Industrial Tribunals Northern Ireland Decisions

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URL: http://www.bailii.org/nie/cases/NIIT/2008/167_05IT.html
Cite as: [2008] NIIT 167_05IT, [2008] NIIT 167_5IT

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THE INDUSTRIAL TRIBUNALS

CASE REFS: 219/08

167/05

CLAIMANT: Gary Scott

RESPONDENT: First Trust Bank

DECISION

The unanimous decision of the tribunal is that

(i) The claimant's claim in respect of unlawful deductions from wages has been brought within the prescribed time;

(ii) The claimant's claim in respect of unlawful deductions from his wages from the period from 15 October 2004 until 23 July 2007 is well founded;

(iii) If the parties cannot agree the amount of the deductions at (ii) above, the matter will be re-listed before the tribunal for a hearing on remedy;

(iv) The claimant's claims under the disability Discrimination Act 1995 are dismissed.

Constitution of Tribunal:

Chairman: Mr Buchanan

Members: Ms Hamilton

Mr Fields

Appearances:

The claimant was represent by Mr M Potter, Barrister-at-Law, instructed by Thompsons McClure, Solicitors.

The respondent was represented by Mr F O'Reilly, Barrister-at-Law, instructed by Elliott Duffy Garrett, Solicitors.

1.	(i)	The claims brought by the claimant were consolidated by an Order of the Tribunal made on 14 March 2008.

	(ii)	They involved allegations of breach of contract, unlawful deductions from wages, disability-related discrimination and a breach of the duty to make reasonable adjustments under the Disability Discrimination Act 1995, as amended. At the hearing the respondent took a time point in relation to the claims of breach of contract and unlawful deductions from wages, though such a point had not been raised at a Case Management Discussion on 13 June 2007 which had been held to identify the issues to be determined by the tribunal and to list the case for hearing. The claimant was not cross-examined on time issues at the hearing. We are satisfied that the claim for unlawful deductions, relates to a series of ongoing deductions and that it has been brought within the prescribed time.

2.	(i)	In order to determine this matter the tribunal heard evidence from the claimant, Mr Scott, and from Mr Robin Bell, his staff representative and a member of the executive committee of the Irish Bank Officials' Association. Mr Kieran Bennett, a senior official of the respondent Bank gave evidence on its behalf. At the relevant time he was the respondent's Head of Retail Banking. The tribunal also had regard to documentary evidence submitted by the parties.

	(ii)	It finds the facts set out in the following paragraphs. These facts are not really in dispute and can be stated shortly.

3.	(i)	The claimant started work with the respondent Bank on 17 September 1973. He was ultimately dismissed from his employment on 23 July 2007. (There is no claim for unfair dismissal before the tribunal, and we are not therefore concerned with the circumstances of his dismissal.)

	(ii)	At the relevant time, the claimant was working as a Lending Officer at the Bank's branch in Newtownards. On 9 February 2004 the claimant was suspended on full pay pending the outcome of investigations into cash irregularities at the branch. Mr Scott accepted in cross-examination that there was evidence – principally CCTV footage – which showed him stealing money from the bank. This appears to have been aberrational behaviour on his part, at a time when he was under great stress in his personal life.

	(iii)	The claimant was suspended under the provisions of the bank's disciplinary procedures, which had been agreed with the trade union. The disciplinary procedure provided that a "[b]ank official shall not be subject to summary dismissal. Summary action, such as immediate suspension from duty, may be taken where the circumstances warrant it …".

	(iv)	There was no express term providing for suspension without pay. Consequently, the claimant's suspension took effect on full pay, and he remained suspended on full pay until 15 October 2004.

	(v)	The provision in the disciplinary procedure, set out above, which made no express provision for suspension without pay during the investigatory stage of the disciplinary process, is to be contrasted with the available disciplinary penalties following a determination of misconduct or wrongdoing. These provide for possible "[s]uspension with or without pay".

4.	(i) (ii) (iii) (iv) (v) (vi) (vii) (viii)	On the day of his suspension, 9 February 2004, the claimant was admitted to a psychiatric ward at Knockbracken. He was there until 17 February 2004, when he was transferred to a similar ward at Ards Community Hospital. He remained there as an in patient until 26 February 2004. In the period from 9 February 2004 (the date of suspension) until 15 October 2004 (when suspension on full pay was ended) various letters were exchanged between the parties concerning the claimant's ability to take part in the disciplinary process. He indicated that following medical advice, he was unable to take part in the disciplinary process. In July 2004 the bank asked the claimant to provide sickness certificates. By letter of 4 August 2004, the claimant replied referring to the bank's letter of 9 February 2004 suspending him on full pay and stating that he did not understand why, in such circumstances, he was being asked to provide sickness absence certificates. Medical reports were also provided to the bank by Dr McCrea on 20 August 2004 and 3 September 2004 stating that he was unable to be of assistance in stating whether or not the claimant was fit to attend the disciplinary process. Further correspondence ensued between Mr Bennett, on behalf of the bank, and the claimant and his trade union representative, Mr Bell, in August and September 2004 with a view to progressing the disciplinary process. Ultimately on 1 October 2004, Mr Bennett wrote to Mr Bell stating that "in view of the fact that Mr Scott has been suspended on full pay for over seven months and we have been unable to progress the disciplinary process or establish mitigating factors for his actions the bank has no alternative other than to suspend Mr Scott on no salary with effect from 15 October 2004 pending the outcome of the disciplinary process". Mr Bennett went on to indicate that, if necessary, he was prepared to conduct any disciplinary proceedings in the claimant's absence. In October 2005, the bank received a report from Dr Anderson, under cover of a letter dated 3 October 2005 which stated that the claimant was fit to take part in the disciplinary process. This report also stated that he was a person with a disability. The disciplinary process went into limbo around the end of 2004. It was resumed in April 2007, and Mr Scott was dismissed on 23 July 2007.
5. 6. 7. 8. 9. 10. 11. 12. 13.	(i) (ii) (iii) (i) (ii) (iii) (iv) (i) (ii) (i) (ii) (iii) (iv) (i) (ii)	At the outset to the proceedings, and during the course of the proceedings, the respondent's substantive defence to the claimant's claims of breach of contract and unlawful deductions from wages was that although it accepted that there was no power of suspension without pay for disciplinary purposes at common law, it had been open to the bank to suspend Mr Scott without pay during the disciplinary investigation on the basis that there was an implied term in his contract of employment which allowed this. (They conceded there was no express power of suspension without pay at the disciplinary investigation stage.) Mr Bennett, when giving evidence on behalf of the bank, very fairly accepted that in his experience he had never known the bank to suspend an employee without pay in these circumstances in reliance on an implied term of the contract of employment. In closing submissions on behalf of the bank, Mr O'Reilly BL very properly resiled from any reliance on an implied power to suspend without pay, and in these circumstances sought to persuade us that the contractual power to suspend with pay at the investigatory stage had to be read subject to a further implied term, namely that suspension with pay would only continue for a period which was reasonable. Where there are areas in a contract of employment where no terms are expressed, and a dispute arises in such an area, a tribunal will have to have recourse to the doctrine of implied terms. Traditionally, courts and tribunals have looked upon implied terms as something which the parties must be taken to have agreed. A court or tribunal, in implying a term or terms regards itself as giving effect to the parties unexpressed intentions. The basis of implying terms is subjective, that is to say the tribunal looks at the likely intention of the parties at the time of making the contract and does not imply a term because it appears reasonable to do so. The tests for the implication of terms, which overlap to some extent, are that the term should be implied to give the contract 'business efficiency' (or 'business commonsense' as it has been more recently called in Marshall v Alexander Sloan & Co Ltd [1981] IRLR 264) or that the term was so obvious that it goes without saying that the parties did not see the need to state it expressly. (See generally : the Moorcock 1889 14 PD 64; Shirlow v Southern Foundries (1926) Ltd [1939] 2 KB 206.) There is, however, a presumption against adding terms which the parties have not expressed (see : Luxor (Eastbourne) Ltd v Cooper [1941] AC 408). In addition to the more traditional grounds on which courts and tribunals infer terms into contracts, there have been cases where they have been more willing to imply terms because they appear reasonable in all the circumstances (as opposed to implying them on the basis of the supposed intention of the parties). This can happen in the case of contracts of employment (it is also discernible in cases of landlord and tenant). An employment (or other) relationship exists and cannot be denied, and the terms implied are therefore necessary to give effect to that relationship. Here, courts and tribunals come closer to imposing terms which they see as 'reasonable' on the contracting parties (see generally : Smith and Wood's Employment Law, 9th Edition p127). Examples of the implication of such terms are to be found in Courtaulds Northern Spinning Ltd v Gibson [1988] ICR 451 (implication of a location/mobility clause where the contract was silent on the matter, and which was essential for deciding a point of constructive dismissal); Lister v Romford Ice and Cold Storage Co Ltd [1957] AC 555 (implied term that employer would ensure that employee had insurance cover); Malik v BCCI (in liquidation) [1997] ICR 606 (employer will not conduct his business in a fraudulent way so as to cause damage to the employee's reputation and place him or her at a disadvantage in the labour market); Scally v Southern Health and Social Services Board [1992] AC 294 (an employer would, in certain closely defined circumstances, inform an employee of a right under a pension scheme to enhance his pension entitlement by the purchase of added years). In Scally, op cit, at 306, Lord Bridge referred to the clear distinction between 'the search for an implied term necessary to give business efficiency to a particular contract and the search, based on wider considerations, for a term which the law will imply as a necessary incident of a definable category of contractual relationship'. In Mears v Safecar Security Limited [1982] IRLR 183, in a reference under section 11 of the Employment Protection (Consolidation) Act 1978 which was the provision in force in Great Britain at that time dealing with written particulars of employment, the Court of Appeal held that in implying terms into a contract of employment (the terms in that case relating to sick pay) courts and tribunals were not bound by the traditional tests relating to commercial contracts, but should consider all the facts and evidence in each case, including the way in which the particular contract of employment had worked in practice, and the way the parties had behaved, since it was made. In effect the court or tribunal could treat as an agreed term one which would not have been at once assented to by both parties at the time they made the contract. In Ali v Christian Salseven Food Services Ltd [1977] ICR 25, the employers had entered into a collective agreement with recognised trade unions to adopt a system of pay based on annualised hours. Employees were paid a standard wage each week and worked a notional 40 hour week with no overtime payments until they reached a certain number of hours. Overtime payments were not paid until the end of the working year which was 31 May, Employees who had been made redundant in October/November of a preceding year claimed overtime payments for hours actually worked in excess of the 40 hour week. An employment tribunal dismissed their claims on the ground that there was no express provision for the payment of overtime where employment had terminated in the course of the working year. The decision of the employment tribunal was overturned by the Employment Appeal Tribunal. When the matter came before the Court of Appeal it was contended on behalf of the claimants that a term in favour of payment should be implied. Such was the obvious inference from the collective and individual agreements, because the parties could not have intended the obvious injustice which would follow if such a term were not implied. The respondent company argued that there was no justification for a term being implied into an agreement which was fully negotiated on a collective basis. The contracts were clear in their general operation, and the fact that eventualities arose for which no provision had been made did not make them incomplete. Waite LJ stated, op cit, 31 : "It is in the nature of such an agreement that it should be concise and clear – so as to be readily understood by all who are concerned to operate it. One would expect the parties to such an agreement to set their face against any attempt to litigate for every possible contingency. Should there be any topic left uncovered by an agreement of that kind, the natural inference, in my judgment, is not that there has been an omission so obvious as to require judicial correction, but rather that the topic was omitted advisedly from the terms of the agreement on the ground that it was seen as too controversial or too complicated to justify any variation of the main terms of the agreement to take account of it." The Court accepted that the omission of any reference to the consequences of early termination of employment was "at first sight … surprising" but that it became less so when regard was had to the difficulties of dealing with every eventuality arising from termination. In essence, the loss here lay where it fell because of the difficulty of showing that the respective parties would necessarily have been of one mind in approaching the problem which had arisen. It is also useful to consider the position with regard to payment during illness. In earlier cases such as Morrison v Bell [1939] KB 187, it was held that wages continued through sickness and incapacity from sickness to do the work contracted for until the contract of employment was terminated by a notice by the employer in accordance with the contract of employment. However, the breadth of this decision was substantially reduced in Mears, and in Howman and Son v Blyth [1983] ICR 416, the Employment Appeal Tribunal held that where an employee was contractually obliged to pay sick pay and the contract was silent on the period for which sick pay was payable, the court will infer that the obligation is to pay it for a reasonable period only. A reasonable period is prima facie what is provided in any national agreement. In the particular industry in that case (the building industry) there was a national agreement that sick pay would only be paid for a reasonable time. The change is emphasis discernible here in the approach of courts and tribunals is partly explicable by the fact that when Morrison v Bell was decided in 1939 the obligation to pay sick pay indefinitely was not as onerous as it first seemed, because an employer could terminate the employee's contract of employment at common law by giving notice. When the later cases were decided dismissal by the employer could potentially give rise to a statutory unfair dismissal claim. We now proceed to apply the applicable law as set out above. We are satisfied that we cannot imply any term on the basis of what we have termed the 'orthodox' or 'traditional' approach. Such an approach depends on the presumed, subjective intention of the parties, and it is far from clear that both sides would have agreed that the power to suspend with pay at the investigatory stage was to be limited by an implied term that the suspension would only last for a reasonable period. (See : Luxor (Eastbourne) Ltd v Cooper [1941] AC 408 where an attempt to imply a term failed because it was not clear both parties would in fact have agreed to the term.) Nor are we prepared to imply the term suggested by the respondent Bank on the basis of the more recent authorities referred to above. It is also clear from the Luxor decision that courts are reluctant to imply a term where parties have entered into a carefully drafted written contract containing provisions agreed between them. In such circumstances, the tendency is to presume that the written agreement constitutes a complete code. This idea finds expression in Chitty on Contracts 27th Edition Para 13.006 where it is stated " … [S]ince the general presumption is that the parties have expressed every material term which they intended should govern their contract, whether oral or in writing, the court will only imply a term if it is one which must necessarily have been intended by them, and in particular will be reluctant to make any implication where the parties have entered into a carefully drafted written contract containing detailed terms agreed between them". In this case the disciplinary procedures incorporated into the claimant's contract were set out in an agreement concluded between the bank and the union. There was no inequality of bargaining power between the respective parties to that agreement. The tribunal does not accept that it is being called upon to rectify on omission. We do not accept that the omission is of necessity an obvious one for it is not uncommon to hear of employees suspended for long periods on full pay, albeit that this seem to arise more frequently in the public sector. The power of suspension without pay, or provision for when and in what circumstances disciplinary suspension with pay would move to being without pay was something which could easily have been included in the agreement in the first place (like disciplinary suspension without pay imposed as a penalty subsequent to investigation). We suspect that the respondent bank, quite understandably, came to regard it as unsatisfactory to have to pay, for an indefinite period, an employee who had been guilty of dishonesty. However, there is an element of ex post facto justification in their defence to this claim for non-payment. In a sense, it may be that the respondent bank only has itself to blame for its lack of foresight, which has led to the agreement now being strictly construed against it in accordance with normal contractual principles. A well-drafted contractual provision could have avoided the situation which has arisen. Finally, we have considered whether there may be a breach of the implied term of mutual confidence and trust in a contract of employment on the part of the claimant, by virtue of a failure on his part to co-operate in an early resolution of the disciplinary process. While we have some concern at the length of that process, and have some suspicion that the claimant prolonged it to his advantage, we consider that overall the evidence on this aspect of the matter is somewhat equivocal, and we therefore can make no finding on fact on this issue. We are therefore satisfied that the claimant has suffered an unlawful deduction from his wages from 15 October 2004 until 23 July 2007. In the event of the parties being able to agree the amount of the said deductions, the matter can be re-listed before the tribunal on the issue of quantum. The claimant had alterative claims under the Disability Discrimination Act 1995 alleging that the respondent's bank failure to pay him full pay was both disability related discrimination and a breach of the duty to make a reasonable adjustment. We can deal with these points shortly in view of our finding for the claimant on the issue of unlawful deductions. We would have been satisfied on the basis of the decision of the Court of Appeal in England and Wales in O'Hanlon v Commissioners of HM Revenue and Customs [2007] IRLR 404 that such claims are not well founded. Hooper LJ, op cit, at 410, referred with approval to the decision of the Employment Appeal Tribunal, where it was pointed out that the purpose of the 1995 Act was to assist the disabled to obtain employment and to get them back into the workplace, and where it was suggested that giving enhanced payments during sickness would only rarely constitute a reasonable adjustment. Any allegation of disability-related discrimination would clearly be justified. This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ireland) 1990.

Chairman:

Date and place of hearing: 7, 8 and 10 April 2008 at Belfast.

Date decision recorded in register and issued to parties: