United Kingdom Employment Appeal Tribunal

BAILII case number: [1996] UKEAT 1165_95_1704

Appeal No. EAT/1165/95

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 17th April 1996

THE HONOURABLE MR JUSTICE MUMMERY (P)

MISS A MADDOCKS OBE

MRS M E SUNDERLAND JP

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REDWING COMPUTER SERVICES LTD          APPELLANTS

MS LARKMAN          RESPONDENT

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR M J JUDD

(Managing Director)

Redwing Computer Services Ltd

Tingewick Mill

Tingewick

Buckinghamshire

MK18 4RB

For the Respondent MR J PINDER

(Representative)

Employment Rights Unit

Citizens Advice Bureau

Acorn House

361 Midsummer Boulevard

Central Milton Keynes

MK9 3HP


 


MR JUSTICE MUMMERY (PRESIDENT): This is a case under the Wages Act 1986. Section 1 of the Wages Act provides:

"(1) An employer shall not make any deduction from any wages of any worker employed by him unless the deduction satisfies one of the following conditions, namely-

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

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

Section 8 of the Act is the interpretation section. The relevant subsection defines what is meant by a "deduction". Subsection (3) states:

"(3) Where the total amount of any wages that are paid on any occasion by an employer to any worker employed by him is less than the total amount of wages that are properly payable by him to the worker on that occasion (after deductions) then, except in so far as the deficiency is attributable to an error of computation, 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."

The combined effect of those two sub-sections is that there is a breach of the provisions of the Wages Act if an employer pays to a worker less than the agreed amount of remuneration. The crucial issue in this case, as in so many cases under the Wages Act, is what was the agreed amount of the remuneration.

It has not been easy for the Industrial Tribunal to answer this question or for this tribunal to hear appeal from the Chairman's decision on that question, because of the absence of the statutory employment particulars. We have drawn to the attention of Mr Judd, the Managing Director of the appellants, Redwing Computer Services Ltd, the statutory provisions in the Employment Protection legislation, as amended by the Trade Union Reform and Employment Rights Act 1993, imposing a statutory obligation on an employer to provide to an employee a written statement of the scale or rate of remuneration, or the method of calculating remuneration and the intervals at which remuneration is paid whether weekly, monthly or by some other period. If that statutory obligation had been complied with in this case, this dispute would never have got to a tribunal. There would have been authentic written evidence of the agreed remuneration. This dispute has arisen largely because of the failure to comply with that statutory provision.

This appeal is against the decision of the Chairman of the tribunal sitting alone at Reading on 10th July 1995. He heard the case brought by Ms Patricia Larkman, who had been employed as a Business Development Manager by Redwing Computer Services from the beginning of April 1993 to 3rd February 1993, when she resigned.

Following her resignation, she wrote a letter to the Managing Director, Mr Michael Judd, on 17th February saying:

"Please could you let me have the outstanding salary due of £6,000 gross for the period 1st November 1994 to 3rd February 1995. Could you also forward pay slips for the current tax year to date. Should I not hear from you within 10 days, I will be obliged to commence legal proceedings. I regret that we should reach this stage, but it has been two weeks since I left your employment due to non-payment and during this period you have not contacted me regarding the arrears."

A follow-up letter was sent on 1st March 1995 acknowledging payments representing salary for November 1994, but saying that Mr Judd should now forward the outstanding £4,000 gross for the period 1st December 1994 to 3rd February 1995 within the next 7 days or legal proceedings would be commenced.

Legal proceedings were commenced. An application was presented to the Industrial Tribunal on 15th March 1995. In that application Ms Larkman complained of unauthorised deduction of wages. Her case was that she had resigned on 3rd February due to non-payment of wages. She was owed wages for December 1994 and January 1995, and the total amount due to her was £2,865.04.

Redwing Computer Services disputed the claim. They pointed out that there was no written agreement, and alleged that the agreement made prior to Ms Larkman joining the company was that her targeted monthly earnings would be £2,000. That figure would be paid if the fortunes of the business allowed. The agreement reached was that she would join at the rate of £1,000 per month. That in fact is what was paid for April and June 1993. From May and July 1993 and from July to December 1993. Payments were made of £2,000 per month. It was then alleged that the mid-1993 sales were poor. Staffing had to be reduced, re-financing had to be sought, and Ms Larkman was therefore paid £1,000 per month for January and February 1994. That was said to be the normal practice. It was an alternative to relinquishing with her services altogether. From March to September 1994 the £2,000 per month payments were made, as sales were adequate until August. Then net losses began to occur again. The defence to the claim then sets out details of the net payments made in August, September, October, November, December 1994 and January 1995.

Mr Judd alleged that:

"PL [Ms Larkman] was an important part of RW's [The Company] capability and was thus integral to the success and failure of the Company. The basis of pay was clearly understood from her commencement and she was fully aware of the Company's fortunes and how it affected it's capability to pay her. During difficult periods an alternative was always to terminate her employment, an option the Company was reluctant to take."

He said that Ms Larkman's claims contradicted the well-established normal practice. Her sudden departure without notice, against the background of that practice, was difficult to understand, but had a profound effect upon the well-being of the company. For those reasons it was submitted that her claim of unauthorised deduction of wages had no factual basis.

They were the issues that the tribunal had to decide.

At the hearing on 10th July 1995, Mr Pinder of the Citizens Advice Bureau, represented Ms Larkman. Mr Judd conducted the case for Redwing Computer Services.

In the extended written reasons for the decision in favour of Ms Larkman, the Chairman set out his findings of facts. He made it clear that those findings were made after considering not only the documents that were put before him in a bundle, but also after hearing oral evidence that was given by both Ms Larkman and Mr Judd.

In setting out his findings of fact, the Chairman gave details of the commencement of employment and the position to which Ms Larkman was appointed. He set out the rival contentions of the parties as to the terms of the agreement. He set out the undisputed facts relating to amounts actually paid down to the date of Ms Larkman's resignation.

He then summarised the case put forward by Mr Judd in paragraph 4 of the extended reasons. He said this:

"4 The respondent company contended that the basis upon which the applicant had been employed was that when the fortunes of the business permitted, she would be paid a wage of £2,000 per month gross; but that when business was poor, her wages would be reduced by 50% to, in effect, £1,000 per month. It was further contended that the applicant knew and had agreed to such an arrangement and that therefore no sums were owing to her since payment in respect of the months of November 1994/January 1995 had been at the rate of £1,000 per month gross."

The Chairman added that there was written evidence of such an agreement. Mr Judd relied entirely on the payments themselves, and the copies of the pay slips.

Having considered that evidence, and evidence to the contrary given by Ms Larkman, the Chairman stated his conclusions in paragraph 5. It is in that paragraph that Mr Judd has to find an error of law if he is to succeed on this appeal.

The conclusions were these:

"5 ... There was a clear conflict between the evidence given which I have to resolve. It was for the applicant to prove her complaint on the balance of probabilities and I consider that she succeeded in doing so. Document A-16 refers to an annual salary of £24,000, notwithstanding that the document was prepared after the 3/4 monthly deductions referred to above had been made. Furthermore, the applicant's letter to the respondent claiming arrears of wages following her resignation ... are entirely consistent with her case. Having heard the evidence of both the applicant and Mr Judd, I prefer the applicant's which I find both more plausible and more likely."

Those findings and that reasoning led the Chairman to made an order that the company pay Ms Larkman arrears of wages amounting to £2,865.04 within 28 days.

Those reasons were notified to the parties on 13th September 1995. Mr Judd served a Notice of Appeal on behalf of the company on 24th October 1995.

At the hearing of the appeal today, Mr Judd has again represented his company, and Mr Pinder has represented Ms Larkman.

We explained to Mr Judd at the outset that this tribunal can only hear appeals on questions of law. In so far as the Chairman made findings of fact, after hearing a conflict of oral evidence, that is a matter on which we have no power to interfere. Where is the error of law? It is not contended that there was any misinterpretation of the Wages Act.

Mr Judd's points were these. First, he alleged that there was bias on the part of the Chairman of the tribunal. He has sworn an affidavit in support of that. He says in his affidavit that the Chairman was confused by the presentation of Ms Larkman's case. He had been hastily substituted to deal with the case with insufficient time to digest it and to digest the evidence. He was struggling to reach a verdict. He said that he had been refused sight of the Chairman's Notes which he suspected would prove sketchy and confirm confusion. He then said this:

"As a result, the Chairman clutched at the straw of Appendix A16 [that is the retirement plan document, which I have already mentioned as part of the decision] and twice erroneously interpreted the document which was submitted unannounced. At this point I believe the understandable bias in favour of all individual applicants came into play to reach an unsubstantiated verdict."

He concluded that only bias could explain the illogical decision of the Chairman.

In accordance with the normal practice of this court, allegations of bias, as verified by affidavit, are submitted to the Chairman of the tribunal to comment on. The Chairman stated in his letter to this tribunal dated 6th February 1996, that it was wrong to suggest that the decision was a result of confusion on his part, or that there was any bias in the case. He denied that there was any truth in the suggestion that he had been hastily substituted to hear the case. He explains how he came to hear the case. He stated that he was willing to have copies of his notes disclosed to the parties if that was appropriate, and that would confirm the time which he finished the case, and his recollection of how long the case lasted.

The conclusion we have reached on this part of the case is that it is a mistaken criticism on the part of Mr Judd to allege bias on the part of the Chairman. A tribunal decision may be flawed by bias if it is demonstrated that the decision appears to have been reached, not by an impartial consideration of the relevant evidence and the relevant law, but as a result of some improper pressure or influence, or connection between the Chairman (or another member of the tribunal) and one of the parties or witnesses. It is not bias, in this sense, for a Chairman of a tribunal to make a decision on the evidence which involves rejecting the evidence of the unsuccessful party. It is the function of the Chairman, when faced with a conflict of evidence, to listen to it and to reach a conclusion as to which evidence is the more probable and which he therefore accepts.

As to the other points made by Mr Judd, he has taken us through his written argument in which he sets out the background to the formation of his company in 1992 as a computer services company, and to the appointment of Ms Larkman. His case that there were no deductions is supported by the fact that over eight different months in 1993 and 1994, and January 1995, Ms Larkman was paid at the rate of £1,000 per month. There was a fluctuation. She was paid £2,000 for other months, but this fluctuation was part of the normal practice. He pointed out this fact that it appears that only in January 1995 was an objection made by Ms Larkman to the fluctuation in remuneration. He says that that coincided with her deciding to leave and seek alternative employment.

As to the reliance by the Chairman on the pension benefit statement, (in our bundle of papers at page 3) he said that that document had been considered by the Chairman to be more important than it really was. The Chairman regarded the document as important because it stated at the top of the document, which was a statement of benefits as at 28th May 1994 that the net known earnings of Ms Larkman were £24,000 as at 28th September 1993. Mr Judd's argument on this point was that, in order to derive a monthly pension contribution, the person advising his company merely extrapolated a predicted future earnings level from the monthly target. That was not to be regarded as evidence of an agreement that Ms Larkman would in fact be paid £24,000 per year. He said that there was no evidence to support the decision of the Chairman. The Chairman had taken an erroneous view of the evidence and had reached an unreasonable conclusion on the facts. His explanation for the Chairman making the wrong decision was that there was underlying bias which caused him to make a decision that was legally incorrect.

We have considered those arguments in detail with both Mr Judd and Mr Pinder. We feel some sympathy with the position of Mr Judd and his company. It does seem to us that Mr Judd has a point on the evidence that he put before the tribunal in the form of the pay slips showing that there were fluctuations in the payments. It appears that there was no written complaint about those. The only written complaint was after the resignation.

On the other hand, appeals here are not decided on sympathy. They are certainly not to be decided by attempting to re-try the case when we have not heard the evidence. We must accept what the tribunal has found on the evidence. There is a clear finding in the extended reasons that, on the balance of probabilities, the version of the agreement given by Ms Larkman was more plausible and more likely, and therefore, accepted by him in preference to the version of the agreement given by Mr Judd.

We are unable to find any legal error in the Chairman's reliance on the retirement benefits document. That was a relevant document that he was entitled to take into account. We cannot see any error of law in the Chairman not accepting Mr Judd's submission that the normal practice as to payments, as evidenced by the pay slips, was proof that his version of the contract was right. The Chairman took those into account, but his decision in the end was based not only on the documents in the form of the retirement plan document and the pay slips; it was also on the basis of the oral evidence. Only the Chairman can decide what the facts are having heard the oral evidence. We have not heard Mr Judd give evidence or Ms Larkman give evidence. It is not our function to hear anybody giving evidence.

The position, therefore, is that, in our view, the extended reasons do not contain any legal error. Mr Judd may feel that he has suffered an injustice by having lost the case which he should have won. There is nothing we can do about that. We have to go by our examination of the reasons. There is nothing legally wrong with these reasons. It is not enough for us to think that, if we had heard this case, if we had heard the evidence, we might have reached a different conclusion.

For those reasons, we have decided that the appeal must fail. It is dismissed.

Application for costs and expenses is refused.