Industrial Tribunals Northern Ireland Decisions

 
THE INDUSTRIAL TRIBUNALS

CASE REFS: 178/07

180/07

181/07

CLAIMANTS: Walter Goodman

Michael Gargan

Michael Leonard

RESPONDENT: Fortress Doors (NI) Ltd

DECISION

The decision is that the claimants did not have unlawful deductions from their wages and their claims are dismissed.

Constitution of Tribunal:

Vice President (sitting alone): Mrs M Price

Appearances:

The claimants were represented by Ms E MacManus, Solicitor, of Donnelly & Kinder, Solicitors.

The respondent was represented by Mr D Bunting, of Peninsula Business Services Limited.

1. The legal issue for the tribunal to consider is Article 45 of the Employment Rights (Northern Ireland) Order 1996, namely that an employer shall not make a deduction from the wages of a worker employed by him unless:-

(a) the deduction is required or authorised to be made by virtue of the statutory provision or a relevant provision of the worker's contract; or

(b) the worker has previously signified, in writing, his agreement or consent to the making of the deduction.

Agreed facts

2. The three claimants had all worked for the respondent for a considerable number of years. There had been an annual pay increase to these workers and other members of the workforce every year. It was given by means of an increase in the hourly wage rate, and varied from year to year.
3. These claimants were members of the Transport & General Workers Union.
4. There was a collective agreement drawn up with the Construction Employers Federation and the respondent abided by the terms of this agreement in relation to minimum wage rates for different categories of workers.
5. The claimants, along with some other categories of workers, were paid in excess of the minimum rates specified by the CEF agreement.
6. A new CEF agreement came into force in August 2004. The claimants understood from their shop steward that they were entitled to an annual increase of 30p per hour based on this agreement.
7. The respondent company paid the increase for the years 2004 and 2005. This was paid to the claimants, but they did not receive an increase in August 2006. The sum claimed by each claimant is £503.00.
8. A new Finance Director, Mr Gregory, was appointed in 2006. He decided that the annual increase would not be paid to the three claimants because they were all being paid considerably higher than the CEF rate.
9. All three claimants submitted grievances which went through the appeal process. The respondent's decision was upheld. These claimants did not have any written contract of employment with the employer until the beginning of 2006.
10. The claimants' case is based on custom and practice, in that they always received an annual increase of varying amounts during the period of their employment and it is submitted on their behalf that this is an implied term of their contract of employment. The respondent submits that the three men were paid in excess of the minimum rates set down for their job categories and the claimants agree with this. The respondent's finance director decided to consider those employees who were being paid considerably above the rates. He decided that the claimants would not be paid the annual increase and also that the persons who were employed as erectors and who were paid considerably more than the average rate would not get increases. The tribunal saw documentation in relation to the erectors and accepts that this decision was taken in August 2005 at the same time as the claimants were paid a 30p increase in their hourly rate.

Mr Leonard's claim

11. Mr Leonard's circumstances are different from those Mr Goodman and Mr Gargan, although he seeks to compare himself with Mr Gargan. Mr Leonard was a supervisor and he decided in September 2003 that he no longer wished to be a supervisor. He agreed in evidence that he had asked to be retained in his previous role as a fabricator. He understood that it might result in reduction in his wages. However the manager, Mr Greenwood, decided that his pay rate should remain the same but there would be no increases until the other employees who were at his level had their pay increased annually so that his would then be the same. Mr Leonard accepted this and I am satisfied that he did not suffer any unlawful deduction from his wages in 2006 because the other tradesmen's wages in this group had not yet caught up to his.
12. Ms McManus helpfully set out some case law on the issue of wages and unlawful deductions. There has been no argument put forward that the claimants had ever completed a written agreement to entitle the respondent to deduct money from their wages and the issue of written contracts does not concern this tribunal because they only came into being in 2006 and in any event were silent on the issue of whether the employer has to follow CEF advice on pay rates. The claimants were informed by letter that they would not be receiving a pay rise in August 2006. The tribunal has pointed out to Mr Gregory that the withholding of the pay rise from these three men would have come as a shock to them and he agreed.
13. The case which the tribunal referred itself to is Bruce & Others v Wiggins Teape (Stationery) Limited [1994] IRLR 536. This case had some similarities to the present case in that employees complained that a reduction in overtime rate amounted to an unlawful deduction from wages under the Wages Act (now the Employment Rights (Northern Ireland) Order 1996). The EAT held that an industrial tribunal had erred in law in holding that a 'reduction in wages' is not a 'deduction from wages' within the meaning of the Wages Act and therefore the respondent employers were not in breach of the Act in unilaterally reducing the enhanced overtime rate paid to the appellant night shift workers. In that case, Wiggins Teape agreed to pay enhanced overtime rates to the rolling night shift personnel including the workers. The rates were double those paid to the original night shift personnel. The increase in the overtime rate was not covered by any written agreement nor was it contained in the written particulars of employment. Three years later the employers decided that for business reasons workers on the rolling night shift would be paid the same overtime rates as those on the original night shift. The decision was made known to the workers and their union representatives. They objected, they did not agree to any change in the overtime rates nor did the union on their behalf. The workers made application to the tribunal complaining of unauthorised deductions from wages. The EAT with Mr Justice Mummery, President, confirmed that wages in relation to a worker are defined as meaning "any sums payable to the worker by his employer in connection with his employment including any fee, bonus, commission, holiday pay or other emolument referable to his employment whether payable under his contract or otherwise". The EAT decided that this definition is wide in its reference to any sums and the fact that the sums are payable 'in connection with his employment' and to sums which may or may not be payable under his contract. It is wide enough to include sums payable for overtime.
14. In the case of Delaney R J Staples t/a De Montfort Recruitment [1991] 1 AER P609, the Court of Appeal stated that the position is that any shortfall in the payment of the amount of wages properly payable to the worker is to be treated as a deduction. Nicholls LJ said at Page 114, "If on his pay day when an employee is due to be paid, a worker receives less wages than he should have done the deficiency is to be regarded as a deduction for the purposes of the Act". If on the facts there is any dispute as to the amounts of wages properly payable by the employer to the worker, the industrial tribunal must determine that dispute in order to determine whether there has been an unauthorised deduction. The crucial question is therefore, "what was the amount of wages properly payable to the workers". On the facts of the Wiggins Teape case it was found that the workers had been paid an enhanced rate for almost four years. They had never agreed to a reduction in the enhanced rate. There was no provision in the contract of employment or in the particulars of employment which entitled Wiggins Teape to reduce the wages of their workers unilaterally. There was no evidence that the increase in the overtime rate was agreed only for a limited period or was terminable by Wiggins Teape unilaterally and without notice.
15. In the present case, the claimants had an expectation of an increase in their wages. There was no actual deduction from the amount they received in August 2006. It was agreed that they were all paid over the minimum rate set down by the CEF for fabricators. Similarly, the erectors had been paid more than the minimum rates for their job as set by CEF. They did not receive an increase in 2005 but the fabricators did.
16. An expectation of a pay rise is not the same as a deduction from a weekly wage. In any industry, an employer has to have flexibility in setting annual wages and it is not the case that every employee can expect to have a pay rise every year of his employment. Whilst the claimants' representative submits it was custom and practice in the workplace, I do not accept that submission. The erectors had not received a pay rise the year before and Mr Leonard had accepted that his pay would not rise until the other fabricators' wages caught up with his. I accept that the CEF agreement related to increases for the minimum weekly rates, and the claimants were paid considerably more than the agreement stipulated. They did not have any deduction made from their wages, but did not receive an increase. This means that their claims are not upheld and their claims are dismissed.

Vice President:

Date and place of hearing: 7 June 2007, Belfast

Date decision recorded in register and issued to parties: