Barts and the London NHS Trust v Verma [2013] UKSC 20

Dr Verma, a part-time hospital practitioner, took a lower-grade NHS training post. The Supreme Court held that paragraph 132 of the NHS terms protects the incremental pay rate, not the amount previously earned, so her protected sessional rate converted to hourly rates applied to all hours worked. Appeal allowed.

Facts

Dr Verma, an oral and maxillo-facial surgeon who originally qualified as a dentist in India, worked in the NHS from 1996. From November 2006 she held a six-month part-time appointment with the Luton and Dunstable Hospital NHS Foundation Trust as a “Trust grade doctor in oral surgery (Hospital Practitioner equivalent) for two sessions per week”. In 2007 she took a post with Barts and the London NHS Trust as a Foundation Year 1 Pre-Registration House Officer – a training post necessary for her to qualify for a consultant appointment.

Her contract was governed by the NHS Terms and Conditions of Service for Hospital Medical and Dental Staff (2002). Paragraph 132 provided that a practitioner taking an appointment in a lower grade for the purpose of obtaining training “shall, while in the lower grade, continue to be paid on the incremental point the practitioner had reached in his or her previous appointment”. Paragraph 135(a) provided that “the rate of salary for a part-time practitioner shall be taken to be the corresponding point in the salary scale”, subject to an exception for part-time medical or dental officers under paragraphs 94 or 105, for whom it is the maximum appropriate to nine notional half-days.

Pay rates were set out in Annex A to the annual Pay Circular. For all grades except Hospital Practitioner the figures were annual full-time figures; for hospital practitioners they were sessional rates. Hospital practitioner posts were limited to a maximum of five notional half-days (sessions) per week, each session being 3½ hours.

The Employment Tribunal held her protection was limited to five sessions (the maximum she could have worked). The Employment Appeal Tribunal (Underhill J presiding) held that paragraph 132 protected the rate, not the amount, so that she was entitled to be paid at her previous incremental point for all the hours worked in the training post. It was common ground before the EAT that sessional rates had to be converted to hourly rates, and that a 40-hour multiplier (rather than 38½) applied. In the Court of Appeal, Elias LJ would have upheld the EAT (subject to one point on calculation), but the majority (Rix and Rimer LJJ) allowed the Trust’s appeal, finding it “counter-intuitive” that the less a part-timer had worked, the more generous the protection.

Issues

The single issue was the construction of paragraph 132 (read with paragraph 135) of the NHS Terms and Conditions: where a part-time practitioner steps down into a full-time training post, does pay protection protect (i) the amount received in the previous post (so that protection is limited to the hours or sessions worked, or capable of being worked, in that post), or (ii) the rate, so that the previous incremental rate is paid for the entirety of the hours worked in the training post?

Arguments

For the Trust, Mr Welch supported the majority reasoning in the Court of Appeal: paragraph 132 speaks of continuing to be paid on the incremental point, and Annex A rates are annual rates or rates per session, not hourly rates; there is no textual basis for converting sessional rates into hourly rates. It would be surprising and counter-intuitive for a practitioner who worked only two sessions per week to receive an annualised figure exceeding a consultant’s salary. He challenged the general approach of the EAT and Elias LJ.

For Dr Verma, Ms Monaghan QC and Mr Kemp relied on the natural reading of paragraph 132 and on paragraph 135(a): the “corresponding point in the salary scale” can only mean the full-time rate shown for that post, and the express exception for paragraphs 94 and 105 practitioners (capped at nine notional half-days) shows that no such cap applies otherwise. Mr Kemp had also researched earlier versions of the terms back to 1949, though neither party suggested this history was decisive.

NHS Employers intervened, explaining that the Hospital Practitioner grade is rare and now closed, with only some 650 practitioners, and that the protection issue was “extremely rare”.

Judgment

Lord Carnwath gave the only judgment, with which Lord Hope, Lord Walker, Lady Hale and Lord Sumption agreed. The appeal was allowed.

Lord Carnwath began by criticising the drafting:

“It is disturbing that a condition designed to confer important rights on employees should be so obscure. The differences of view between such experienced judges, even after the intense analysis to which the condition was subjected in the Court of Appeal, is testament enough that the condition is not well drafted, and requires reconsideration.”

He observed, given the rarity of the grade and the absence of evidence of wider practical problems, that “In retrospect, this may be another case where it would have been better to have left the case where it stood following consideration by the specialist appeal tribunal.”

He declined to resolve the issue by reference to intuition about fairness. The majority in the Court of Appeal had been strongly influenced by the improbability of the EAT’s result on these facts; the EAT and Elias LJ regarded the result as surprising but acceptable as the application of a general rule to an unusual case. Lord Carnwath saw “force in both points of view, but for that reason find neither of much assistance in resolving the issue of construction.”

He therefore applied ordinary principles of contractual construction, citing Lord Hope in Multi-link Leisure Developments Ltd v North Lanarkshire Council [2010] UKSC 47, 2011 SC (UKSC) 53, para 11, on ascertaining the parties’ intention from the words used in their contractual context, giving effect to every word and not adding words that are not there.

Applying that approach, the critical words were “continue to be paid on the incremental point the practitioner had reached in … her previous appointment”. The incremental point was the relevant point on the Annex A scale for her grade, expressed in sessional rates. Because her training post measured work in hours rather than sessions, some conversion was necessary, and “the most obvious way of doing this was by conversion of the sessional rates to hourly rates” – a method which, in any event, had been common ground before the EAT and which Mr Welch offered no convincing reason to disturb.

Crucially, there was no textual foundation for the limitation the Trust asserted:

“However, there is nothing in the wording of paragraph 132 which can be relied on to support the limitation which he asserts. One might have expected to find such a limitation in the interpretation provision, but there is none.”

Paragraph 135(a) simply confirmed that no distinction was drawn between part-time and full-time practitioners in applying Annex A rates. Lord Carnwath agreed with the EAT that the express exception for part-time medical and dental officers (capped at nine notional half-days, and, unlike other part-time appointments under paragraph 69, not confined to remuneration from a single NHS appointment) tended to support Dr Verma’s construction: the existence of a specific limitation made it harder to imply an unspoken limitation elsewhere.

Implications

The decision restores the EAT’s ruling that paragraph 132 protects the rate of pay (the incremental point) rather than the amount previously earned, so that a part-time practitioner stepping down into a full-time training post is paid at the protected rate for all hours worked. It is, in substance, an exercise in contractual construction of a particular set of NHS terms rather than the statement of a broad new principle.

Methodologically, the case illustrates the Supreme Court’s insistence on textual analysis: where a suggested restriction on an entitlement has no anchor in the words used, and where the drafter has expressly imposed limitations elsewhere (here, the nine half-day cap and the paragraph 69 aggregation rule), the court will not imply an unspoken limitation merely because the literal result seems generous or counter-intuitive. Arguments based on the perceived oddity of the outcome cut both ways and were treated as unhelpful to construction.

The practical reach of the decision is narrow. It concerns the 2002 terms; revised terms with revised pay protection arrangements came into force on 1 August 2007 and did not apply to Dr Verma. The Hospital Practitioner grade is closed and rare, and NHS Employers recorded no comparable case since 2004. The conversion of sessional rates to hourly rates, using a 40-hour multiplier, rested significantly on the parties’ common ground before the EAT, so its general applicability is qualified.

Lord Carnwath’s observations on the obscurity of the drafting, and his suggestion that the matter would have been better left with the specialist appeal tribunal, carry a cautionary message for those drafting collectively negotiated employment terms and for parties contemplating appeals from expert tribunals on narrow points of construction of specialised terms.

The case was remitted to the Employment Tribunal to determine the outstanding issues identified in the EAT’s order.

Verdict: The appeal was allowed. The Supreme Court upheld the reasoning and conclusion of the Employment Appeal Tribunal, restored the EAT’s order, and remitted the case to the Employment Tribunal to determine the outstanding issues identified in that order.

Source: Barts and the London NHS Trust v Verma [2013] UKSC 20