Railway employees had been instructed by their unions to ‘work to rule’ and more specifically to ban overtime, Sunday and rest day working. ‘Working to rule’ meant giving an unreasonably literal construction to certain requirements of the railway rule book (such as satisfying oneself that the engine is in order) and ignoring others, such as the rule that one should make every effort to facilitate the working of the trains and prevent avoidable delay. And this course of conduct was pursued with the intention of bringing the system to a halt. The question was whether the conduct of the union amounted to industrial action.
Held: The employees were not obliged to work on Sundays and rest days and refusing to do so, even for the purpose of being obstructive, was not a breach of contract. On the other hand, there was a limited obligation upon individual employees to work 9 hour shifts instead of 8 when rostered to do so and the ban on this overtime was a breach of contract. In addition, the ‘work to rule’ was in breach of a reasonable construction of the rules. So the instructions involved breaches of contract by the employees.
Lord Denning MR said that what made the action a breach of contract was the motive with which it was done: ‘So much for the case when a man is employed singly. It is equally the case when he is employed, as one of many, to work in an undertaking which needs the service of all. If he, with the others, takes steps wilfully to disrupt the undertaking, to produce chaos so that it will not run as it should, then each one who is a party to those steps is guilty of a breach of his contract. It is no answer for any one of them to say ‘I am only obeying the rule book,’ or ‘I am not bound to do more than a 40-hour week.’ That would be all very well if done in good faith without any wilful disruption of services; but what makes it wrong is the object with which it is done. There are many branches of our law when an act which would otherwise be lawful is rendered unlawful by the motive or object with which it is done. So here it is the wilful disruption which is the breach. It means that the work of each man goes for naught. It is made of no effect. I ask: Is a man to be entitled to wages for his work when he, with others, is doing his best to make it useless? Surely not. Wages are to be paid for services rendered, not for producing deliberate chaos.”
As to the words ‘if it appears to the Secretary of State’ used in the statute there in question: ‘If the Minister did not act in good faith or he acts on extraneous considerations which ought not to influence him or if he plainly misdirects himself in fact or in law it may well be that a court would interfere.’
Lord Denning’s analysis was that there was a breach of the implied obligation to act in good faith: ‘Those rules are to be construed reasonably. They must be fitted in sensibly the one with the other. They must be construed according to the usual course of dealing and to the way they have been applied in practice. When the rules are so construed the railway system, as we all know, works efficiently and safely. But if some of those rules are construed unreasonably, as, for instance, the driver takes too long examining his engine or seeing that all is in order, the system may be in danger of being disrupted. It is only when they are construed unreasonably that the railway system grinds to a halt. It is, I should think, clearly a breach of contract first to construe the rules unreasonably, and then to put that unreasonable construction into practice.’
Roskill LJ said: ‘In legal theory, performance or non-performance of a contract does not depend upon goodwill or lack of goodwill; a contractual obligation can be properly performed albeit without goodwill, it can equally be broken notwithstanding honest if unavailing and well intentioned attempts at performance. But I venture to doubt whether the dichotomy between mere withdrawal of goodwill and the non-performance of a contract is in practice as complete as Mr Pain eloquently urged upon us. Purported performance accompanied by lack of goodwill may all too easily cross the borderline between lawful performance without breach and purported performance in breach either of some express or some implied term in the contract.’
Buckley LJ said: ‘With regard to the direction to the men to work strictly in accordance with the rules, the contracts of employment between the board and the railwaymen are entered into as part of the board’s commercial activity. Such contracts have commercial objectives and are based on commercial considerations. Just as, where a contract is entered into the performance of which requires the continued existence of a particular state of affairs, the wilful act of one party in bringing that state of affairs to an end so as to render the performance of the contract impossible constitutes a breach of an implied term of the contract, so, in my judgment, in the case of a contract of a commercial character the wilful act of one party which, although not, maybe, departing from the literal letter of the agreement, nevertheless defeats the commercial intention of the parties in entering into the contract, constitutes a breach of an implied term of the contract to perform the contract in such a way as not to frustrate that commercial objective.
Assuming in the appellants’ favour that the direction to work to rule avoided any specific direction to commit a breach of any express term of the contract, the instruction was, nevertheless, directed, and is acknowledged to have been directed, to rendering it impossible, or contributing to the impossibility, to carry on the board’s commercial activity upon a sound commercial basis, if at all. The object of the instruction was to frustrate the very commercial object for which the contracts of employment were made. It struck at the foundation of the consensual intentions of the parties to those contracts, and amounted, in my judgment, to an instruction to commit what were clearly breaches or abrogations of those contracts. These are or would be, in my judgment, breaches of an implied term to serve the employer faithfully within the requirements of the contract. It does not mean that the employer could require a man to do anything which lay outside his obligations under the contract, such as to work excess hours of work or to work an unsafe system of work or anything of that kind, but it does mean that within the terms of the contract the employee must serve the employer faithfully with a view to promoting those commercial interests for which he is employed.’
Lord Denning MR, Buckley, Roskill LJJ
[1972] ICR 19, [1972] 2 QB 455
England and Wales
Cited by:
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The first claimants were long standing employees. Mr Eastwood fell out with his manager, who disciplined him using false statements. When Williams refused to provide a false statement he too was disciplined. Each claimed damages for the injury to . .
Cited – Lassman and Others v Secretary of State for Trade and Industry CA 19-Apr-2000
The claimants worked for Rotaprint when it went into receivership in 1988, and then for the receiver before being transferred to Pan Graphics. Statutory redundany payments were made on the receivership of Rotaprint. The claimants sought further . .
Cited – Phillips v Brown QBD 20-Jun-1980
DONALDSON LJ: Mr. Phillips appeals by case stated against his conviction and a fine of andpound;5 imposed by Mr Loy, the Leeds Stipendiary Magistrates, in September 1978 for failure to comply with a School Attendance Order. It is not the conviction . .
Lists of cited by and citing cases may be incomplete.
Employment, Contract
Updated: 23 November 2021; Ref: scu.187524
