Application of "custom and practice" tests (case ref: 3.2/Aug 04)
Summary of case
PCS asked for advice on potential challenges to the employer, who had announced plans to reduce weekend working.
Members were concerned about the adverse impact the reduction of hours would have on their salary level. Of particular concern was the potential loss of shift disturbance allowances as well as premium payments for working on Saturdays and Sundays. The solicitor was specifically asked for a view on whether or not the planned reductions would amount to a breach of contract.
Key advice provided by Thompsons
An important part of the advice provided by Thompsons revolved around what the contract actually said about normal hours of work, and custom and practice in relation to working patterns and arrangements. A key extract from the advice letter is set out below:
"I note from the contract that those officers receive a 'Shift Disturbance Allowance', amounting to an additional 16.5% of the basic salary, as well as a premium for any Saturday and Sunday work. I also note from the contract that the normal hours of work are 37 hours per week based on a 5 day working week.
"It is assumed that the 5 days are Monday to Friday, given that there is a premium for any Saturday or Sunday work. In short, the contract is for a Monday to Friday working week and there is no obligation on staff to work Saturday and Sunday. However, I note that over the past fifteen to twenty years, most staff have worked Saturday and Sunday and receive a shift premium in respect of the additional days worked.
"In order to show that the reduction in weekend working is a breach of contract, given that there was no express term in the contract to work Saturdays and Sundays, it will be necessary to establish that this system of working has been incorporated into the contract through custom and practice.
"A custom or established practice applied with sufficient regularity may eventually become an implied term of the contract. This occurs at the point where the Court is able to infer from regular application of the practice that the parties must be taken to have accepted that the practice has crystallised into a contractual right. The practice must also be reasonable, certain and notorious (Bond v CAV Limited  IRLR 360).
"It is for the Court to determine whether there is sufficient evidence to show that the term is implied by custom and practice. These cases are usually difficult to prove. However, I note from the papers that there is evidence that the Employers, when writing supporting documentation for mortgage applications, have regarded weekend working as a permanent feature of salary.
"However, I also note from the papers that the Employer's reason for reducing weekend working is because of a large overspend on the budget. In the circumstances, it is likely that the Court see this as a reasonable business decision and this may act as a sufficient defence against any claims for breach of contract (if you are able to establish that weekend working has been incorporated into the contract through custom and practice)."
The advice letter went on to confirm the extent of the difficulties members have in bringing claims under these circumstances, the employer's likely defence and the route by which the claim would need to be made via ET applications. The solicitor said:
"In the circumstances, the first hurdle will be to convince the Court that weekend working has been incorporated into the contract. If the Court finds in favour of the employees, there is a risk that they will consider the actions of the Employer as justified and a sound business reason for making the changes to the contract. Furthermore, notice was given on the 2nd of February 2004 that there was likely to be a suspension with immediate effect from the 1st of April 2004 of premium time working and weekend working.
"In the circumstances, the Employers will be able to show that they have given notice of a potential change in the contract. It would therefore be open to the employees to protest in writing to the employers that they did not agree with the changes to their contract. If it could be established that there was incorporation of this term into the contract, then it would also be open to the employees to resign and claim constructive dismissal. However this is not a course of action I would recommend.
"In view of my advice, I believe that it may be difficult to bring a claim for breach of contract, given that it is expressed in the contract of employment that the employees are required to work a 5 day week, this is likely to prevail over term that may be implied through custom and practice.
"If, however, employees are successful in establishing incorporation by custom and practice, then they may be able to bring a claim for unlawful deduction of wages in the Employment Tribunal. It will therefore be necessary to establish who has suffered an unlawful deduction and bring proceedings within 3 months of the deduction."
Legal department comment
Officers often ask how much weight can be placed on arguments regarding application of "custom and practice criteria". The advice highlighted above confirms the tests Tribunals are likely to apply when considering the impact on contractual rights.
Also worth noting is the likelihood that employers will cite "business reasons" to justify their actions and the difficulty such arguments pose in terms of pursuing successful claims.