Deakin & Ors v Kuehne & Anor

This appeal raises a short point concerning the construction of a provision in a collective agreement negotiated between the TGWU union and the relevant employers’ federation sometime in 2002. It is conceded that the clause has been incorporated into the contracts of employment of each of the 84 appellants. We were told that there are also hundreds of other workers around the country who will be affected by our decision.

The appellants are all drivers or draymen who became employed by the respondent in 2006 following a succession of TUPE transfers. The respondent company, their employer, is a logistics company predominantly supplying the drinks market. It was not a party to the relevant agreement and this has meant that we have had virtually no evidence about the circumstances in which the agreement was reached.

The relevant collective agreement is known as Supply Chain North 2. It governs various aspects of the working arrangements of the drivers including breaks that need to be taken during the working day. These are not simply matters of contract, however. Certain EU rules and statutory provisions made pursuant to them apply to the drivers’ working time.The drivers are trained in respect of these requirements and non-compliance is considered to be a disciplinary matter. One of the issues in this case is the relationship, if any, between the contractual terms and the statutory provisions.

The relevant clause in issue concerns breaks from work. The appellants contend that the company has been misconstruing that clause with the effect that they have not been paid full recompense for the time that they have spent actually working. They brought a claim before the Employment Tribunal for unauthorised deduction from pay contrary to section 13 of the Employment Rights Act 1996. As a matter of law the failure to pay the wages due constitutes an unauthorised deduction. Whether or not there was any such deduction depends, therefore, upon whether they were paid less than they were entitled to be paid, and that turns on the proper construction of the agreement.

The relevant clause is as follows:

“c)

Breaks From Work

Drivers will at all times comply with all legal requirements contained in the Drivers’ Hours Regulations with particular reference to breaks and maximum driving hours.

Where an operator’s day/shift is planned to be up to six hours there will be no compulsory break planned into the shift.

Where an operator’s day/shift is planned to be between 6 and 9 hours an unpaid break of thirty minutes will be planned into the day/shift.

Where the day/shift is planned to be in excess of 9 hours the unpaid break time will be 45 minutes.

Where the day/shift consists of two or more trips the break will, where possible and practicable, be planned between trips at the distribution centre.

Where an operator’s day/shift is planned to consist of one trip only it is deemed the responsibility of that individual operator to ensure that break time of 30 or 45 minutes as appropriate is taken within the working day.

All break time will be taken account of and deducted when calculating actual hours worked.”

The way in which the employers calculated the pay of the appellants was described by the employment judge as follows:

“The claimants’ daily routine is that on arrival at work they receive a manifest that includes the planned duration of the working schedule and specifies the planned breaks. The Company’s system automatically allocates set times for the journeys and for the various stops at customer outlets or storage facilities …The system allows either for there to be no break (shifts of under 6 hours) or for timed breaks (for shifts that exceed 6 hours). The system automatically provides a print out showing specific times for each activity; it does not split up the breaks or apportion them …

Having completed one’s work a driver would take his record to a de-briefing clerk where a record is be made of the actual time spent working. It was accepted by all concerned that the plan was only a guide and the timed journeys, calls and break at the end of 6 hours is not a hard and fast stipulation. It would not be possible to so provide as the drivers are to an extent subject to the whims of traffic, customers and any number of delays whereas the manifest would appear on the face of it to be proscriptive….

The respondent has adopted a practice of calculating the duration of a shift, time spent working and therefore payment not on the planned hours under the manifest or the actual worked hours but on what it calls “attended hours”. This is not defined in N2. By “Attended hours” the respondent refers to the time that is spent working plus time spent on break periods. It follows from this practice that the attended hours on which payment is calculated includes non-working time for which no payment is due. The respondent calculates the working day by reference to the attended hours; in establishing whether or not a shift is of 6 hours, 9 hours or some other duration it will include the unpaid break periods in calculating the length of day “attended”.”

Accordingly the calculation of actual hours is made by assessing the actual period between clocking in and clocking out (what is termed the “attended hours”) and then deducting the breaks. It is assumed that the length of the shift includes breaks and that the planned break identified at the start of the day will have been taken.

The appellants submit that there are two errors in the calculation of the hours for which payment must be made. They both relate only to those workers whose planned day is over 9 hours. The first is this. Sometimes the worker whose planned tasks exceed nine hours in fact returns to the depot before then. The employers say that contractually he ought to have taken a 45 minute break, because this was the break planned into his day, even though had it been known in advance that the work would take less than 9 hours he would only have been required to take 30 minutes. So they deduct 45 minutes from the attended hours when calculating the working hours. If the worker has in fact taken a 45 minute break, there is no complaint about this deduction since the worker is receiving full pay for the hours actually worked. However, it is submitted that in some cases the worker will only have taken a 30 minute break, which in fact accords with the legal obligation for someone working between 6 and 9 hours. It is said that in such cases it is unjust and contrary to the proper construction of the contract to deduct a break of 45 minutes when that has not been taken. In those circumstances the worker is not being paid for the hours actually worked.

In practice this is not as significant a problem as it might have been since we were told that in most cases of this kind the employers do, as a concession, only deduct 30 minutes if the worker returns to the depot in under 9 hours. Indeed, the employers contend that they do this even if in fact the worker has taken a 45 minute break. However, they deny that they are contractually obliged to deduct only 30 minutes even if that is in fact the only break which the worker has taken. The appellants accept that the concession is often made, but not always. In any event, the existence of the concession does not, of course, affect the proper construction of the contract and they wish to establish that in such cases it is their entitlement that only 30 minutes should be deducted from the attended hours.

The second issue relates to the point at which the obligation to take the 45 minute break is triggered. The employers say that as a matter of contract it is where the worker is on a shift of nine hours, and this naturally means where he has been attending work for nine hours. Since he will have already completed a 30 minute break in the course of that shift, this means that he will have actually been working for only eight and a half hours. So they require the worker to take the 45 minute break if his time actually working exceeds eight and a half hours. The appellants submit that the natural meaning of a 9 hours shift is that the worker should actually be working for 9 hours. They point out that this construction is consistent with the current regulations regulating the breaks of these workers, and the Directive which they are designed to implement. These only require a 45 minute break after the worker has actually been at work for 9 hours.

If that analysis is right, it follows that the obligation to take a 45 minute break only arises after the worker has been at work for nine and an half hours. Therefore if the worker returns to the depot after nine hours at work he should still only have half an hour deducted. The 45 minutes should not be deducted until he has been at work for nine and a half hours.

The employment judge accepted the appellants’ submissions. He concluded that the employer had wrongly construed the relevant contractual provisions. As to the first issue, he held that the employer was obliged to pay for time actually spent at work. The fact that a break was planned was irrelevant:

“Drivers are not paid for adhering to a plan or guide which in practice can rarely be delivered as all parties conceded.”

The employment judge also found for the appellants with respect to the second issue:

“[The agreement] was the only written documentation concerning these provisions relating to break periods and payment. That agreement provided that unworked hours, the rest break periods, should not be taken into account when calculating pay. Clearly the 30 minutes break taken during the 9 hours “attended” was being taken into account by the respondent and served to reduce the claimant’s pay on the assumption that after 9 hours attended work the claimant had an additional 15 minute unpaid break. The respondent should have measured the actual time worked and only required 45 minutes total break when the total number of worked hours, excluding break periods, exceeded to 9 hours. That would be in accordance with the strict application of [the agreement] and makes more sense in the context of the working time directive, drivers’ hour’s regulations and health and safety requirements. It does not make sense to impose an additional break for rest purposes on the basis in part of time already spent not working but resting.”

The EAT upheld the employers’ appeal and held that the employment judge had been wrong on both issues. So far as the first issue was concerned, HH Judge Serota QC considered that the agreement was clear: the worker was obliged to take the requisite break as fixed by reference to the planned hours. The fact that the attended hours worked might prove to be fewer than the 9 hours anticipated was immaterial. HH Judge Serota QC held, with respect to the second issue, that the employment judge’s conclusion that the obligation to take a 45 minute break was triggered only after 9 hours actual work i.e. nine and a half hours of attended work, far from being a strict application of the agreement, was in fact a departure from its ordinary meaning. He concluded that the employers were properly applying the agreement.

In my judgment, it is important to emphasise three features of the agreement. First, the break period to be taken by the workers is fixed in advance of the shift starting. It is plain from the terms of the agreement that it is calculated by reference to the planned length of the shift, which may be different – either shorter or longer – than the actual hours worked. Second, the break must be taken in the course of the shift. It is intrinsic in the notion of break that it is taken at some point in the working day and not at the end of it; it is a break between two periods of work interrupting that work and is not intended to be taken at the end of the working shift. It would undermine the health and safety objective of providing breaks during the working shift were it otherwise. Unsurprisingly, this is what the contract requires. It says in terms that the break should be taken “in the course of the working day” and where possible between jobs. Third, the break is compulsory and it is the worker’s obligation to take it at a suitable time.

I turn to the first question, namely whether the employer is entitled to deduct the break stipulated by reference to the planned hours even if it is not the break actually taken and moreover was not the break which had to be taken as a matter of law. Mr Allen accepted that this only arises in the few cases where a worker has not in fact taken the 45 minute break which it was anticipated he would be obliged to take when his shift was planned and has only taken 30 minutes because, contrary to expectations, he returns to the depot within the nine hour period. With hindsight it can be seen that 30 minutes is the break that he would have been required to take if the planned day had accurately predicted the actual day. In those circumstances, says Mr Allen, only the half hour actually taken should be deducted.

I do not accept that submission. In my judgment, the employers have made it clear that it is the duty of the worker to take the break which the planned hours dictate will be necessary. That is so even if the planned hours in fact overestimate the time taken to perform the worker’s duties. Usually the worker will have taken the longer break, if only because typically the break will be taken well before the end of the shift, such as between jobs where possible. At that stage it is unlikely to be known that the shift will finish early. Furthermore, the break must be taken as an interruption from work and it ought not to be taken towards the very end of the shift. For these reasons there ought to be very few occasions where the worker whose planned day exceeds 9 hours returns to the depot within the 9 hours without having taken the full 45 minute break, although no doubt it will exceptionally happen. If it were possible to detect precisely whether the worker had taken the full break or not, using the tachometer or otherwise, there would be no difficulty in paying the worker for all the hours actually worked. However, we were told that it is not possible in the case of drivers like these to discover whether the worker has taken the full 45 minutes or not.

Moreover, I can see nothing unfair in a rule of this nature. On the contrary, there is obvious sense in a rule which provides that where (i) the anticipated break stipulated at the start of the day is 45 minutes; (ii) the worker has had the opportunity of taking that break; (iii) it is the worker’s obligation to take the requisite break; (iv) the break will typically be taken well before the end of the shift; and (v) it is not possible to determine whether the worker has in fact taken the break or not, then it will be assumed in all cases that he will have taken the stipulated break.

The appellants submitted that this would lead to anomalous and illogical results, for example, someone whose planned work was 8 hours 55 minutes would be deducted only 30 minutes and would be paid for 8 hours and 25 minutes whereas someone with a planned working day of nine hours and 5 minutes would have 45 minutes deducted and would therefore only get paid for 8 hours and 20 minutes even though he has been at work longer.

I do not accept that this is either anomalous or illogical. If each worker has taken the break envisaged in the agreement, the worker whose planned shift exceeds 9 hours gets paid less because his actual time at work has been less and he only receives pay for the time actually worked. The apparent anomaly lies in the fact that where there is a change in the break period from 30 to 45 minutes, that change must be introduced after the duration of a certain number of working hours. Necessarily there will be apparent anomalies either side of the line resulting from the fact that someone whose shift is longer might actually be at work for a period that is shorter.

I should add that there is no problem with the person whose planned day is fewer than 9 hours but who in fact works for longer. It is accepted that he will have to take the breaks which the law requires, and indeed the agreement stipulates that he should. He cannot therefore claim that he has taken a shorter break than the law obliges him to take and the employers would be in breach of their legal obligations if they were to allow him to do so. Accordingly, he will be treated as having taken the full 45 minutes which he is obliged to take.

In short, in my view the agreement means that it is the obligation of the worker to take the planned break and he will be deemed to have done so even if the break is longer than would in fact have been necessary given the actual length of the working day, and even if in fact he has not taken that break.

The second issue is when the switch to the 45 minute break is triggered. The agreement states that it is when the day/shift is planned to be in excess of 9 hours. Like the EAT I consider that it is contrary to the natural meaning of the phrase “a 9 hour shift” to say that this means time spent actually at work. In my view the natural meaning of that phrase is the period from the beginning to the end of the working day, as it were from clocking on to clocking off. So a 9 hour shift would in fact include the designated 30 minute break. Payment would therefore be for eight and a half hours of actual work. That is the way in which the agreement has been implemented by the employer and in my view it is the better construction of the agreement.

The most powerful counter argument advanced by the appellants was one which does not seem to have been pursued below. They point to the fact that the current regulations on breaks for employees are the Road Transport (Working Time) Regulations 2005 which give effect to Directive 2002/15/EC on the organisation of the working time of persons performing mobile road transport activities. It is common ground that under these provisions the duty to take a 45 minute break arises only after nine hours of actual work has been performed. The appellants submit that it must have been the intention of the parties when they reached this agreement to reflect these legal obligations. The employers would not have intended that breaks should be taken more frequently than the law requires.

The difficulty with that submission is that we have no evidence about the circumstances in which the agreement was made. We are told that it was made in 2002, and the Directive came into force in March of that year. However, there was no obligation to implement the Directive into domestic law for three years and that is indeed how long it took the UK to introduce the relevant regulations. In the absence of any evidence on the point, I do not think that it is legitimate to infer that the parties were intending to give effect to a Directive which at the time the collective agreement was made had not been transposed into domestic law.

Moreover, we were told that the relevant legislation in force and applicable to these drivers at the material time when the agreement was made were the provisions in Part VI of the Transport Act 1968 and Council Regulation (EEC) No. 3820/85. Section 96(2) of the 1968 Act is in fact wholly consistent with the obligation to take a half hour break once the attended hours exceed 6 hours and therefore supports the employers’ case. I confess that it is not obvious to me that the agreement is consistent with the Council Regulation which appears to be more favourable to the drivers than the agreement, and counsel were not able to assist on why this appeared to be so. However, I am sure that there is some explanation since I cannot believe that employers and union representatives would have drafted and implemented an agreement which purported to give workers something less than their legal rights. Be that as it may, in the circumstances I do not consider that it is legitimate to infer that the agreement was intended to reflect the rights conferred by the Directive. Accordingly, the agreement should be given its natural meaning which in my view is what the employers have done.

It follows therefore that the appeal fails.

I agree.

I also agree.