United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MRS L GOLDMAN (of Counsel) Messrs Alexander Johnson 11 Lanark Square Glengall Bridge Isle of Dogs London E14 9RE
For the Respondent	MR R WALKER (Father of Respondent and Solicitor)


 


JUDGE PETER CLARK: This is an appeal by the employer, Nebraska Group of Companies, against a decision of the Stratford Industrial Tribunal sitting on 14th May 1996, that the respondent employee's complaint brought under the Wages Act 1986 was in time. Extended reasons for that decision are dated 26th June 1996.

The Facts

The primary facts were largely undisputed.

The respondent commenced employment with the appellant as a sales executive on 9th April 1994. Under a written contract of employment dated 11th October 1994 his salary was payable monthly in arrears, normally on the last working day of each month, and each side was required to give one month's notice of termination of the contract.

On 20th July 1995, the respondent gave one month's written notice of termination of the employment, that is, to expire on 19th August.

The relationship between the parties then deteriorated and on 28th July they entered into a written agreement which provided:

"Nebraska and Michael Walker hereby agree to terminate the "Contract of Employment" signed by both parties on October 11th 1994."

The document then dealt with the restrictive covenants contained in the original contract, and the respondent covenanted not to deal with the appellant's clients for a period of 36 months from the date of the agreement.

On 1st August the respondent called at the appellant's premises and asked for his July pay cheque. He was told that it was not ready. He returned home assuming that it would arrive at the end of August, after the final reckoning. He acknowledged that he owed some money to the Company for computer components.

On 23rd August 1995 solicitors acting on behalf of the respondent wrote to the appellant in these terms:

"We are instructed by Mr. M. J. Walker in connection with the termination of his employment with you. We understand that Mr. Walker gave you one month's notice pursuant to his Contract of Employment with you, expiring on 20th August 1995.

Our client does not appear to have received his Tax Form P45 and we shall be grateful if you will kindly forward this to us without further delay."

At the end of August he did not receive a cheque. Telephone calls were made and on 6th September the appellant wrote to the respondent solicitors enclosing a form P45 which showed his date of leaving as 31st July 1995.

On 15th September the respondent's solicitors replied, thanking them for their letter enclosing the P45, but pointing out that no itemised pay statement had been provided since the month of June.

Thereafter an itemised pay statement for July was sent to the respondent, which prompted a letter from his solicitor dated 10th October in which he pointed out that no cheque for £918.86, the net pay due for July, according to the statement, had been enclosed.

On 17th October the appellant replied, alleging that the respondent was working for a competitor in breach of his undertaking not to do so contained in the agreement dated 28th July.

Further inconclusive correspondence followed and on 13th November 1995 the respondent's solicitor wrote to the Industrial Tribunal and followed up that letter with an originating application presented to the Central Office of Industrial Tribunals on 22nd November 1995 setting out his complaint under the Wages Act. He claimed unpaid wages from 1st July to 20th August 1995, the date on which he claimed his original notice of termination took effect.

The Law

The provisions of the Wages Act 1986 are now to be found in the Employment Rights Act 1996.

S.13 provides:

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

...

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

...

(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 tot he 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."

The question has arisen whether non-payment of wages can amount to a deduction from wages for the purposes of s.13(3). That question was resolved by the Court of Appeal in Delaney v Staples [1991] ICR 331. Non-payment is included in the expression "deduction".

S.23 of the Employment Rights Act 1996 provides:

"(1) A worker may present a complaint to an industrial tribunal-

(a) that his employer has made a deduction from his wages in contravention of section 13 ...

(2) Subject to subsection (4), an industrial tribunal shall not consider a complaint under this section unless it is presented before the end of the period of three months beginning with-

(a) in the case of a complaint relating to a deduction by the employer, the date of payment of the wages from which the deduction was made, ...

(3) Where a complaint is brought under this section in respect of-

(a) a series of deductions or payments, ...

the references in subsection (2) to the deduction or payment are to the last deduction or payment in the series ...

(4) Where the industrial tribunal is satisfied that it was not reasonably practicable for a complaint under this section to be presented before the end of the relevant period of three months, the tribunal may consider the complaint if it is presented within such further period as the tribunal considers reasonable."

We considered the proper approach for Industrial Tribunals to take when considering the question of limitation in Wages Act claims in Taylorplan Services Ltd v Jackson [1996] IRLR 184. At paragraph 18 I summarised the questions to be asked as follows:

"(1) Is this a complaint relating to one deduction or a series of deductions by the employer?

(2) If a single deduction, what was the date of the payment of wages from which the deduction was made?

(3) If a series of deductions, what was the date the last deduction?

(4) Was the relevant dated under (2), alternatively (3), above within the period of three months prior to the presentation of the complaint?

(5) If the answer to question (4) is in the negative, was it reasonably practicable for the complaint to be presented within the relevant three-month period?

(6) If the answer to question (5) is in the negative, does the tribunal consider that the complaint was nevertheless presented within a reasonable time?"

The Industrial Tribunal decision

In paragraph 4 of their reasons the tribunal state that the substance of their consideration had been directed entirely at the date of the deduction from the respondent's wages alleged against the appellant.

In answering that question the tribunal expressed itself to be entirely satisfied that the respondent was justified in his belief that he was to receive a cheque for his outstanding remuneration at the end of August 1995. That was borne out by the appellant sending the respondent's P45 on 6th September. Indeed that was the date on which the respondent might have taken the view that a deduction had been made. In either event the originating application was presented on 22nd November, within the primary limitation period of three months.

Alternatively, if it were necessary to do so, the tribunal would have found that it was not reasonably practicable to present the claim within time on the basis that the appellant's conduct, consisting of the confusion which was engendered by the appellant to the respondent, and the unspecific content of the 28th July Agreement.

The Appeal

In this appeal Mrs Goldman, on behalf of the appellant attacks the tribunal decision on three grounds:

(1) that the tribunal erred in law in finding that the limitation period began on 31st August 1995.

(2) that the alternative finding that it was not reasonably practicable to present the complaint in time was flawed.

(3) that the tribunal exhibited an appearance of bias, relying on the judgment of the Employment Appeal Tribunal in Peter Simper & Co Ltd v Cooke [1986] IRLR 19.

The beginning of the limitation period

The result of the Court of Appeal decision in Delaney v Staple, that non-payment of wages amounts to a deduction, gives rise to a further difficulty, not addressed in that case, as to limitation.

We return to the words of s.23(2)(a), "the date of payment of the wages for which the deduction was made". In the ordinary case the employee will know as soon as he receives his itemised pay statement and pay cheque that the alleged unlawful deduction has been made. However, where he received no payment on what date is the "deduction" made?

Here, Mrs Goldman submits that the contract terminated on 28th July 1995 when the agreement of that date was made. Therefore payment for July was due on 31st July. No payment was then made. Time started running from that date.

However, this is a preliminary issue. The question is what deductions are complained of. The respondent complained that he was not paid for the month of July and the period 1st to 20th August. That is a complaint of a series of deductions (July and part of August); and under the statute it is necessary to look at the date of the last deduction in the series.

Even if that is so, argues Mrs Goldman, final payment was due on 19th or 20th August. No payment was then received. Therefore time ran from 20th August at the latest.

We cannot accept that submission.

In our judgment it was open to the tribunal to find that since payment was normally made by the appellant on the last day of the month, the respondent could not have been aware that any deduction had been made in respect of August until the last day of that month.

On this basis we reject Mrs Goldman's first submission and uphold the tribunal's finding that time began to run on 31st August 1996. It follows that the originating application was presented within time on 22nd November and thus it is unnecessary for us to consider the tribunal's alternative finding as to reasonable practicability or Mr Walker's argument that a valid complaint was presented on 14th November by his letter dated 13th November. Smith v Auto Proprietory Ltd [1973] ICR 306.

Bias

The complaint is put in this way by the appellant's solicitor, Mr Johnson, who appeared below, in paragraph 4 of an affidavit sworn by him on 18th November 1996:

"4. After judgment had been given Mr. Walker, the Solicitor, collected his papers from the same member [of the tribunal] who had been smiling at him and as she handed the papers she wished him "Good Luck"."

The comments of the Chairman and both lay members have been obtained. None recall such an observation being made.

Mr Walker senior, a solicitor, who appeared below for the respondent, his son and before us, whilst also not recalling that comment being made, does recall that when he approached the bench at the conclusion of the hearing he mentioned that he would shortly be retiring from practice. If the lay member said "good luck" it was in relation to his impending retirement, not the future conduct of this case.

On that material it seems to us that if the comment was made, as Mr Johnson has said, it was in relation to Mr Walker's retirement and not this case. Accordingly we are unable to say that the conduct of the tribunal member complained of properly gave rise to an appearance of bias.

In these circumstances we shall dismiss this appeal, but before leaving the case we repeat our observations in earlier cases that the use of preliminary issue hearings may add to rather than reduce the time and expense involved in Industrial Tribunal litigation. It would have been desirable for this short case to have been listed for a full hearing, at which all the evidence could be received and the issue of limitation dealt with at the same time. Mrs Goldman is properly concerned that at a merits hearing the next Industrial Tribunal may feel bound by a finding of fact contained in paragraph 10(f) of this Industrial Tribunal's reasons that the contract continued until 20th August 1995, a matter hotly in dispute. In our judgment the next tribunal is not so bound under the principles of issue estoppel. For the purposes of deciding whether the complaint was in time, it was not necessary for the first Industrial Tribunal to make a finding as to the effective date of termination of the contract. That will be a matter for the next Industrial Tribunal, having heard all the evidence, to determine.