United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR OLIVER SEGAL (of Counsel) Messrs Thompsons Solicitors Price House 37 Stoney Street The Lace Market Nottingham NG1 1NF
For the First Respondents	MR JEREMY McMULLEN QC Messrs Hammond Suddards Solicitors 2 Park Lane Leeds LS1 1ES
For the Second Respondents	MR CHRISTOPHER WALKER (of Counsel) Messrs Wansboroughs Willey Hargrave Solicitors 103 Temple Street Bristol BS99 7UD


 


JUDGE PETER CLARK: We have before us appeals by certain applicants before the Nottingham Industrial Tribunal sitting on 14th December 1995 and a cross-appeal by the first respondent, Reliance Security Services Ltd ["Reliance"] against that tribunal's decision promulgated with full reasons on 11th January 1996. We heard argument in the matter on 11th December 1997, allowed the appeals and dismissed the cross-appeal and made a declaration in terms agreed between Counsel and annexed to our Order of that date. We shall return to that eclaration later in this judgment, which now sets out our reasons for so ordering.

The facts

The tribunal's reasons are economical. Unhappily the Chairman, Mr J H Bellis, fell seriously ill after these cases were heard and it has proved impossible to obtain the Chairman's Notes of Evidence. In these exceptional circumstances we have admitted an agreed note prepared by the parties of the proceedings before the Industrial Tribunal. We have also been provided with the bundle of documents which was before the tribunal. From these various sources, the facts not being materially in dispute, we have ascertained the relevant events to be as follows.

Prior to 14th February 1994 each of the appellants was employed by Group 4 in the capacity of Security Officer at various collieries then owned and operated by British Coal Corporation ["BC"] under Group 4's terms and conditions of employment. ["The Group 4 terms"].

In 1993 BC sought tenders for contracts to provide security services at the collieries, specifying the hourly rate which it would pay. Reliance was the successful tenderer and on 14th February 1994 BC entered into security contracts with Reliance, the Group 4 contract having terminated.

At that date Group 4 did not believe that a relevant transfer had taken place; nor did Reliance. Accordingly Group 4 purported to pay to each of the appellants a statutory redundancy payment; pay in lieu of notice and an ex gratia payment.

Each of the appellants carried on working for Reliance without interruption. However, Reliance employed the appellants on terms which it is accepted were less favourable than the Group 4 terms. Those terms were contained in contracts of employment signed by the appellants under protest in March 1994.

On 1st March 1994 the appellants signed complaints to the Industrial Tribunal alleging against Reliance "incorrect Statement of Terms and Conditions" and unlawful deductions under the Wages Act 1986. Those complaints were presented to the tribunal on 24th March 1994. The complaint of Mr Waterfield proceeded under Case No: 18377/94.

It was the nature of the employees' case against Reliance that a relevant transfer had taken place between Group 4 and Reliance on 14th February 1994 and that accordingly they were entitled to enjoy the Group 4 terms during their employment with Reliance.

By their Notice of Appearance Reliance denied that a relevant transfer had taken place. It has since been accepted by Reliance that in fact a relevant transfer did then take place.

Thereafter parts of the business of BC were transferred to RJB Mining (UK) Ltd ["RJB"] and Annesley Bentink Mining Ltd ["ABM"].

On 17th August 1996 RJB terminated one security contract made with Reliance and entered into a new security contract with Conquest Security Services PLC ["Conquest"]. Of the appellants before us, 11 appellants including Mr Waterfield (known as the Waterfield 11) had been employed by Reliance and were, following 17th August 1996, employed by Conquest.

On 2nd August 1996 ABM terminated its security contract with Reliance and also entered into a new security contract with Conquest. Of the current appellants, five including Mr York (known as the York 5) had been employed by Reliance and were, following 2nd November 1996, employed by Conquest.

The remaining appellants, known as the Smith 4, left the employment of Reliance before the dates of the security contracts entered into between, respectively, RJB and ABM on the one part and Conquest on the other, more particularly on the dates shown against their names in the agreed Schedule annexed to our Order dated 11th December 1997.

Since the Industrial Tribunal's decision in the instant cases was promulgated on 11th January 1996, the Waterfield 11 have each presented a second complaint against Conquest, alleging that a relevant transfer took place between Reliance and Conquest when RJB entered into a new security contract with Conquest on 17th August 1996.

Those cases are presently proceeding in the Nottingham Industrial Tribunal and are numbered 2600791-2600801/96. We understand that Conquest accept that a relevant transfer took place in respect of the Waterfield 11, and that concession is recorded in a consent Order of the Industrial Tribunal dated 24th June 1997.

Similarly, the York 5 have presented second complaints against Conquest, based on an alleged relevant transfer between Reliance and Conquest on 2nd November 1996. The transfer is not admitted in those cases, and those proceedings are stayed pending the outcome of this appeal.

The Industrial Tribunal decision

Reverting to the tribunal's decision and reasons dated 11th January 1996, the tribunal found that in March 1994 the appellants signed contracts of employment with Reliance "admittedly under duress". Mr McMullen QC for Reliance accepts that that means "under protest".

A relevant transfer having been admitted by Reliance, the tribunal set out the issues and their findings at paragraphs 5-8 of their reasons in these terms:

"5 It was urged on behalf of the applicants that they should continue to be paid under the Group 4 terms and conditions of employment until the respondents dealt with the matter properly. This clearly involved giving notice to the applicants terminating their employment, and then obtaining their signatures to contracts of employment incorporating the respondents' terms and conditions of employment.

6 It seems to us that it would not be realistic. What occurred occured because of a misunderstanding as to the position in relation to Group 4, the respondents and the applicants. At the end of the day the applicant knew what the terms and conditions of their employment with the respondents would be. It seems to us that it would do justice to the case for the applicants to be paid under Group 4 terms and conditions for 3 months from 14 February 1994.

7 It was suggested that the applicants should give credit for the payments made by Group 4. We do not agree. A mistake clearly has been made. It was a mistake common to all the parties. It would not seem appropriate to relieve the respondents of their obligations because of a mistake by Group 4. We have decided that the applicant should not give credit for any monies paid to them by Group 4, apart from the ex-gratia payments.

8 To summarise, the applicants have been underpaid (and that is an unlawful deduction) for a period of 3 months from 14 February 1994 but they must give credit for the ex-gratia payments they received from Group 4."

Parties

The original parties to this appeal were the present appellants and each of them and Reliance. Subsequently Conquest were added as second respondent, on their application, by Order of the Registrar dated 5th December 1997. Plainly Reliance are a party interested in the appeal for the purpose of Rule 18 of the Employment Tribunal Rules 1993.

Mr McMullen has submitted that since Conquest have conceded that a relevant transfer took place between Reliance and Conquest in relation to the Waterfield 11 on 17th August 1996, then Conquest are the proper respondents to these appeals of the Waterfield 11, and not Reliance. He makes a similar submission in relation to the York 5, although the transfer is not admitted by Conquest in relation to those five. He accepts that Reliance is the proper respondent to the appeals of the Smith 4, who each left the employment of Reliance before any transfer or alleged transfer to Conquest.

In our judgment these submissions are ill-founded. At the time when this tribunal decision was promulgated the only relevant respondent to each of these appellants' claims was Reliance. What happened subsequently in relation to Conquest is immaterial. Although Conquest have been joined as second respondent to these appeals as a party interested, we make no Order against Conquest in the appeal. The argument that responsibility for payment of any unlawful deductions from the appellants' wages since 14th February 1994 rests with Conquest and not Reliance ought more properly to be addressed to the Industrial Tribunal hearing the second complaints of the Waterfield 11 and York 5.

The Appeal

Mr Segal takes essentially two points on behalf of the appellants. First, he submits that the tribunal erred in law in limiting the period of unlawful deductions to three months. As a matter of law the appellants never agreed to the Reliance Terms and Conditions on the tribunal's findings of fact. Accordingly, interesting questions as to whether, even had they consented to the Reliance terms, as opposed to the more favourable Group 4 terms, discussed in Wilson v St Helen's Borough Council [1997] IRLR 505, do not arise on the facts as found in this case.

Further, Reliance never terminated the contracts of employment of the appellants on notice, and offered new employment on the Reliance terms prior to Conquest taking over.

Thus, applying the principle to be found in Rigby v Ferodo Ltd [1988] ICR 29, a case which we see was cited to the Industrial Tribunal by Counsel then appearing for the appellants, given that a relevant transfer took place the appellants are entitled to recover unlawful deductions for the whole of the period 14th February 1994 until 17th August 1996 in respect of the Waterfield 11 and 2nd November 1996 in the cases of the York 5. In the cases of the Smith 4 entitlement continued until each of them left the employment of Reliance.

In response, Mr McMullen sought to persuade us that it was implicit in the tribunal's reasoning that there was a dismissal by Reliance for an economic technical or organisational reason. We find it quite impossible to draw such an inference. In our judgment the Industrial Tribunal, in an attempt to do what it saw to be rough and ready justice, incorrectly limited the period to three months. As a matter of law that limitation cannot stand and we shall set it aside.

Mr Segal's second point concerns the distinction which the tribunal purported to draw between the credit which it held that the appellants must give for ex-gratia payments received from Group 4, and the redundancy payments and pay in lieu of notice for which credit need not be given.

It is common ground between Counsel that all three payments stand or fall together. The issue in this appeal is whether any credit need be given by the appellants for those payments in their claims for unlawful deductions against Reliance, or not.

Mr Segal submits that no credit can, as a matter of law, be properly ordered to be given. They were not "overpayments of wages" within the meaning of s.14(1)(a) of the Employment Rights Act 1996; the payments were not "wages"; Reliance did not reclaim those monies from the appellants' wages prior to Conquest taking over.

The Cross-Appeal

Mr McMullen has argued that the appellants should give credit for all three Group 4 payments in their claims for unlawful deductions against Reliance. He accepts that s.14 does not apply in this case. However, he has sought to raise a new argument, not advanced below. relying on s.13 of the 1996 Act.

Having listened to that argument de bene esse we reject it on its merits. It runs like this. It was an express term of the Reliance terms, not in conflict with the Group 4 terms, that by Clause 2.8:

"Errors causing under and overpayment of wages will be corrected by adjustment of wages in the following weeks."

Based on s.13(1)(a) of the 1996 Act he contended that first, the payments made by Group 4 were made under a mistake of law. Accordingly they were payments made "in error" within the meaning of Clause 2.8. He acknowledged that on the current state of the law it was not open to him to argue before this tribunal that monies paid under a mistake of law, that is, that no relevant transfer had taken place between Group 4 and Reliance, entitled Group 4 to claim restitution. He reserved his position as to that contention for argument in a higher court.

However, we do not solely reject his argument on that ground. It proceeds on the basis that s.13(1)(a) applies, that is Clause 2.8 authorises a deduction from wages by Reliance of payments made in error by Group 4. However that cannot apply, in our judgment, where no such deduction was made during the currency of the appellants' employment with Reliance. It is now too late, even if those sums could properly have been deducted from wages during the employment, which we doubt.

What Mr McMullen is seeking to do is to raise a restitutionary claim by way of set-off in these complaints of unlawful deductions from wages. The Industrial Tribunal has and had no jurisdiction to entertain such a claim, whether well-founded or not.

Accordingly the cross-appeal, supported by Mr Walker on behalf of Conquest, must be dismissed and the appeal succeeds on both limbs advanced by Mr Segal.

The result is that we make the declaration set out in the agreed Schedule with one correction. We note that the Schedule refers to the "Waterfield 11" (Case Nos. 260079-2600801/96). Those are the case numbers of the second complaints made by the Waterfield 11 against Conquest, which are still to be determined by the Industrial Tribunal. We think that the Schedule ought to refer to the first complaints presented by the Waterfield 11 on 24th March 1994. In Mr Waterfield's own case that was Case No. 18377/94. Accordingly, if we are correct, we direct that the parties submit an agreed altered Schedule, identifying the correct case numbers in respect of the Waterfield 11, which will then be attached to our Order dated 11th December 1997 in substitution for the existing agreed Schedule. We shall correct the error apparently made by Counsel in the agreed Schedule under Rule 33(3).