United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR C QUINN (of Counsel) Messrs Thompsons Solicitors Congress House Great Russell Street London WC1B 3LW
For the Respondents	MR P DOUGHTY (of Counsel) 17 Carlton Crescent Southampton SO15 2XR


 


JUDGE PETER CLARK: At all relevant times Mr Johnson was employed by the Respondent as a Probation Officer. Two days after joining the Service in September 1984 he was told by his Senior Probation Officer that he needed a car to undertake his duties. As a result he applied for a car loan which he used to purchase a car. He has updated his vehicle from time to time, again with the assistance of a loan from his employers.

1. The Respondent operated a motor car allowance scheme. Its terms provided that "casual users", those for whom it is merely desirable that a car should be available when required for business use, received a mileage figure, that is, so much per mile for the use of a car on the employer's business. "Essential car users", those whom the Probation Committee determined that it is essential in the interests of the efficient conduct of business should use their private car in carrying out official duties, received a lump sum allowance and a mileage rate for actual business travel.
2. The Appellant fell into the latter category until he was reclassified as a casual user. That meant the end of his lump sum allowance. In these circumstances he presented a complaint of breach of contract to the Southampton Employment Tribunal on 8 May 1998.
3. The claim was resisted and came on for hearing before a Chairman, Mr N. Jenkinson, sitting alone at Southampton on 23 July 1998. It was pointed out to the Appellant, who appeared in person, that the Tribunal had no jurisdiction to entertain a breach of contract claim in circumstances where his employment continued. There had been no termination of employment for the purposes of Article 4 (c) of the Employment Tribunals Extension of Jurisdiction Order 1994.
4. In these circumstances the Appellant accepted, on the Chairman's invitation, the opportunity to reformulate his claim as one of unlawful deductions from wages under section 13 of the Employment Rights Act 1996.
5. That raised a preliminary question. Did his claim relate to "wages" as defined by section 27 of the Act.
6. Section 27 provides, so far as is material:

"27. Meaning of 'wages' etc.

(1) In this Part 'wages', in relation to a worker, means any sums payable to the worker in connection with his employment, including –

(a) any fee, bonus, commission, holiday pay or other emolument referable to his employment, whether payable under his contract or otherwise,

…

but excluding any payments within subsection (2).

(2) Those payments are –

(a) any payment by way of an advance under an agreement for a loan or by way of an advance of wages (but without prejudice to the application of section 13 to any deduction made from the worker's wages in respect of any such advance),

(b) any payment in respect of expenses incurred by the worker in carrying out his employment,

…"

7. The Chairman concluded, in a decision with Extended Reasons promulgated on 29 July 1998, that the essential car user allowance was payment in respect of expenses within the meaning of section 27 (2)(b) of the Act; and accordingly no complaint arose under section 13. In reaching that conclusion the Chairman considered the decisions of this Appeal Tribunal in Barrie v Rochdale Metropolitan Borough Council EAT/224/94, 5 May 1995 Unreported, Morison J presiding and London Borough of Southwark v O'Brien [1996] IRLR 420, Mummery J presiding.
8. Against that decision the Appellant appealed by a Notice dated 30 August 1998. The point which he then took was that his case ought to have been distinguished from that of O'Brien because he, the Appellant, was carrying out a statutory responsibility whereas Mr O'Brien, a joiner employed by Southwark Council, was not.
9. The appeal was permitted to proceed to this full hearing by a division of the Appeal Tribunal presided over by Judge Colin Smith QC, sitting on 3 February 1999. In giving the judgment of the Tribunal, the learned Judge identified the issue on appeal in this way:

"The question which falls to be decided is whether the lump sum allowance is different in kind from the mileage allowance and is arguably wages, whereas the mileage allowance is expenses, despite the decision in the case of London Borough of Southwark v O'Brien [1996] IRLR 420 in which the position was arguably different because the employee in O'Brien was only in receipt of a mileage allowance."

10. It is that latter formulation of the appeal which has been argued before us today by Mr Quinn on behalf of the Appellant. Before turning to the substantive issue in the appeal we should record two preliminary observations made by Mr Quinn.
11. First, he invites us to endorse the observations of Mummery J in O'Brien, paragraphs 30-33, as to the desirability of lay members sitting on the former Wages Act cases such as this at the Employment Tribunal. The benefit of their experience on such questions cannot be underestimated. We readily do so. Speaking for myself I have found it of particular assistance to have the benefit of my lay colleagues' industrial experience in determining this appeal.
12. Secondly, he points out the undesirability, in the context of this case, of the limitation in the Tribunal's breach of contract jurisdiction to cases where dismissal has taken place. Again, we agree. This claim, as we shall explain, is, as the Appellant originally formulated it, one of breach of contract. It ought to be justiciable before the Employment Tribunal as a breach of contract claim. Instead it will have to go to the County Court if this appeal fails.
13. As to the substantive issue, Mr Quinn submits that the cases of Barrie and O'Brien are distinguishable, not only on their facts but on principle. In Barrie the Applicant employees were entitled to a car allowance, part of which was by way of a fixed monthly payment and part referable to a fixed mileage allowance, depending on the engine capacity of their vehicle. The employer sought to alter the engine capacity bandings, causing the employees to receive lower allowance payments than before. That was held not to be an unlawful deduction from wages, the payments being in respect of expenses. In O'Brien the employer withdrew a mileage allowance which was paid to the Applicant in respect of mileage done by him on Trade Union business. The Employment Tribunal found that the claim was justiciable as an unlawful deduction claim. That decision was overturned on appeal.
14. Here, submits Mr Quinn, what has happened is that the lump sum allowance has been removed in Mr Johnson's case. That is not a payment referable to any expenses incurred by him. It forms part of his emolument. The Act applies.
15. We are quite unable to accept that submission. It seems to us that the essential car user allowance comprises an element attributable to the general expense of running a car, necessary for the proper discharge of the employee's duties, coupled with a fixed mileage allowance. That there may be an element of profit to the employee does not alter the fact that the total allowance is payment in respect of expenses incurred by the worker in carrying out his employment. Similarly, with the casual user allowance. There is no difference in principle between the two for the purposes of the statutory definition of wages in our judgment.
16. In these circumstances we are unable to discern any distinction in principle between this case and those of Barrie and O'Brien. We shall follow the reasoning in those cases. The Chairman reached a permissible conclusion on the facts before him. This appeal is dismissed.