The claimants worked on new Covent Garden market as registered porters. Registered porters were paid a basic wage plus a sum for porterage, which was pay for the transportation of the produce onto the vehicles. Non-registered porters received the basic pay but not the porterage. The collective agreement, which was formulated in 1974, stated that the porterage rate should be paid by the employer into a porterage pool for all the porters employed by him and then shared out equally. At the time the agreement was made there were no non-registered porters. The claimants claimed unauthorised deductions from wages on the basis that the porterage pool was divided between registered and non-registered porters, which meant the registered porters received less than they would have if the non-registered porters were not entitled to a share. They won at the ET and the employer appealed.

The EAT allowed the appeal. There was no distinction between registered and non-registered porters – the purpose of the porterage scheme was to reward those workers who did heavy lifting and a person who performed the duties of a porter was to be given money for doing so.

In this judgment Rimer LJ identifies that the question revolved around the construction of the 1974 collective agreement. He then supports the conclusions of the EAT that the reason the collective agreement

"focuses on registered porters is because, at the time it was made, registered porters were the only species of porter known to the Market. It appears to me, however, unreal to interpret the agreement as intended to prescribe that, in circumstances in which the qualifications to work as a porter in the Market changed, and unregistered porters could also lawfully work there, the porterage earned by all porters was nevertheless to be paid exclusively to registered porters. "

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Case No: A2/2012/1415

Neutral Citation Number: [2013] EWCA Civ 412

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL

His Honour Judge McMullen QC (sitting alone)

UKEAT/0571/11/SM

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 26/04/2013

Before :

THE PRESIDENT OF THE QUEEN'S BENCH DIVISION

LORD JUSTICE MOORE-BICK

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LORD JUSTICE RIMER

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Between :

GARRY HAY AND OTHERS (Appellants)

- and -

(1) GILGROVE LIMITED; (2) C&C FRUIT & VEG LIMITED (Respondents)

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Mr Ben Cooper (instructed by Pattinson & Brewer) for the Appellants

Mr Oliver Segal QC and Mr Deshpal Panesar (instructed by RBS Mentor Services) for the Respondents

Hearing date: 24 January 2013

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Judgment

Lord Justice Rimer :

Introduction

1. This appeal is against an order of the Employment Appeal Tribunal ('the EAT') dated 10 April 2012 made by His Honour Judge McMullen QC. Judge McMullen thereby allowed an appeal against the judgment of the London South Employment Tribunal ('the ET') (Employment Judge Tsamados) that was sent, with reasons, to the parties on 12 July 2011. Judge Tsamados had upheld the claimants' claim that the respondent employers had made unauthorised deductions from their wages contrary to section 13 of the Employment Rights Act 1996. Judge McMullen took the different view that they had not. By their appeal, the claimants seek to restore the ET's judgment.

1. The first three claimants, Mr Hay, Mr Watson and Mr Allen, are employed by the first respondent, Gilgrove Limited ('Gilgrove'). The fourth and fifth claimants, Mr Mole and Mr Hurst, are employed by the second respondent, C&C Fruit and Veg Limited ('C&C'). The two sets of claimants brought separate claims, but as the claims all raised the same issue they were combined into one set of proceedings and heard together. The issue is as to the construction of a term of a collective agreement made in 1974 between employers and a union, a term accepted as having been incorporated into the claimants' contracts of employment.

The background

1. The claimants are porters working at New Covent Garden Market ('the Market'). Their employers are fruit and vegetable importers. The role of a porter is to move goods on behalf of customers. The only formal qualification required for the job is a certificate of competence to drive a forklift truck. Gilgrove currently employs four porters, of whom three are claimants. C&C employs three porters, of whom two are claimants. The claimants are each 'registered porters'. The fourth porter employed by Gilgrove and the third porter employed by C&C (neither is a party) are 'unregistered porters'.

1. 'Porterage' is a charge made by the employers to customers for the movement of goods (moving, stacking, loading etc). The payment and distribution of porterage is administered by the employer. It has traditionally been pooled and shared between registered porters in accordance with the number of porters employed. When a porter is on holiday, he receives no porterage and the other porters receive an increased share. Porterage is included in the porters' pay slips and is subject to the deduction of income tax.

1. The present proceedings result from the departure from that tradition so as to introduce unregistered porters to the Market. Despite that change, the registered porters' case is that the porterage entitlement earned by the efforts of both registered and unregistered porters is to be shared exclusively between the registered porters. Not so, say the employers. One might think the fair disposal of such a dispute would require a representative unregistered porter to be a respondent. As I shall explain, it does not.

The 1974 collective agreement

1. Each of the claimants became employed as a porter during the time when a collective agreement ('the 1974 agreement') applied to working systems at the Market. The agreement operated as from 11 November 1974 and was between (1) The Covent Garden Tenants Association Limited, of which the respondent employers are members, and (2) The Transport and General Workers' Union (now Unite), of which the claimants are members. The preamble provided expressly that it was not legally enforceable, but it is agreed that the porterage provisions in it were incorporated into the claimants' contracts of employment. I must set out the material provisions of the 1974 agreement. Neither side relied on Part I. The relevant provisions are in Part II.

1. Clause 1 dealt with hours of work at the Market. Clause 2 provides:

'2. DUTIES

Porters

(a) Offload incoming produce – check – book in stack and sort to quality, variety and sizes on pallets.

Put on show of samples not exceeding the limits of the brass line, and the front access to be kept free and return to stacks at the end of the day such an amount not to be unreasonable.

Open and close premises if required.

Use such mechanical equipment as provided – subject to the necessary training being given.

Deliver produce to the customers stand or vehicle within the Fruit and Vegetable Market Area (no produce to be delivered to the Flower Market).

Straighten up stacks and clean stand of refuse caused by the days trading.

Receipts for outgoing produce to be obtained subject to the employers instructions. Where receipts are unobtainable and the employers instructions are to return the goods to the premises, there shall be a payment of double porterage in addition to the porterage payment when the goods go out again.

(b) The Registered Porters have the right to handle all produce within the precincts of the Market whether physically passing through the employers premises or not. All loads consigned to a merchant delivery of which is accepted by him on presentation within the Market area and partially or wholly unloaded including samples shall be regarded as being physically handled.'

Part II neither defines a 'registered porter', nor states whether a 'registered porter' as referred to in clause 2(b) differs from the general 'porter' referred to in the sub-heading above clause 2(a) and in other provisions of Part II.

1. Clause 3 provides that 'when goods are transferred from one stand to another, or from one vehicle to another, full porterage payment shall be made'. Clause 4 contains another reference to 'porterage'. Clause 5, 'Porterage', provides:

'The employer shall be responsible for the payment of porterage as per the agreed porterage schedule, which shall be shared in equal parts between the foreman, porters and temporary porters (if any) employed on the stand (or stands where mutually agreed to extend the porterage to cover such stands) on the basis of the number of days in attendance.'

1. Clause 7, 'Special Loads', contains another reference to a 'registered porter', and provides:

'Loads driven by foreign drivers, and any vehicle whose original departure point was outside the United Kingdom shall only be unloaded by registered porters covered by this agreement. Where it is agreed necessary for a Registered Porter/s to get aboard a vehicle for the purpose of off-loading the produce, there shall be a payment made as per the agreed schedule as set out in Appendix II.'

1. Clause 9 is headed 'Porters not in permanent employment'. These are casual workers and clause 9 provides for a special rate of pay for 'such porters', who are not regarded as weekly employees. Clause 10, 'Foreman porter', provides for there to be at least one 'Foreman Porter' on each stand, to be appointed by management after consultation with the porters employed on that stand. Clause 11 provides for the holiday entitlement of 'each permanent porter'. Clause 12 provides for consultation 'with the Porters' on the numbers to be employed whenever the Market is opened on Good Friday. Clause 14 provides for the payment of sickness benefit to 'a porter … absent through ill health'. Clause 18 sets out the procedure applicable when an employer wishes 'to reduce its Portering Staff through lack of business …'. Clause 19 contains a third reference to 'registered porter' and provides for the appointment of a liaison officer whose duty is to liaise between the employers and the union 'on all matters relating to the allocation of Registered Porters to Employers on a permanent or temporary basis …'.

1. Clause 20 provides for the establishment of a 'Registration Committee', the registration relating to that of porters. Clause 20(c) provides that 'each man applying for registration' shall be vetted by the committee, and clause 20(d) provides that 'each registered porter' shall be issued with a registration card issued by the liaison officer, which is to be carried at all times when the porter is in the Market and to be produced on request by any of various identified people. Clause 20(e) provides that registration cards are not transferable and must be surrendered to the liaison officer upon leaving employment as a 'registered porter'. It appears that the expression 'registered porters' in the 1974 agreement simply means porters registered by the clause 20 committee. Clause 21 provides that it is a condition of employment that 'all workers covered by this agreement' will be members of the TGWU. Clause 22 provides for a 'guaranteed minimum weekly fall back wage' for 'each Regular Porter', a term that is not defined. Clause 23 refers to the provision to 'the porter' of his necessary tools of trade. Clause 25 provides for the notice to be given by employer or employee for the termination of employment, with clause 25(b) providing for the length of notice to be given to 'a porter' to depend upon his length of service.

The porterage schedule

1. This is referred to in clause 5 of the 1974 agreement. The only schedule in evidence dates from 1961. It related to a predecessor collective agreement, and no doubt its rates of payment have been updated. Paragraph 2 provides:

'The porterage rates set out in the Schedule shall be paid by the employer into a porterage pool for all the porters employed by him in respect of all produce covered by Clause 3(xiii) of the Joint Trade Agreement.'

The issue

1. On 4 December 2008, the Tenants' Association gave notice terminating the 1974 agreement at the end of March 2009. Following the retirement of one of its porters, Gilgrove employed a replacement porter; and C&C employed an additional porter. The employment of each new porter post-dated the termination of the 1974 agreement. Neither of the new porters was a registered porter. Gilgrove therefore had four porters, of whom three (all claimants) are registered and the fourth is unregistered; and C&C had three porters, of whom two (both claimants) are registered and the third is unregistered.

1. The terms of employment of the unregistered porters differ from those of the registered porters. The registered porters receive a basic wage plus their share of porterage. As for the unregistered porters, the employers did not put their contracts in evidence, and the only evidence as to their terms is from Mr Ashley, a director of each respondent employer. He explained that the unregistered porters 'do not receive a separate payment for porterage. All their pay is wrapped up in their weekly wage'.

1. Judge McMullen provided some agreed figures that helpfully illustrate the difference in treatment between registered and unregistered porters. In general terms, a registered porter receives basic pay of, say, £250 a week, plus a share of porterage which will vary from week to week but may take his overall pay up to, say, £550 a week. In contrast, an unregistered porter receives a higher fixed basic pay of, say, £500 a week and no additional pay for porterage. It follows that in any week, depending on the size of the porterage pool, the registered porters may do better or worse than their unregistered colleagues. The commercial reality is, I understand, that the unregistered porters have surrendered any right they might otherwise have had to a separate share of porterage in exchange for the benefit of a fixed, but higher, basic wage than that payable to a registered porter.

1. The practice for the payment of porterage is as follows. Gilgrove pays each of its three registered porters a basic wage plus a quarter of the total porterage earned by its four porters; and C&C pays each of its two registered porters a basic wage plus a third of the total porterage earned by its three porters. The extra quarter and third share respectively is not paid to any employee, but forms part of the employers' revenue out of which they pay the wages, including those of the unregistered porters. The employers' position is that the registered porters cannot complain, because they receive their proportionate share of the porterage earned by all porters; and the unregistered porters cannot complain that they do not receive a separate porterage share, because they have contracted out of that right.

1. What, therefore, is the problem? It is that the registered porters assert that the incorporation into their contracts of employment of the relevant provisions of Part II of the 1974 agreement entitles them to share between themselves the entirety of the porterage pool earned by all porters, including the unregistered porters: they say that is what the agreement provides. Therefore, each Gilgrove registered porter should receive a third of the porterage pool, not just a quarter; and each C&C registered porter should receive half of the porterage pool, not just a third. So to share the porterage will not injuriously affect the unregistered porters, who have a fixed wage and no additional right to porterage. It may affect the employers, who may have negotiated the terms of the unregistered porters' employment on the basis that the extra share of porterage forms part of the employers' revenue. If so, that is their problem. The claimants' claim is in respect of what they say was an unlawful deduction from their wages of part of their porterage entitlement.

The decision of the ET

1. I do not, with respect, find it easy to extract clear findings of fact from Judge Tsamados's reasons. Although they include a 42-paragraph section headed 'Findings of Fact', it is largely made up of references to evidence and submissions. The judge noted that the documentary evidence was limited and incomplete; and he also noted that the only oral evidence was from two witnesses who did not appear to have any direct or recent experience of the matters to which they spoke. I shall go straight to the judge's conclusions, in paragraphs 62 to 79, which I take as reflecting the factual findings he made.

1. Judge Tsamados described the 1974 agreement as 'in many respects particular and rooted to a point in time'. He referred to it as setting out a system of registration of porters by a committee and including a particular term (clause 5) relating to the payment of porterage to porters. His conclusion, in paragraph 67, was that it was the intention of the 1974 agreement to establish a system by which suitable applicants would be registered as porters, who would thereafter enjoy certain rights and be subject to certain obligations. He said:

'It does not appear to make sense that the Agreement would set up these rights and obligations to persons who could be employed as Porters without having been so registered. My view is that references to the word "Porter" must have been intended to refer to a "registered Porter".'

1. He then posed the crucial question: is each claimant entitled to an equal share of porterage divided between all porters employed by their employer, both registered and unregistered? Or is each claimant entitled to an equal share of porterage divided simply between all registered porters so employed? He went on to find that the registration system had been in place since at least 1980 and had not fallen into disuse. His main conclusion, in paragraph 76, was:

'… I find that [Gilgrove and C&C] more likely than not knew that porterage was only paid to registered Porters and what I am confronted with is a situation in which [they] have diverted [sic: departed?] from the express provisions of the Agreement which they acknowledge form part of the Claimants' terms and conditions of employment. There is no evidence to support any previous variation by the Respondents of the term relating to the payment of porterage.'

1. He therefore upheld the claimants' claim to porterage in the shares they claimed. He directed a remedies hearing to determine the amount of the underpayments. The outcome was that each Gilgrove claimant was awarded about £6,900 and each C&C claimant about £15,000.

1. Judge Tsamados's reasoning was, therefore, that all references to a 'porter' in the 1974 agreement were exclusively to a registered porter and did not include an unregistered porter. Therefore the only porters entitled to share in the 'porterage' that was earned (including that earned by the efforts of unregistered porters) are the registered porters.

The decision of the EAT

1. Judge McMullen recorded counsel's agreement that the 1974 agreement drew no distinction between 'porter' and 'registered porter' and that at the time of the agreement there were anyway no 'unregistered porters'. He noted that there were two types of registration. The first was in the hands of the Market landlord, who required registration of porters with the superintendent. That type of registration had, however, ceased: the landlord no longer required it. The second was that required by the provisions of clause 20 of the 1974 agreement. Despite the termination of the 1974 agreement in March 2009, Judge McMullen recorded that 'registration by the joint committee is still live, although there are, as this case illustrates, non-registered porters'.

1. Judge McMullen turned to whether 'porter' in the 1974 agreement meant only a 'registered porter', a question he rightly identified as one as to the construction of the agreement and so of law. He noted that at the time of the 1974 agreement, all porters were registered, were men and that it was a condition of employment that they be union members. Although the claimants were all members of Unite, it was agreed that the clause 21 condition had ceased to be enforceable and that non-compliance with it did not affect a porter's right to porterage. Judge McMullen posed the question thus:

'As both counsel agree, what has to be decided here is what did the parties mean by a term as it applied to a situation that no one envisaged at the time. No one envisaged you could work in the Market without being in the union or without being registered, and yet both have occurred, as the facts in this case bear out'.

1. To paraphrase Judge McMullen's reasoning, he answered that question by concluding that the intention and purpose of the 1974 agreement were to reward those actually performing the functions of porters in the Market. True it was that, at the time of the 1974 agreement, all those doing such work were registered porters and would be union members. If they were not registered, or were not union members, they would not have been employed as porters. But in his view the objective of the 1974 agreement was not to reward only those porters who satisfied those conditions (as, at the time, all porters would have done) but to reward those actually doing the work, who would incidentally also have satisfied those conditions. If therefore, as they have been, such conditions were to be relaxed, so that an employee can perform a porter's role in the Market without satisfying them, such an employee is as entitled to share in the total porterage earned as is a colleague who does satisfy them: satisfaction of such conditions is not of the essence under the 1974 agreement for an entitlement to share in porterage. Judge McMullen concluded that Judge Tsamados had misdirected himself in the interpretation of the 1974 agreement, and (counsel having agreed that he could decide the matter himself) Judge McMullen allowed the appeal and dismissed the claimants' claims.

The appeal

1. We had elaborate arguments from counsel, but ultimately the question for us is, in my judgment, a short one as to the construction of the 1974 agreement.

1. Mr Cooper, for the appellants, had three submissions. They included, albeit I think only faintly, the adoption of a point raised by the court at the beginning of the argument, namely that there was no evidence that the terms of the (by then terminated) 1974 agreement had been incorporated into the unregistered porters' contracts, so that such porters had no basis for claiming a share of porterage at all. The oral argument quickly illustrated, however, that there was nothing in that point. It is irrelevant whether or not the service agreements of the unregistered porters entitle them to porterage, and the evidence suggests that they probably do not so entitle them: their contracts simply entitle them to a fixed weekly wage regardless of the porterage earned. The appellants' complaint can only be that the employers have paid them less than they ought to have done in respect of porterage. Whether that case is good or bad, its investigation does not require the examination of the pay entitlement of an unregistered porter. The only relevant questions are: (i) to what porterage were the appellants entitled; and (ii) have they received it in full?

1. Mr Cooper's second point was that Judge McMullen was wrong to interfere with Judge Tsamados's decision because the latter's decision was one founded on a finding of fact that he had made and Judge McMullen was not entitled to ignore his finding of fact. The argument proceeded thus: (i) Judge Tsamados held that, when the 1974 agreement first saw the light of day, references in it to 'porters' meant only 'registered porters'; (ii) he found, as a fact, that nothing had happened over the subsequent 37 years to support the employers' contention that the union and the tenants' associations had so conducted themselves as to justify an inference that there had been an implied variation of the terms of the 1974 agreement extending the meaning of 'porters' to include 'unregistered porters' (I paraphrase Judge Tsamados's more economical expression of the point); therefore (iii) he had found as a fact that 'porters' in the 1974 agreement meant, and meant only, 'registered porters'.

1. If that is a fair summary of the argument, its problem is that the conclusion is invalid. Since the interpretation of a document is a question of law, step (i) was a holding of law. Step (ii) was a finding of fact that there had, since the inception of the 1974 agreement, been no implied variation of, or departure from, the original meaning of the agreement. Step (iii) was Mr Cooper's attribution to Judge Tsamados of a finding of fact he did not make. That is because the negative return represented by Judge Tsamados's consideration of step (ii) simply took him back to his initial holding in step (i), namely that, as a matter of law, 'porters' in the 1974 agreement meant, and still meant, only 'registered porters'. The only question is whether he was right about that, and Judge McMullen held that he was not. In so holding, Judge McMullen did not step into a factual arena that had been the preserve of Judge Tsamados. He did no more than correctly grapple with the only point in the case, namely what the 1974 agreement means. That is a question of law.

1. Mr Cooper's third point was that, whilst he recognised that it gave rise to anomalies, Judge Tsamados was anyway correct in his interpretation of the meaning of 'porters' in the 1974 agreement. If, as he submitted, the sense of that agreement was that references in it to 'porters' meant only 'registered porters', there is no answer to the appellants' claim that they are entitled to all the porterage earned in the market, including that earned by unregistered porters.

1. In my judgment, Judge Tsamados may well have been correct that all references in the 1974 agreement to 'porters' were to 'registered porters', since the evidence showed that at the time the only porters in the Market were registered porters: the concept of an 'unregistered porter' working in the Market did not exist, just as the concept of any porter in the market not being a union member did not exist. If, however, Judge Tsamados was also right in concluding that the sense of the 1974 agreement was therefore that only registered porters can share in the clause 5 'porterage', it must follow that the references to 'porterage' in clauses 2 to 5 of the 1974 agreement (as in the 'porterage schedule') can sensibly also only be interpreted as intended to be a reference to porterage earned by registered porters. That is because if the concept of porterage being earned by unregistered porters was beyond the ken of the architects of the 1974 agreement, 'porterage' cannot have been contemplated as covering anything other than porterage earned by registered porters: the purpose of the 1974 agreement cannot rationally be interpreted as having been intended to provide for the payment to one identified group of workers of money referable to the work of a different group of workers. It was obviously intended to do no more than to provide for the sharing between an identified group of workers of earnings to which they had collectively contributed.

1. It seems to me, therefore, that if Judge Tsamados's interpretation was the correct one, it was necessary for him to pursue it to its logical conclusion, which he failed to do. Applying it to the present case, it would mean that each Gilgrove claimant is only entitled to one third of the porterage that the three of them collectively earn, but to not a penny of the porterage earned by their unregistered colleague. Approaching the payment of porterage on a broad brush basis, such third share will likely (although not necessarily) equate to the quarter share that each Gilgrove claimant is currently receiving, although in theory its ascertainment could involve a complicated factual enquiry.

1. Having considered the ultimate logic of Judge Tsamados's preferred approach, I record that neither side submitted that it was the right one, and I need not consider it further. The only alternatives canvassed were: (i) by Mr Cooper, that all registered porters were exclusively entitled between them to the entirety of the porterage earned by registered and unregistered porters; and (ii) by Mr Segal QC, for the respondents, that each registered porter was entitled to no more than a pro rata share of the total porterage earned by all porters.

1. What is the correct answer? In my judgment, Judge McMullen put his finger on it. The 1974 agreement is no doubt about registered porters, and can fairly be read as directed to identifying their entitlement to 'porterage'. The reason, however, that it focuses on registered porters is because, at the time it was made, registered porters were the only species of porter known to the Market. It appears to me, however, unreal to interpret the agreement as intended to prescribe that, in circumstances in which the qualifications to work as a porter in the Market changed, and unregistered porters could also lawfully work there, the porterage earned by all porters was nevertheless to be paid exclusively to registered porters. It is true that the 1974 agreement does not, in terms, reflect that the parties had in mind that circumstances might in the future arise in which unregistered porters could lawfully be admitted to the Market (just as it does not, in terms, reflect that porters who were not union members could or might be so admitted, and no one suggests there has ever been any problem about that). But to attribute to the architects of the 1974 agreement an intention to achieve the consequence for which the appellants contend appears to me to involve the attribution of the absurd. They cannot rationally have intended that, in circumstances in which both registered and unregistered porters could lawfully be employed in the market, the porterage earned by the efforts of the unregistered porters should be shared exclusively by the registered porters. That makes for neither sense nor fairness. In my judgment, the sense of the 1974 agreement is that insofar as it can be read as referring only to registered porters, it was simply using all references to registration as no more than descriptive of what was then a qualification for the job of porter. The description was, however, no more than that. It cannot, in the changed circumstances that were destined to come about, be elevated to the status of a qualifying condition of entitlement to porterage.

1. In my judgment, Judge McMullen came to the correct conclusion. I would dismiss the appeal.

Lord Justice Moore-Bick :

1. I agree.

The President of the Queen's Bench Division :

1. I also agree.