his employment he was obliged to supervise out-of-hours lettings.

In agreeing with the Council, the Chief Executive and the Secretary of State concluded that Mr Skingle was not obliged to work the overtime in question. In upholding Mr Skingle's complaint the Pensions Ombudsman also concluded that Mr Skingle was under no obligation to work the overtime, but he concluded that the overtime was nevertheless not 'non-contractual overtime' for the purposes of regulation C2(2)(a) since it was remunerated at contractually agreed rates.

Allowing the Council's appeal, Jacob J concluded that the Pensions Ombudsman had erred in law in his construction of regulation C2(2)(a), in that overtime which the employee is not obliged to work is 'non-contractual overtime'. Jacob J also dismissed a cross-appeal by Mr Skingle (raised by a respondent's notice) whereby Mr Skingle contended that he was obliged to work the overtime in question. Having considered Mr Skingle's terms of employment Jacob J rejected that contention, saying (in paragraph 20 of his judgment) that he could see no basis upon which Mr Skingle could have been obliged to work the overtime. He refused Mr Skingle permission to appeal.

Mr Skingle applied to this court for permission to appeal, on the ground that the judge had misconstrued the expression 'non-contractual overtime'; and secondly, in the alternative, that the overtime in question was compulsory in nature in that the Council could have compelled him to work it. He also contends, by his grounds of appeal, that a document entitled Site Supervisors' Agreement formed part of his terms of employment. I shall refer to that document later in the judgment.

Robert Walker LJ granted permission to appeal on the papers, but limited to the issue whether there was evidence on which the Pensions Ombudsman could conclude that Mr Skingle was under no obligation to work overtime during out-of-hours lettings of the school premises. Robert Walker LJ expressed his reasons for granting such permission thus:

Thus, the one issue in respect of which permission to appeal has been granted is whether Mr Skingle's terms of employment obliged him to work the overtime in question. If he was so obliged, then (in accordance with Jacob J's decision, in respect of which there is no permission to appeal) the overtime in question was not 'non-contractual overtime' within the meaning of regulation C2(2)(a) and accordingly did not fall to be excluded from the definition of 'remuneration' in paragraph (1) of the regulation.

The Pensions Ombudsman referred to three documents as forming part of Mr Skingle's terms of employment: first, a document entitled "Contract of Employment for APT&C Staff" dated 17 June 1991 and signed by Mr Skingle ("the Contract Document"); second, a job specification issued by the Council relating to the job of Site Supervisor ("the Job Specification"); and third, a document issued by the Council headed "Site Supervisor", with a sub-heading "Purpose of Job" ("the Purpose of Job Document").

I turn first to the Contract Document. It is entitled "Contract of Employment for APT&C Staff subject to the agreement with the National Joint Council for Local Authorities Administrative, Professional and Technical Services and the Employment Protection (Consolidation) Act 1978". It then states Mr Skingle's name. Underneath that, against the legend "Post Title" are the words "Site Supervisor". Further down the page one finds:

Later one comes to a heading "Overtime", where one finds this:

I turn next to the document referred to in the Contract Document as 'the purple book'. Paragraph 2.1 of the purple book, under the heading 'Working Arrangements' reads as follows (so far as material):

Paragraph 2.3 of the purple book deals with rates of pay for employees who are required to work additional hours (i.e. overtime).

I turn next to the Job Specification. The Job Specification describes the purpose of the job in the following terms:

There follows a section headed 'Duties and Responsibilities'. These include the following:

At the conclusion of the section headed "Duties and Responsibilities" there is the following note:

The Purpose of Job Document is in substantially the same form as the Job Description, but it omits the note at the end.

The Pensions Ombudsman made no express finding as to whether the further document entitled "Site Supervisors' Agreement", to which I referred earlier, also formed part of Mr Skingle's contract of employment, although he based his reasoning on a provision to be found in it. Jacob J concluded, in paragraph 18 of his judgment, that in the absence of such a finding by the Pensions Ombudsman it was not open to him to hold that it did form part of Mr Skingle's contract of employment. Jacob J also recorded that it had not been contended otherwise by Mr Randall (who appeared before the judge for Mr Skingle, as he does before us). Before us, Mr Randall explains that it has throughout been Mr Skingle's case that the Site Supervisors' Agreement forms part of his contract of employment, and that before the judge he had proceeded on the basis that the Pensions Ombudsman had so found. At all events, he seeks to raise that contention before us. In the circumstances, I should refer at this point to those provisions of the Site Supervisors' Agreement on which Mr Randall seeks to rely.

The introduction to the Site Supervisors' Agreement states that it is a locally negotiated collective agreement. Paragraph 3 records that a new role has been agreed for caretaking staff which "may broadly be defined as that of Site Supervisor". It goes on to say:

Paragraph 7 of the Site Supervisors' Agreement (which is headed "Overtime") contains the following provisions:

Paragraph 8 of the Site Supervisors' Agreement is headed "Use of Buildings Outside School Day". Paragraph 8.1 provides as follows (so far as material):

In setting out details of his complaint to the Pensions Ombudsman, Mr Skingle said this:

Mr Skingle expanded on this in a witness statement made in support of his complaint.

In its response to the Pensions Ombudsman's preliminary conclusions (which reflected his final conclusions), the Council said this:

Referring to the obligation contained in paragraph 9 of the Job Description, and to the equivalent provision in the Purpose of Job Document, to "manage and operate systems of staffing cover for lettings and other out-of-hours usage of the premises", the Pensions Ombudsman said this:

However, as noted earlier, the Pensions Ombudsman went on to hold that such overtime, albeit (in his view) voluntary, was not 'non-contractual overtime' within the meaning of subparagraph (2)(a) of regulation C2 since (as was undoubtedly the case) it was remunerated at rates prescribed by the terms of Mr Skingle's employment.

Allowing the Council's appeal, Jacob J concluded (in paragraph 9 of his judgment) that, as a matter of construction of Mr Skingle's terms of employment, overtime which was not "called for by the contract" - i.e. voluntary overtime - was 'non-contractual overtime' within the meaning subparagraph (2)(a) and was accordingly excluded from the definition of 'remuneration' in regulation C2(1). Thus, in paragraph 10 of his judgment the judge said, referring to regulation C2(2)(a) [2a/14]:

Addressing Mr Skingle's contention (raised by his cross-appeal) that he was contractually obliged to work the overtime - i.e. that it was compulsory, not voluntary, overtime - the judge said this in paragraphs 19 to 21 of his judgment:

The one ground of appeal in respect of which permission to appeal has been granted is expressed in section 7 of Mr Skingle's Appellant's Notice in the following terms:

Mr Skingle further contends, in his grounds of appeal, that the "relevant contractual documents" for this purpose include the document entitled Site Supervisors' Agreement; that Jacob J erred in not making a finding to that effect; and that had he made such a finding "the only permissible option available to him as a matter of law was to find that the overtime worked by the Appellant was compulsory in nature".

By a Respondent's Notice the Council invites this court to uphold Jacob J's decision on different or additional grounds: viz. that Mr Skingle has been refused permission to appeal Jacob J's conclusion that, as a matter of law, 'non-contractual overtime' for the purposes of regulation C2 means overtime which the employee is not obliged to work (i.e. voluntary overtime); that Mr Skingle's appeal against the Pensions Ombudsman's conclusion (upheld by Jacob J) that the overtime in question was voluntary overtime is not an appeal on a point of law but an appeal on an issue of fact; and that accordingly this court has no jurisdiction under section 151(4) of the Pension Schemes Act 1993 to hear the appeal. As to the contention that the Site Supervisors' Agreement formed part of Mr Skingle's terms of employment, the Council relies on the fact (recorded by the judge in his judgment, as noted earlier) that that argument was not raised before him.

Before us, Mr Randall submits that the correct approach is to construe the relevant terms of Mr Skingle's employment in order to determine whether the Council could (had it wished to do so) have required him to work the overtime in question. So much is accepted by Mr Algazy on behalf of the Council. Mr Randall submits that that is an issue of law, and thus one which we have jurisdiction to entertain. He submits that on the true construction of the documents (which, he submits, include the Site Supervisors' Agreement) Mr Skingle could have been required to work the overtime. He submits that it is immaterial that a pool of other employees might have been called upon to work the overtime if Mr Skingle had not done so. The obligation, he submits, was on Mr Skingle to work the overtime, but if some other suitable person was found who in fact worked it in place of Mr Skingle, the Council would have been in breach of its implied duty to act reasonably had it treated Mr Skingle as being in breach of his contract (see Woods v WM Car Services (Peterborough) Ltd per Browne-Wilkinson J, as he then was, cited in United Bank Ltd v Akhtar [1989] IRLR 507).

Mr Randall relies strongly on the note at the foot of the Job Specification, quoted earlier. This note, he submits, makes it clear that Mr Skingle might be (that is to say could be) required to work overtime.

As to the Site Supervisors' Agreement, Mr Randall submits that at the very least it must form part of the factual matrix within which the other documents fall to be construed; but if necessary (and he submits it is not necessary) he goes further and submits that it clearly forms part of Mr Skingle's contract of employment.

Whilst acknowledging that citation of authority may be of little assistance in resolving a question of construction, he nevertheless seeks support for his submissions in the decision of the Scottish Employment Appeal Tribunal (Lord McDonald MC presiding) in Martin v Solus Schall [1979] IRLR 7. In that case, the employee's contract of employment contained the following provision:

The employer submitted that those words meant something less than a legal obligation. The Tribunal rejected that submission, saying:

Mr Algazy submits firstly that there is no jurisdiction to entertain Mr Skingle's appeal, since it does not raise any point of law: rather, he submits, it is an appeal against factual findings made by the Pensions Ombudsman. He relies in this connection on Robert Walker LJ's reasons for granting permission to appeal.

That apart, he submits that it is not open to Mr Randall to argue that the Site Supervisors' Agreement is a contractual document, in the sense that its terms form part of Mr Skingle's contract of employment, since that argument was not advanced before the judge. In any event, he asserts that the terms of the Site Supervisors' Agreement are of no material assistance on the question of construction which we have to decide.

As to the obligation to manage and operate staffing systems in relation to out-of-hours activities at the school, Mr Algazy submits that that obligation did not extend to requiring Mr Skingle to provide cover himself. As to the note at the conclusion of the Job Specification, Mr Algazy submits that the judge was right to conclude that it refers to irregular or unsocial, rather than to additional, hours. If it alters the terms of the Contract Document in any way, he submits that it merely alters the 'overall band' for basic hours of 6.00am to 6.30pm.

Mr Algazy submits that the contractual term in Martin v Solus Schall, which provided that the employee was "expected" to work overtime, is clearly distinguishable from the contractual terms in the instant case as contained in the Contract Document, the Job Description and the Purpose of Job Document. He further submits that it is irrelevant that Mr Skingle felt compelled to work the overtime in question.

In the first place, I reject Mr Algazy's submission that there is no jurisdiction to hear this appeal since the appeal is not on a point of law, and is therefore outside section 151(4) of the Pensions Act 1993. I agree with Mr Randall that the issue raised by the one ground of appeal in respect of which permission to appeal has been granted is clearly one of law as to whether, on the true construction of Mr Skingle's terms of employment, the Council was contractually entitled to require him to work the overtime in question. We are not concerned with findings on disputed facts; there were none in this case.

Secondly, as to where those terms are to be found, I propose to consider first the Contract Document (which incorporates the purple book), the Job Specification and the Purpose of Job Document without reference to the Site Supervisors' Agreement. In this connection I should say at this point that I have not derived any assistance from the case of Martin v Solus Schall in resolving the question of construction which arises on these documents.

Looking, therefore, at the documents in question - and leaving out of account for the moment the Site Supervisors' Agreement - the short question is whether, on their true construction, Mr Skingle was obliged to work the overtime in question.

In approaching that question, it is in my judgment irrelevant to consider what the Council, or for that matter the Secretary of State, intended the documents to mean. Direct evidence of intention is plainly inadmissible for this purpose. Nor, in my judgment, is any assistance to be gained from evidence as to the availability or otherwise of others who might be willing (or, for that matter, required) to work the overtime. So much, indeed, is common ground.

In my judgment, the clear flavour of the contractual documents (leaving aside the Site Supervisors' Agreement) is that a Site Supervisor such as Mr Skingle may be required to work overtime. The note at the foot of the Job Specification seems to me to make this clear. In my judgment, it is simply not realistic to suppose that (given Mr Skingle's responsibilities for maintenance and security) his terms of employment envisage that, for example, if called upon to attend the school premises in the middle of the night to attend to a burst pipe or to investigate why a burglar alarm has been set off, he would be entitled to refuse to do so. And the same applies, in my judgment, to his attendance at out-of-hours lettings. I accept Mr Randall's submission that the obligation was on him to be present at lettings and other out-of-hours activities, but with the qualification that if he were able to procure that some other suitable person be present in his place the Council would not be in a position to contend that he had breached his contract. In practical terms, Mr Skingle was in my judgment obliged by his contract of employment to work the overtime in question save in so far as he made proper arrangements for someone else to do so.

As to the Site Supervisors' Agreement, it seems to me that whilst its provisions may not add very much to the debate, they certainly go nowhere towards negativing the conclusion which I have reached as to the true construction of the other documents. In those circumstances I do not find it necessary to decide whether (and if so to what extent) it strictly formed part of Mr Skingle's contract of employment.

It follows from my conclusion that the Council was contractually entitled to require Mr Skingle to work the overtime in question that payment for such overtime is not 'non-contractual overtime' for the purposes of regulation C2(2)(a) of the 1995 Regulations and accordingly must be brought into account as 'remuneration' for the purposes of determining Mr Skingle's pensionable pay. I would therefore allow the appeal.

LORD JUSTICE KAY: I agree.

LORD JUSTICE ALDOUS: I also agree.