Industrial Tribunals Northern Ireland Decisions

THE INDUSTRIAL TRIBUNALS

 

CASE REF: 10265/18IT

 

CLAIMANT: Carole Ritchie

 

RESPONDENT: Tesco Stores Limited

 

 

 

DECISION

 

 

The tribunal is unanimously satisfied that the respondent made an unlawful deduction of wages from the claimant. The respondent is ordered to pay to the claimant the sum of £240.60

 

 

CONSTITUTION OF TRIBUNAL

 

Employment Judge: Employment Judge Browne

 

Panel Members: Mr I O'Hea

Mr I Rosbotham

 

APPEARANCES:

 

The claimant was represented by Mr M Potter, Barrister-at-law, instructed by USDAW

 

The respondent was represented by Mr S Doherty, Barrister-at-law, instructed by Pinsent Masons LLP Solicitors

 

 

Issues and Evidence

 

1.             As per the response entered on behalf of the respondent the correct title of the respondent is 'Tesco Stores Limited' and the title is amended accordingly.

 

2.             The claimant's case is one of alleged unlawful deduction of wages from holiday pay payable to her.

 

3.             The claimant, from 1988, worked full time for Stewarts Supermarkets, five days per week for a total of thirty-nine hours. In May 1997, the respondent bought Stewarts, and in 1998, the claimant's job as a customer assistant was transferred to Tesco.

 

4.             The respondent operated a different system from that of Stewarts, and introduced a 36.5 hour week for those working full time, because it did not pay its staff for two fifteen-minute tea breaks per day.

 

5.             At the time of transfer, the claimant had accrued twenty-five days' holiday under her contract with Stewarts. As part of the transfer of ownership, employees were not permitted by the respondent to take their accrued holiday entitlement in their first year of employment with the respondent.

 

6.             Instead, their accrued holiday entitlement was "frozen". This process was explained by the respondent in the comprehensive terms and conditions document supplied to all staff, including the claimant, at the time of transfer: "Will you lose out? No, as only the actual days are frozen and not the cash value. When you leave Tesco, you will receive the value of the accrued days as part of your final money at the rate you are then paid."

 

7.             The respondent's holiday pay policy, issued to all staff, including the claimant, in October 2018, included at section 13 a heading titled "Are there other holiday schemes?" The first paragraph of the respondent's answer to that question states:-

 

"Longer serving colleagues may have different entitlement that will be paid to them when they leave Tesco".

 

It was stated by the respondent in addressing the "accrued frozen scheme" affecting the claimant that "The part allowance was 'frozen' and will be paid to a colleague when they leave the company at their current rate of pay. The number of days will not be adjusted to reflect the number of days worked at the point of leaving, but will always reflect the number of days worked at the point of leaving, but will always reflect the number of days at the point they were earned".

8.             The situation the subject of these proceedings arose in November 2017, at which point the respondent introduced moving all staff, including the claimant, previously paid weekly, to being paid four-weekly. In order to assist staff with budgeting their personal finances before the change bedded in, the respondent gave staff with frozen holiday entitlement the option of 'cashing-in' up to two weeks of their entitlement, normally only payable upon leaving the respondent's employment.

 

9.             The claimant sought clarification from the respondent as to how much money she was entitled to receive. This was calculated by Ms Lynsey Guest, the respondent's former personnel manager at the store where the claimant works. Ms Guest gave the claimant a post-it note which stated "25 frozen [days] £1548.25", which was the equivalent of 25 days' full-time pay with Stewarts, calculated using the hourly rate now payable by the respondent.

 

10.          The claimant decided to 'defrost' the maximum two weeks' frozen holiday pay, but then was told by Ms Guest that, whilst it would be paid at the current hourly rate, it would be calculated using her [current] weekly hours. That figure would therefore be 24 hours per week, as opposed to her previous full-time working pattern with Stewarts of 39 hours, during which time her holiday entitlement had been accrued, before then being frozen by the respondent as part of the transfer deal.

 

11.          This calculation resulted in the claimant being paid £385 in May 2018, rather than the £625.60 she had been expecting, from her own calculation and from the figure originally provided by Ms Guest. The figure paid therefore equated to eight days' pay, rather than ten, in accordance with the claimant's current work pattern.

 

12.          The claimant immediately raised the issue with her line manager, and was subsequently referred to other managers, all of whom insisted that she had been paid the correct amount, despite the figure of £1548.25 being on her personnel file.

 

13.          Part of the respondent's resistance to the claim is that, if the claimant's interpretation of the means of calculation is correct, it would lead to other employees who have changed their work pattern being disadvantaged. That argument appeared to be advanced less upon the ground of operational unfairness than that such an anomaly only served to highlight that the claimant's interpretation of the respondent's policy is incorrect, and ought not to be interpreted by the tribunal to have been the intention of the respondent in devising and promulgating it.

 

Law and Conclusions

 

13. The relevant legislation is set out in Article 45 of the Employment Rights (Northern Ireland) Order 1996:

 

" 45.-”(1)  An employer shall not make a deduction from wages of a worker employed by him unless:-

 

(a) the deduction is required or authorised to be made by virtue of a 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.

 

(2) In this Article " relevant provision " , in relation to a worker's contract, means a provision of the contract comprised:-

 

(a) in one or more written terms of the contract of which the employer has given the worker a copy on an occasion prior to the employer making the deduction in question, or

 

(b) in one or more terms of the contract (whether express or implied and, if express, whether oral or in writing) the existence and effect, or combined effect, of which in relation to the worker the employer has notified to the worker in writing on such an occasion.

 

(3) Where the total amount of wages paid on any occasion by an employer to a worker employed by him is less than the total amount of the wages properly payable by him to the worker on that occasion (after deductions), the amount of the deficiency shall be treated for the purposes of this Part as a deduction made by the employer from the worker's wages on that occasion.

 

(4) Paragraph (3) does not apply in so far as the deficiency is attributable to an error of any description on the part of the employer affecting the computation by him of the gross amount of the wages properly payable by him to the worker on that occasion.

 

(5) For the purposes of this Article a relevant provision of a worker's contract having effect by virtue of a variation of the contract does not operate to authorise the making of a deduction on account of any conduct of the worker, or any other event occurring, before the variation took effect.

 

(6)  For the purposes of this Article an agreement or consent signified by a worker does not operate to authorise the making of a deduction on account of any conduct of the worker, or any other event occurring, before the agreement or consent was signified.

 

(7)  This Article does not affect any other statutory provision by virtue of which a sum payable to a worker by his employer but not constituting " wages " within the meaning of this Part is not to be subject to a deduction at the instance of the employer."

 

14. The parties were agreed that the key to this case is interpretation of the terms of the claimant's contract, of which the holiday pay policy of the respondent undisputedly is a part.

 

15. The claimant sought to place emphasis upon the provision to her on two separate occasions of the figure of £1548.25, which was only £15 apart from her own calculation.

16. The tribunal considers however that such calculation cannot of itself fix the respondent with liability, since the respondent is quite clear that such formula does not represent the correct interpretation of its policy. The respondent's case, in effect, is that those who provided such a figure, unwittingly misrepresented the true position, and consequently acted outside their authority.

 

17. The tribunal's focus therefore must be the true and natural meaning of the wording of the respondent's terms and conditions document and of its published holiday pay policy, which, on both parties' case, form the basis of the relevant portion of a mutually binding contract of employment.

 

18. The accrued Stewarts holiday entitlement might properly be regarded as an "inherited debt", owed to the claimant by the respondent upon its purchase of all of the assets and liabilities of her former employer. Its standing as something arising outside the claimant's contract of employment with the respondent, appears to the tribunal to be confirmed by the fact that, until the scheme devised to address the four-weekly pay cycle issues, that "inherited debt" was only to be paid after the claimant was no longer employed by the respondent.

 

19. Viewed in that context, the standing of that holiday pay entitlement appeared to the tribunal to be much more closely aligned to the claimant's contract of employment with Stewarts.

 

20. The first paragraph of section 13 of the respondent's holiday pay policy, headed "Are there other holiday schemes?" also makes it clear that "longer serving colleagues may have different entitlement".

 

21. The wording under sub-heading (b) of the same section includes reference to those employed, or who commenced employment by the respondent between 1 April 1991 and 31 March 1992, but neither that sub-heading nor the first paragraph of section 13 makes any mention of the type of scenario affecting the claimant as an employee with accrued rights under a contract with another employer subsequently bought out by the respondent.

 

22. Whilst such silence does not necessarily preclude inclusion of that type of situation, the focus of the tribunal's attention inevitably must be the interpretation of the wording used by the respondent in the key documents.

 

23. The primary source of information therefore is the 1998 terms and conditions; and the October 2018 holiday pay policy.

 

24. The tribunal is unanimously satisfied that the terms and conditions document, in stating that the claimant would not "lose out" means that she would not be financially disadvantaged. In assessing how such disadvantage could be avoided by the respondent, the tribunal concluded that paying her for fewer hours than she had actually worked to earn her Stewarts days off was not credible. She had fulfilled her contract with Stewarts, and was accordingly credited with the relevant days off.

 

25. The tribunal concluded that the clear and natural meaning of wording of the relevant portion of the terms and conditions document given by the respondent was, on its face, intended to reassure Stewarts staff.

26. Such reassurance addressed any reasonable and natural concerns of its new employees that the imposed inability to take their accrued days off might later be further aggravated by a reduction in their contemporary value, relative to the time worked to earn them.

27. It additionally is considered by the tribunal to be highly unlikely that anyone to whom such method of calculation was at the outset clearly explained would agree to be paid only for part of each day, rather than for the full day actually worked.

 

28. If there was any potential ambiguity, it is not apparent in the wording used at the relevant time.

 

29. The respondent advanced the argument that holiday pay does not accrue, only holiday days, giving the right to take days off work commensurate with the hours worked in each employee's normal working week.

30. The tribunal considers however that, by the point at which the claimant became an employee of the respondent, her right to twenty-five full-time Stewarts days off had already accrued.

 

31. The respondent argued that following the logic of the claimant's argument would potentially cause anomalies in pay to employees who had changed their work patterns. It therefore appears to rely upon operational unfairness as a reason to reinterpret the wording of the 1998 arrangements.

32. The tribunal concluded that the later holiday pay policy clearly refers to the existence of different, perhaps anomalous arrangements, accrued, as in this case, under a different contract, affecting a small and diminishing group of employees.

 

33. The tribunal concludes from the clear and natural wording of the claimant's original terms and conditions that the interpretation advanced by the respondent of those terms and conditions and the later holiday pay policy is incorrect.

 

34. It further concludes that the respondent's interpretation has resulted in the incorrect calculation by the respondent of the amounts owed to the claimant when her two weeks' holiday payment was calculated. She ought to have been paid for the "inherited debt" of ten full days actually worked under her previous contract, not the eight days under her current work pattern. As a consequence, an unlawful deduction was made from her wages.

 

35. The tribunal is satisfied that the claimant's calculation is correct. The respondent is therefore ordered to pay to the claimant the sum of £240.60.

 

36. This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ireland) 1990.

 

 

 

Employment Judge:

 

 

Date and place of hearing: 20 February 2019, Belfast.

 

 

Date decision recorded in register and issued to parties: