The 250 employees were claiming that wages had been deducted unlawfully because the authority had imposed new terms and conditions on them without agreement. The claims arose from the implementation of the Red Book collective agreement.  Unions had agreed and undertaken job evaluations but no agreement was reached on future pay models. Accordingly, following legal advice, the Respondent's Chief Executive imposed the new pay and grading structure. A collective grievance failed and the matter came before the ET, who found that the relevant clause 12.2 of the Implementation Agreement could be incorporated into individual contracts and that the respondent had been entitled to impose the new pay structure once the job evaluation and review of grading structures was complete, regardless of union agreement.

In this appeal, counsel for the claimants argued broadly that i) the Implementation Agreement should not be incorporated into individual contracts as it was "aspirational in nature" and did not deal with individual entitlements and ii) in the alternative, the ET had erred by, among other things, failing to give weight to the presumption against a power of unilateral variation in a contract. Lady Smith reviews the relevant law and authorities including the Court of Appeal judgment in Griffiths, which she noted was not binding but covered almost identical issues. She agrees with the ET's findings on the Implementation Agreement, and clause 12.2 within it, noting that the clause states that existing pay models would remain in place until "superseded by local arrangements" rather than "local agreement".  She also finds that, in the circumstances,  the employers did have a power to vary and that there had been no evidence  on the intentions behind the 1999 agreement so the ET had not failed to give sufficient weight to that factor. 
______________________

Appeal No. UKEATS/0029/09/BI

EMPLOYMENT APPEAL TRIBUNAL

52 MELVILLE STREET, EDINBURGH, EH3 7HF

At the Tribunal

On 26 January 2010

Before

THE HONOURABLE LADY SMITH

MR J KEENAN MCIPD

MS A MARTIN

MR M AGNEW AND OTHERS (APPELLANT)

NORTH LANARKSHIRE COUNCIL (RESPONDENT)

Transcript of Proceedings

JUDGMENT

For the Appellant
MR AIDAN O'NEILL (One of Her Majesty's Counsel)

Instructed by:
Messrs Thompsons Solicitors
Berkeley House
285 Bath Street
Glasgow
G2 4HQ

For the Respondent
MR JAMES PEOPLES (One of Her Majesty's Counsel)
MR DOUGLAS FAIRLEY (Advocate)

Instructed by:
Head of Legal Services
North Lanarkshire Council
Civic Centre
Windmillhill Street
Motherwell
ML1 1AB

CONTRACT OF EMPLOYMENT

Incorporation into contract

Two hundred and fifty local authority employees claimed unlawful deductions from wages when the Council implemented a new pay model in accordance with single status agreement (a collective agreement); individual contracts of employment stated that terms and conditions incorporated collective agreements negotiated nationally from time to time. The Employment Tribunal concluded that a particular term of the collective agreement was apt for incorporation into the individual contracts and its effect was that the Respondents had been contractually entitled to implement the new pay model. The Employment Appeal Tribunal agreed and dismissed the appeals, the result of which was to confirm the Tribunal's dismissal of all claims.

1. This is an appeal by a group of about 250 local authority employees from the judgment of an Employment Tribunal sitting in Glasgow, Employment Judge Susan Walker, holding that the respondent employer was:

"…entitled to rely on Clause 12.2 of the 'Red Book' as the basis for implementing a new pay and grading structure on 6 November 2006 and that, therefore, the claims shall be dismissed."

1. We will continue referring to parties as Claimants and Respondents.

1. The Claimants had presented claims to the Employment Tribunal in which they complained of having suffered an unlawful deduction from their wages in respect that the Respondents had, put shortly, imposed new terms and conditions on them without their agreement; the effect of that was, they said, that they had suffered a unwarranted diminution of pay.

1. Mr Agnew's contract of employment, which is representative of all the Claimants' contracts, is dated 10 September 2004 and includes the following provisions:

"7. Salary:

(a) Job Grade AP4/5

(b) Scale of Payment £19,632 to £24,396

(c) Salary Placing Your commencing salary will be £23,052 increasing by annual increments up to the maximum of the scale.

…………………

20. Other Terms and Conditions: Your terms and conditions of employment incorporate collective agreements negotiated from time to time by the Scottish Joint Council for Local Government Employees as adopted and amended by the Council and supplemented by any local collective agreements.

The national terms and conditions referred to are covered by collective agreements embodied in the Scheme of Conditions for Scottish Local Government Employees ie the "Red Book" and the implementation of those conditions is on a phased basis.

These terms and conditions form part of your contract of employment with the Council and copies of the collective agreements are accessible to you at your workplace or departmental headquarters. From time to time, variations in your terms and conditions of employment, resulting from both national and local negotiations and agreement with trade unions will be separately notified to you or otherwise incorporated in the documents to which you have access.

The Council undertakes to ensure that such future changes will be entered in these documents, or otherwise recorded for you to refer to, within one month of the change."

1. On 1 July 1999, a national collective agreement was entered into by the Scottish Joint Council for Local Government Employees which had, as its broad objective the provision of a single set of terms and conditions for all local authority employees, irrespective of the nature of their employment. That single set of terms, contained in what has come to be known as the "Red Book" and commonly referred to as the 'single status agreement' was intended to replace a system whereby terms and conditions relating to manual workers had been contained in one collective agreement (the "Green Book"), and terms and conditions relating to administrative employees ('APT&C') had been contained in a separate collective agreement (the "Blue Book"). This is not first time that this Tribunal has had to consider the nature and effect of the Red Book.

1. The Red Book was the result of lengthy and detailed negotiation between employers' representatives and the relevant trade union representatives. The Tribunal found that the wording of the Red Book had been negotiated line by line and sometimes word by word. It was not, on their findings "an agreement entered into carelessly or without consideration". (paragraph 12 of their judgment) and that is consistent with the impression we have gained from other appeals we have heard concerning it.

1. The documentation in the Red Book begins with what is referred to as an "Implementation Agreement". There was some discussion before us as to whether, strictly, it forms part of the Red Book or not. For instance, at paragraph 2 it states that the Scottish agreement "will consist of a new handbook to be known as the Red Book" (and that the Red Book will comprise four parts beginning with Part 1, which follows on from the Implementation Agreement). That might be thought to indicate that it is not regarded by parties to the collective agreement as being part of the Red Book. As against that, however, the "Implementation Agreement" has been physically included within the red binding of the 'Red Book' and its pagination runs sequentially from the page at the start of the Implementation Agreement to page 64, which goes beyond the end of Part 4 so as to include various appendices. Ultimately, however, we agree with Mr Peoples that it does not matter whether the Implementation Agreement is part of the Red Book or separate from it because there can be no doubt that the Implementation Agreement is a collective agreement and the Claimants' contracts of employment plainly refer to all collective agreements entered into from time to time, not solely to the Red Book.

1. Returning to the Implementation Agreement, it expressly states that what is contained in it sets out what has been agreed between the parties to the collective agreement about bringing the terms of the Red Book into effect. Paragraph 1 states:

"1. This provides for the implementation of the agreement between the Scottish Employers and the Trade Unions to a) introduce a new Scottish agreement in place of the APT&C handbook (Blue Book)) (including provision for Nursery and Residential staffs) and the manual handbook (Green Book); and to merge the existing negotiating machinery for APT&C and Manual Workers."

1. An important part of the agreement referred to relates to pay. Manual workers were formerly paid on an hourly rate basis according to their grade, and APT&C employees were formerly paid on an annual salary basis within a scale comprising incremental steps, identified by reference to a grade (such as Mr Agnew's grade of AP4/5). Under the Red Book, however, that changes; all persons employed, whether manual or administrative, are to be paid by reference to a single pay scale containing a spinal column. Paragraphs 10 – 12 of the Implementation Agreement explain:

"10. Employees on former APT & C scales shall be entitled to progress to the top of their pay scale in accordance with existing arrangements for incremental progression, until superseded by job evaluation and assimilation to the new spinal column.

11. The grading structures for former Manual Workers and former APT&C staff will remain in effect until superseded by local arrangements following job evaluation. Allowances protected under this arrangement, for example nursery staff special education needs allowance and social workers' standby allowance, will be uprated in line with Scottish pay settlements.

12.

12.1 To fulfil a key objective of single status employment, fair and non discriminatory grading structures are needed at local level to integrate former APT&C staff and former Manual Workers. A job evaluation scheme is being jointly developed which will be recommended to councils for their use.

12.2 Councils should review their local grading structures, including whether or not to operate a system of pay scales as opposed to single pay points. In conducting such a review, representatives of the recognised trade unions will be fully involved. Once such a review has been completed, the local grades, using Scottish spinal column points, will supersede the existing Scottish grading provisions. A standard protection against loss of remuneration, following job evaluation, has been agreed by the Scottish Joint Council."

1. So far as that protection against loss of remuneration is concerned, paragraph 19 of the Implementation Agreement sheds further light. It sets out an important aspect of the pay protection agreement:

"19. Protection at assimilation on to the new spinal column for all employees including bonus earners will be for three years on a cash conserved basis. This timescale has regard to the increased potential for equal pay claims should protection be allowed to extend beyond that period."

1. We would also observe that paragraphs 13 and 14 of the Implementation Agreement refer to individual employees having rights of appeal in respect of the grading afforded to them once job evaluation is completed. It is envisaged that individual employees will have individual rights of appeal. Paragraph 13 refers to "employees grading appeals" and paragraph 14 refers to the formation of an Appeals Panel which is to subsist during the job evaluation exercise and thereafter, to a mechanism being put in place whereby 'individual's rights under the scheme including the job evaluation scheme' can be determined.

1. The Tribunal explain that groups comprising representatives of the relevant unions and of the respondents met to consider various issues that arose from the need to carry out job evaluation and determine on future pay models between November 2006 and September 2006. Job evaluation was completed. No agreement was reached between the two sides regarding the pay models to be applied in the future. The Respondents' Chief Executive had understood that if agreement as to a pay model could not be reached with the unions, the Respondents would have to dismiss the workforce and offer re-engagement on new terms and conditions. However, the advice of senior counsel was taken and, following receipt of that advice, the Respondents decided to go ahead and impose a new pay and grading structure without the agreement of the employees or their representatives.

1. So it was that on 26 September 2006, letters were sent to all employees advising them that a new pay structure that had been determined on by the Respondents would be implemented with effect from Monday 6 November 2006. A number of employees objected.

1. A collective grievance procedure ensued. It was not upheld.

1. The Tribunal rejected the Claimants' claims. Their reasons for doing so are clearly explained. Put shortly, they were satisfied that clause 12.2 was apt for incorporation into individual contracts of employment, that it had been interpreted into the Claimants' contracts and, further, that their interpretation of it was to the effect that the Respondents had been entitled to impose the new pay structure on the Claimants once job evaluation and their review of pay and grading structures was complete, notwithstanding the absence of union agreement.

1. The issues that emerged from parties' submissions were:

i. whether or not the terms of paragraph 12.2 of the Implementation Agreement were apt for incorporation into the individual contracts of employment ?

ii. if so, what was its meaning and effect? Did it provide the respondents with a contractual basis for introducing a new pay and grading structure on 6 November 2006?

1. Without wishing to afford inadequate recognition to the submissions that were carefully presented to us, it seemed, in the end of the day that the differences of approach could be shortly summarised.

1. Mr O'Neill's repeated theme was that collective agreements were presumed not to be enforceable: Trade Union and Labour Relations (Consolidation) Act 1992 s.179. That was the context against which the construction exercise required to be carried out. Context was everything. In that and the whole circumstances, the Implementation Agreement was not apt for incorporation into the individual contracts of employment; it did not deal with individual entitlements but was purely aspirational in nature being a non-legally binding measure of the parties' intentions. Those circumstances included that the Respondents' case was that paragraph 12.2 conferred on them a power unilaterally to impose contractual variation.

1. In the event that paragraph 12.2 was considered to be contractual in nature, the Tribunal had, according to Mr O'Neill, erred in its conclusions since it had failed to give due weight to (i) what he referred to as "the law's presumption against a power of unilateral variation being afforded to any party to a contract" meaning that any language that might be thought to confer such a power required to be clear, and (ii) their finding that at local level, parties had acted on the basis that they were working to reach agreement as to a 'whole package' and their intention was not to deal with pay and grading in isolation (see paragraph 13 of the Tribunal's reasons). That showed that there was a common subjective intention that agreement was required before pay and grading could be changed and weight ought to have been given to that factor. He did not, however, suggest that any such common intention or understanding between parties at local level was conclusive of the issue.

1. Mr Peoples, on the other hand, saw matters rather differently. It was plain from the terms of paragraph 20 of the contract of employment that all national collective agreements were incorporated. That included the Implementation Agreement. Whilst the Appellants sought to minimize its importance, it was critical. It contained reference to individual entitlements, not just to broad aspirations. The plain impression from the way that it was drafted was that it envisaged the matters referred to in paragraph 12.2 would take place. It set out a process which was to be followed and it set out what would be the consequences if that process was followed, namely that the new local pay and grading determined upon would supersede the "old" Scottish grading provisions. It was wrong to refer to it in terms of unilateral imposition of variation. The whole sequence of events had to be considered. As to the references to efforts to reach agreement and that being what the Respondents and the unions had envisaged, locally, would happen, that was of no moment. Of course it was preferable to try to reach agreement but that was not to say that the contracts did not allow for the final stage of the process to occur without specific agreement about it. The Tribunal had not erred.

1. Counsel referred to a number of authorities in the course of submissions and we refer to these and their respective imports, below.

1. A collective agreement is any agreement or arrangement made by or on behalf of one or more trade unions and one or more employer or employers' association and relating to matters such as terms and conditions of employment. The fact that a collective agreement has been entered into does not, of itself, affect individual contracts of employment even if it is relevant to employees and their employment. As Mr O'Neill points out, there is a statutory presumption against a collective agreement being legally enforceable between those who are parties to it (TULRA **s.179) but we cannot accept that the fact that Parliament thought fit to restrict the circumstances in which claims could be made between those who are parties to a collective agreement makes it less likely that the terms of such an agreement are apt for incorporation into an individual contract of employment. It is not unusual for a contractual document to refer for terms to another document which does not of itself have contractual effect.

1. Accordingly, the terms of a contract of employment may be found not only in the individual contract but also in a collective agreement. When employer and employee are at issue as to whether or not some of the terms on which a person is employed are to be found in a collective agreement, certain questions arise. The first is whether the contract contains wording which makes it clear that the terms of the collective agreement are incorporated; parties were not at issue on this question. They appeared to be in agreement that, as a generality, the collective agreement was incorporated. The second is whether the term or terms relied on are apt or suitable for incorporation. A third question may arise, namely what actually is the meaning of the incorporated term? There may be cases where the second and third questions are inextricably linked; it may not be possible to reach a view on the aptness of incorporation without first determining what exactly the clause means.

1. The approach outlined above was summarized in Alexander v Standard Telephones and Cables Ltd (No.2) [1991] IRLR 286 **in the well known passage where, at paragraph 31, Hobhouse J said:

"…The relevant contract is that between the individual employee and his employer; it is the contractual intention of those two parties which must be ascertained. In so far as that intention is to be found in a written document, that document must be construed on ordinary contractual principles. In so far as there is no such document or that document is not complete or conclusive, their contractual intention has to be ascertained by inference from the other available material including collective agreements. The fact that another document is not itself contractual does not prevent it from being incorporated into the contract if that intention is shown as between the employer and the individual employee. Where a document is expressly incorporated by general words it is still necessary to consider, in conjunction with the words of incorporation, whether any particular part of that document is apt to be a term of the contract."

1. The question of whether or not a term of a collective agreement is, as Hobhouse J put it "apt" for incorporation into an individual contract of employment arises because it is not unusual for a collective agreement to include some terms which are not capable of being read as relating to individual contracts of employment or as envisaging that the creation of enforceable rights between employer and employee will follow from them. As Keene LJ observed in Kaur v MG Rover Group Ltd [2005] ICR 625:

"…..even in cases of express incorporation of a document it is still necessary in Hobhouse J's words, to consider whether any part of that document 'is apt to be a term of the contract'. When dealing with collective agreements made between an employer and trade unions, there may well be certain provisions which are clearly not intended to give rise to legally-enforceable contractual rights between the employer and the individual employee. As Scott J indicated in National Coal Board v National Union of Mineworkers [1986] ICR 736 such collective agreements may deal with the appropriate mechanisms for dealing with industrial disputes or for collective bargaining, matters patently not intended to be legally enforceable by the individual employee. One must therefore look at the content and the character of the relevant parts of the collective agreement to determine whether they are apt to be a term of the individual contract of employment".

1. Thus, the nature and import of the term in question has to be assessed, as does its meaning. That having been done, a view has to be reached as to whether it relates to individual contracts of employment in such a way that the creation of some enforceable right, or perhaps duty, as between employer and employee was anticipated at the time when the collective agreement was entered into.

1. We would also refer to the case of Griffiths & Moore v Salisbury District Council [2004] EWCA 162. In doing so we do not suggest that it is binding on us. It is not. We recognise that there have been occasions in the past when the appellate courts north and south of the border have not agreed on employment law issues; Caulfield and others v Marshalls Clay Products Ltd [2004] ICR 1502 CA (rolled up holiday pay) is an example. Griffiths does, however, involve issues which were almost identical to those which arise in the present case and we consider it appropriate that we, at least, have regard to how those issues were resolved by the Court of Appeal. We would add that on one view, for the purposes of the Respondents' argument, the circumstances of the present case are a fortiori those in Griffiths since, there, agreements regarding pay protection had yet to be agreed at local level whereas, as is evident from the terms of paragraph 12.2 (and paragraph 19) of the Implementation Agreement in this case, no uncertainties regarding pay protection subsisted by the time the collective agreement was concluded.

1. In Griffiths, the Court of Appeal considered whether or not a term of a collective agreement concerning a change in local authority employment in England to a "single status" basis had contractual effect. The collective agreement in Griffiths was known as 'the Green Book' and was used as a template by those who negotiated and agreed the collective agreement with which the present case is concerned (see Tribunal's reasons at paragraph 2(ii)). The term under consideration in Griffiths was:

"12.2 Local authorities should review their local grading structures, including whether or not to operate a system of pay scales as opposed to single pay points. In conducting such a review, representatives of the recognized trade unions should be fully involved. In conjunction with local grading reviews the authority and the unions shall agree the terms on which there should be protection against loss of remuneration. Once such a review has been completed, the local grades, using national spinal column points, will supersede the existing national grading provisions and scales referred to in Appendix 1 to Part 3".

1. That is, apart from the reference to pay protection still requiring to be agreed at local level, the terms are identical to those in paragraph 12.2 of the Implementation Agreement in this case.

1. The judgment of the Court of Appeal records that, subsequent to the conclusion of the Green Book agreement, pay protection was agreed between the defendant authority and the relevant unions. Thereafter the local authority adopted a new pay and grading structure. The Court of Appeal roundly rejected the argument that clause 12.2 was not apt for incorporation. At paragraph 13, Lord Justice Peter Gibson explains:

"All these clauses, not to mention Part 3, paragraph 1 of the Green Book, contemplate that there will be a regrading: it may be a question whether the Council is obliged to start the exercise of regrading but whether it is or not, the clauses to my mind make clear that, if there is a regarding, and if it is done in consultation with the recognised unions and if the unions agree to terms for the protection from loss of remuneration (if any) then the regrading is to take effect. Clauses 11 and 12 of the Implementation Agreement use the natural language of obligation ('will remain in effect…until superseded', "will supersede the existing national grading provisions and scales") and in my judgment are entirely apt for incorporation as legally binding commitments into the claimant's contracts of employment. If Mr Moore's arguments are correct, the Council, even if it had completed the review contemplated by clause 12.2 in full consultation with the unions, could decline to regard itself as bound by any upgrading. One imagines that that would not be exactly welcome news for the majority of the Council's employees who have in fact benefited from the review".

1. The Court of Appeal also rejected an argument to the effect that clause 12.2 did not permit the local authority to do as it had done because that amounted to the imposition of a unilateral variation of the contract of employment to the detriment of employees in that it resulted in a loss of salary. It did so on two grounds. The first was that 12.2 did not confer a power unilaterally to vary the contract to the detriment of the employee; there was provision for agreement with the unions as to pay protection. The second and separate reason was that they considered the clause to be clear in its terms (see: Lord Justice Peter Gibson at paragraph 16).

1. Turning to the issue of interpretation (in this case the interpretation of paragraph 12.2 of the Implementation Agreement), the ordinary rules apply. Reference was made, appropriately, by Mr O'Neill to the case of Chartbrook Ltd and another v Persimmon Homes Ltd and another [2009] UKHL 38 [2009] 1AC 1101 a recent decision in which their Lordships reaffirmed that the principles on which a contract should be interpreted were as summarised in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1WLR 896 at 912- 914 **namely that the question is:

"…what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to mean". (Lord Hope at paragraph 14 in Chartbrook)".

1. The relevant background knowledge in this case would include the matter to which we refer at paragraph 6 above, namely that the wording of the collective agreement under consideration had been:

"...negotiated line by line and sometimes word by word. This was not an agreement entered into carelessly or without consideration." (paragraph 12 of the Tribunal's reasons).

1. It would also include that the collective agreement was entered into against a background whereby manual workers and APT&C workers had been employed on different terms and conditions, including different pay and grading provisions, and there was a desire to move to 'single status' employment for all those workers.

1. We begin by considering the nature of paragraph 12.2.

1. Paragraph 12.2. is part of the "Implementation Agreement". That agreement seems to us to be a vital part of the structure of the entire collective agreement. It sets out how it is that the move to single status employment is going to be achieved. We do not accept that it contains only purely aspirational terms and that none of them are apt for incorporation into individual contracts of employment. Nor do we agree that it is merely an 'Executive Summary' as was also, at one point, suggested by Mr O'Neill. We consider it appropriate to have regard not only to paragraph 12 but also to paragraphs 10, 11, 13, 14, 15, 19 and 21 of the Implementation Agreement. They all concern employees' rights: the right of former APT&C employees to progress to the top of the scale on which they were employed under the old regime "until superseded by job evaluation", the right of both sets of employees to remain on their old grading structures until 'superseded by local arrangements following job evaluation', the rights of both sets of employees regarding appeals against job evaluations which affect them, the right to a basic working week of 37 hours, the right to pay protection as agreed with the unions for a period of three years, and the right to have pre and post 30 June 1999 service treated as continuous service. Those rights are all referred to in the context of a process, envisaged by paragraph 12, concerning the move to single status employment. Key elements of that move are the carrying out of job evaluation studies and, in the light of the results of those studies, reviewing local grading structures. The latter relates to a key provision of any contract of employment, namely, pay. The paragraph looks to the end result of the process being that a new pay structure will be put in place, a pay structure which involves using a single set of Scottish spinal points in place of the "old" grading provisions which involved two different systems of grading for pay purposes.

1. We also consider that there is no tension between the terms of clause 12.2 of the Implementation Agreement and the terms of clause 1 of the ensuing Part 3, which begins at page 31 of the Red Book. Mr O'Neill at one point suggested that it was the operative provision regarding pay and grading, not any part of the Implementation Agreement and that clause 1.3 only related to new employees. On the contrary we read Part 3, which is headed "Other National Provisions" as being quite consistent with clause 12.2. Clause 1.1 of Part 3 specifies what is to happen as regards pay and grading pending completion of job evaluation. Interestingly, it specifies that it remains as before

"until superseded by local arrangements following job evaluation."

1. It is, we consider, of note that in a carefully worded agreement, the terms "local arrangements" are chosen rather than 'local agreement' when referring to the matter of new pay structures superseding the old ones. "Arrangement" is a term which is indicative of something other than agreement. If agreement was being envisaged, parties could reasonably have been expected to say so, particularly since the language of obligation is used elsewhere in the document.

1. Turning to clause 1.3 of Part 3, which refers to assimilation of all employees to the new spinal column by 31 March 2004, and to those on recruitment or training rates being moved onto that spine as soon as they are undertaking a full range of duties, we do not see that it somehow shows, as was suggested, that regard was overall being had only to new, post March 2004 employees. Nor do we accept that it detracts at all from the meaning which we attribute to clause 12.2 of the Implementation Agreement. It adds to it but does not take anything away.

1. Nor do we consider that the clause is inapt for incorporation by reason of the fact that it looks to what will happen in the future, as was suggested. That factor does not detract from the context being that it is very much to do with the resultant employer/employee relationship on a matter of fundamental importance.

1. Turning to the correct interpretation of 12.2, we are not persuaded that it properly falls to be categorised as a clause which empowers an employer unilaterally to vary a contract of employment to the detriment of the employee. That is to put matters too starkly and ignores the context. As Mr O'Neill himself recognized, context is important and the relevant context is that the resultant change to the individual's terms and conditions of employment was the implementation of an agreement which was struck at national level and it followed a review of grading at local level in full consultation with employees' representatives. We observe also that it was what was envisaged as the end result of the process set down in the national agreement. Furthermore, we find the language used to be clear. Mr O'Neill suggested that it was indicative only of prediction, but, like the Court of Appeal in Griffiths, it seems clear to us that the reasonable person with the relevant background knowledge would conclude that "will" was used as language of obligation. Whilst it might, as the Court of Appeal in Griffiths** noticed, be arguable that local authorities are not, given the use of the word 'should' in the first line, obliged to review their local grading structures, it seems to us without doubt, given the use of the word "will" twice, later on in the clause, that if a local authority does do so then it is obliged to carry out its review in consultation with the relevant trade unions and must recognise that, on completion, the reviewed grading structure has to apply. If it does not then any employee who would have benefited from the new structure would have justified cause for complaint, assuming incorporation of the collective agreement into his contract. In fairness to Mr O'Neill, he recognised that that created a difficulty for his argument. His answer was that it only meant that such an employee would not have an unlawful deduction from wages claim. It would, he said, be open to him to seek redress down other avenues such as an equal pay claim. With respect, that is not a satisfactory answer. It cannot be right to eschew a contractual interpretation that seems to be the right one because a party who would lose out might have another, none contractual, remedy, particularly where it is a far less straightforward remedy, as would be the case were that hypothetical benefited employee forced to make an equal pay claim.

1. It follows from the above that even if Mr O'Neill was correct to refer to there being a legal presumption against a power of unilateral variation being afforded to a party to a contract, regarding which we have some doubt, the circumstances of this case are such as show that on a proper interpretation of the contract, the employers did have the requisite power to vary. We bear in mind the discussions in cases such as Wandsworth London Borough Council v D'Silva [1998] IRLR 193 **on the matter but it is sufficient for present purposes to note that the essence of the judgment of Lord Woolf MR, as he then was, was that "clear language" was required to reserve to one party such a power and that, in our judgment, the words of paragraph 12.2 are quite clear in that regard.

1. We turn to the argument for the Claimants that the Tribunal failed to accord due weight to a finding they made at paragraph 13 which was:

"all parties at local level acted on the basis that they were working to agree a whole package and that the intention was not to deal with pay and grading in isolation."

1. It was suggested that that showed that the tribunal had found that there was consensus between the parties to the effect that they could not move to implementation of the new pay and grading structure without agreement. That showed what parties' intentions were, it was said, and the Tribunal required to give weight to that factor.

1. We do not agree. Firstly, we do not read the Tribunal's findings as being to the effect that parties to the contracts of employment agreed that they required to reach agreement before the new pay and grading structure could be implemented. The fact that parties in such circumstances try to reach agreement is sensible and understandable and is not indicative of their having taken a particular view of their contractual rights or obligations or indeed of their having reached a separate agreement. Rather, the impression from the Tribunal's findings is that they had not thought about what their contractual position was until they reached the point of concluding that they were not able to reach agreement with the unions. Secondly, in cases where the common intention of parties to a contract is relevant (see: Chartbrook; Investors Compensation Scheme), the tempus inspiciendum is at and immediately prior to the time of conclusion of the relevant contract, in this case, the collective agreement. There was, though, no finding that the intention of the parties to the collective agreement, at the time it was entered into was that the consent of employees or their representatives would be required before there could be implementation even where the process set out in paragraph 12 had been carried through. There were no findings in fact at all as to what those parties intended regarding implementation of new pay and grading structures at the time when the collective agreement was entered into in 1999. No evidence about that matter appears to have been led.

1. In conclusion, we agree with the Employment Tribunal that the Respondents were entitled to rely on clause 12.2 as the basis for implementing the new pay and grading structure which they introduced on 6 November 2006.

1. In these circumstances we will pronounce an order dismissing the appeal.