United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR D READE (of Counsel) Instructed by: Mr M Hossain 139 Headley Drive Ilford Essex IG2 6QJ
For the Respondent	MR S JONES (of Counsel) Instructed by: Messrs Holman Fenwick & Willan Solicitors Marlow House Lloyds Avenue London EC3N 3AL


 


THE HONOURABLE MRS JUSTICE COX

1. This is an appeal against the decision of an Employment Tribunal sitting at Stratford, promulgated on 14^th December 2001, relating to the correct calculation of the Appellants' emoluments for the purposes of the pension compensation lump sum payment made by the Respondent on the termination of their employment by reason of redundancy. The Appellants' complaint in respect of this matter was expressed as a claim for unlawful deduction from wages contrary to the provisions of section 23 of the Employment Rights Act 1996.
2. The lead Appellant, Mr. Hossain, who was the lead applicant below, was represented in the Tribunal by leading Counsel. Subsequently he drafted the grounds of appeal himself, appeared in person at the preliminary hearing of this appeal and provided a skeleton argument for our consideration. Today, however, he has been represented before us by David Reade of Counsel, who was instructed only very recently by new solicitors but has provided us with a supplemental skeleton argument, which formed the basis of his oral submissions. The Respondent was represented by Sean Jones of Counsel, who also appeared below. We are very grateful to both Counsel for their assistance in this case.
3. The relevant background to what was obviously a complicated and wide-ranging dispute can now be more shortly stated, since the issue for us to determine is a narrow one.
4. In September 1999 a total of 26 applicants, including the present Appellant, all of whom were long-serving employees of the Respondent bank, lodged Originating Applications with the Tribunal complaining of unfair selection for redundancy, unfair dismissal, breach of contract and unlawful deduction from wages. They were represented at that time by Lawford and Co., solicitors. All the applications were resisted. Mr. Hossain was selected as the lead applicant. All of them were U.K. residents appointed to positions at the bank, a nationalised bank in Bangladesh, in the 1970s and 1980s. At that time service with the bank was understood to provide a career for life but, in June 1999, they were made redundant and enhanced payments were made to them. The Tribunal found that all the applicants were resident in the U.K. at the time of their recruitment and that they remained U.K. residents, despite agreeing to be absorbed as "home-based" employees in approximately 1978. It was common ground between the parties that all bank employees working in this country were employed under contracts of employment governed by English law. Their salary had essentially three elements, namely basic salary (as paid to staff working in Bangladesh), a protected personal element and foreign and housing allowances.
5. There were at the outset a large number of issues arising for determination in the litigation but, following successful mediation, many fell away, including the unfair dismissal claims, leaving only three issues to be determined by the Tribunal. All related to the calculation of the sums which were received by the applicants on being made redundant. In relation to two of these issues, namely the claims in respect of arrears of housing allowance and earned leave entitlement on termination, the Tribunal ruled against Mr. Hossain. The third issue related to the pension claim and on this issue the Tribunal held in his favour, deciding that:

"…. the Applicant's claim in respect of the pension payment succeeds and the Respondent, having made an unauthorised deduction from the Applicant's pay, is ordered to pay, in the case of Mr. Hossain £1,440 to Mr. Hossain."

6. The applicants then lodged notices of appeal raising a number of different grounds. Mr. Hossain was the lead Appellant and, at the preliminary hearing on 20^th January 2003 before this Appeal Tribunal (Rimer J. presiding), all grounds of appeal were dismissed save the one which we have considered today, relating to the correct calculation of the emoluments for pension purposes. This affects eight of the Appellants, who were therefore permitted to proceed to a full hearing on this issue alone.

The Pension Issue

7. The issue arises in the following way. The pleaded claim as to pension was initially set out only very shortly in the originating application at paragraph 12.11 as follows:

"The Respondent has failed to pay to the Applicant his pension entitlement and provident fund which should have been paid in Taka in Dhaka."

Further Particulars were sought and provided in considerable detail by leading counsel on the Appellant's behalf, dated 15^th November 2000, as follows:

" (d) Pension

24 This is a claim for payments from the pension fund as at termination which have been miscalculated in relation to a small number of the home-based Applicants.

25 Their pensions were governed by the Sonali Bank Employee's Pension Fund Rules, with effect from 1 January 1958, as well as the National Pay Scale of the Bangladeshi Government (see above).

26 By Memorandum F/IU – 12/66/93 from the Government of East Pakistan, Finance Department, dated 2 September 1966, the calculation of pension payments was based on "emoluments", defined in paragraph 2(5) as including, inter alia, "personal pay". "Personal pay" is defined in Regulation 2(p) of the 1981 Regulations. It essentially represented that element of an employees' pay which compensated the employee for any detrimental disparity in pay he or she would otherwise suffer by transferring employment to the First Respondent. Memorandum MF/FD/REGN – 1/3P – 28/85/1067 from the Government Bangladesh, Finance Division confirmed the scale of pensions paid as a percentage of emoluments.

…

29 …. for those Applicants who claim under this head the "personal pay" element of their pay was not taken into account in the "emoluments" used to calculate the pension payment (see the documentation in relation to calculation of their payments)."

The complaint was thus that only basic pay and not, as the Appellants contended, basic pay plus personal protected pay, had been included in the calculation. There was, therefore, an alleged unlawful deduction of the personal or protected pay element in the calculation.

8. The documentation referred to in the Further and Better Particulars in relation to calculation of the payments appears, so far as is relevant, for the lead Appellant at page 104 of our bundle. In a format similar to that of a "Scott Schedule" the Appellant's pleaded and particularised claim under this head was therefore that there had been an unlawful deduction from wages of £1,440.
9. As is clear from Note 4 on page 107, at the time this documentation was prepared for the Tribunal hearing, the Respondent was contending that pension entitlement for the Applicants was determined by the 1995 Sonali Bank (Employees) Regulations, promulgated in Bengali in Dhakar and that, for the purposes of calculating the payments made to the Applicants, only basic pay was relevant. It is common ground however that, during the hearing, the Respondent abandoned reliance on the 1995 Regulations and sought to rely on a worked example pension calculation prepared by the Respondent's head office, where basic pay was used as the basis of the calculation. This was rejected by the Tribunal, who found in the Appellant's favour on his claim. It is necessary at this point to set out the Tribunal's findings in relation to the pension claim, which are at paragraphs 42 to 46 of the Extended Reasons:

"42. Mr. Hossain and seven others claim that their personal protected pay element of their pay was not taken into account to calculate the pension payment to which they were entitled. They therefore received less than their entitlement. It is not in dispute that they had an entitlement to a compensatory pension upon redundancy. The dispute is as to the meaning of the 'final pay' used in calculating the pension entitlement. 'Basic pay or mul bethon' (a small sum) was used by the Respondent in the calculation.

43 For much of this case, the Respondent based its defence to this claim on the assertion that by virtue of Regulation 52(3) of the 1995 Regulations, basic pay or 'mul bethon' was the proper basis of the calculation. After the cross-examination of Mr. Latif, the deputy general manager of the Bank called by the Respondent, the Respondent conceded that Regulation 52(3) did not bear one way or the other on the question of how final pay was to be determined for the purposes of the pension scheme. The Respondent has therefore abandoned what appeared to be their defence in reliance on Regulation 52(3). Rather late in the day, they placed reliance instead upon a worked example pension calculation prepared by the Respondent's head office where basic pay ('mul bethon') has been used as the basis of the calculation. The Respondent maintains that that method of calculation is correct and place reliance upon that worked calculation.

44 We have been conducted, by the industry of Mr. Millar [leading Counsel for the Applicants] in an enormously complicated paper trail through documents over the years, in an effort to convince us that the 'personal/protected' element of Mr. Hossain's pay (and that of the seven others) should have been included as the basis for calculation of the pension lump sum.

45 At the end of that trail, with the assistance of a signpost called 'emoluments' and the meaning of that word we are convinced that the personal/protected pay element of Mr. Hossain and the relevant Applicants should have been included in the calculation of their pension lump sum and was not included. We have concluded that, for the optee home-based persons concerned who had personal protected elements of their pay on absorption, the calculation based on the Taka sum, mul bethon, was incorrect. The worked example put before us by Mr. Jones as an indication to the contrary is not convincing.

46 It follows that Mr. Hossain and the other relevant Applicants succeed in this element of their case. The calculation should have been done on the basis that the personal/protected pay element was included. The amounts due to each Applicant are known to the parties. The lump sum payable to each of these persons at termination is an emolument 'referable to the employment'. The Tribunal therefore declares that, insofar as the payments did not include an element calculated on the basis of their personal/protected pay, the Respondent made unauthorised deductions from their pay and is ordered to pay them the difference."

10. Before the Tribunal the Appellant's case as to entitlement, which was upheld by the Tribunal, relied on the following (with page references to appropriate documents in our bundle):

"(a) Pursuant to the Sonali Bank (Employees) Service Regulations 1981 all permanent employees became members of the General Provident Fund and entitled to the "Pension and Death – CUM – Retirement Benefit" (72).

(b) The pension was to be calculated according to the length of qualifying service and "pay drawn immediately before the retirement" (73).

(c) The "pay drawn immediately before the retirement" was the same as "emoluments" as referred to in Head Office Circular No. 448 dated 21^st September 1989 (76).

(d) "Emoluments" had a clearly understood meaning for Government staff which was set out in Memorandum No. F/IU – 12/66/93, dated 2^nd September 1966, as set out at paragraph 7(5)(82)."

"(5) The term 'Emoluments' shall mean the emoluments which the Government servants was [sic] receiving immediately before his retirement and shall include-

(a) Pay as defined in rule 5(40) of East Bengal Service Rules, Part 1;

(b) Special pay granted in terms of rule 5(48) of East Bengal Service Rules, Part I

(c) Thchnical [sic] Pay;

(d) Personal Pay; and

(e) Any other emoluments which may specifically be declared as emoluments reckoning for pension."

The 1989 Circular and the 1966 Memorandum had been specifically referred to at paragraph 26 of the Further and Better Particulars provided by the Appellant. It is common ground that no other document before the Tribunal dealt with pension provision or calculation. There is a dispute between the parties about the adequacy of discovery which, in the event, is unnecessary for us to refer to in determining the issue before us. We note only that it appears to be accepted that most of the documentation before the Tribunal was in fact produced by the Appellant and that Mr. Jones, in the course of making his submissions, was constrained to observe that his clients were perhaps "not the most organised international banking organisation."

11. Before the Tribunal, therefore, the Appellant's case was and always had been that the 1995 Regulations did not apply and that his pension entitlement was governed by the 1981 Regulations and the other documents referred to in paragraph 10 above. The Respondent's concession in evidence that the 1995 Regulations did not in fact apply was therefore not relevant to the Appellant's case on pension calculation advanced in the Further and Better Particulars and at the hearing before the Tribunal.
12. The point in this Appeal has its foundation in the written closing submissions to the Tribunal prepared by leading counsel on the Appellant's behalf and specifically paragraphs 54 and 55 thereof, which read as follows:

"54. It has emerged in the course of the hearing that R considers that all of the sums received by its UK optee staff each month (basic pay, protected pay and allowances) to be part and parcel of their net "salary" [see 1.282] or "take home pay" [see especially the evidence of Mr. Latif on day 8 am when cross examined about 1.282]. The claim as pleaded and articulated in evidence by MMNH is, however, limited to basic plus protected pay (see the "other allow" column at 2.282 for the eight of the As) "final" pay for pension purposes.

55 Accordingly the ET is invited to consider whether the reality of the As employment in the UK requires that the phrases covering "final" pay for pension purposes be construed so as to cover not only protected/personal pay but this full final monthly pay. Those acting for A and the union are concerned to ensure that guidance capable of resolving all the As grievances is obtained from the ET's decision. If this point is not considered (but merely the claim as pleaded) this may not occur."

Written closing submissions were exchanged by the parties and were the subject of oral submissions on the last day of the hearing before the Tribunal, namely 5^th June 2001. It is common ground that Mr. Millar Q.C. made no application to amend the Originating Applications at any stage, but limited his submissions to an invitation to the Tribunal to "consider whether" final pay for pension purposes should be construed so as to cover full final monthly pay.

13. Mr. Reade submits that, in the light of the evidence from the Respondent's witness Mr. Latif in cross-examination, it became clear that the Respondent considered that in fact all sums received by its U.K. staff by way of salary should be included in the computation of the lump sum for pension entitlement. This he says would include not only personal pay in addition to basic pay, but all other allowances paid. If this is correct then the sum to be awarded to the Appellant is not the £1,440 claimed, but the vastly greater sum of £193,710 (see page 68 of our bundle). Mr. Reade submits that the Tribunal were invited to calculate the correct payment on that basis. Their failure to do so amounted to an error of law for the following reasons:

(i) The Tribunal ignored the "invitation" and failed to decide the matter and to give reasons. No decision with reasons was recorded on the last day of the hearing, 5^th June 2001. The extended reasons in the Decision promulgated on 14^th December 2001 make no reference whatsoever to the Respondent's evidence or the invitation and no reasons for declining it are given. There is therefore an error on the face of the Decision and this appeal should be allowed.

(ii) There was no necessity for any amendment to the pleaded claim and no question of lack of jurisdiction arises. The Appellant's complaint in broad terms at paragraph 12.11 of the originating application was that he had not been paid his pension entitlement. That was sufficiently broadly pleaded to encompass the claim for a more substantial sum, based on the Respondent's evidence, that calculation of the salary for pension purposes should include all allowances and should be the full final monthly salary. The narrowing of the pleaded claim in the Further and Better Particulars served subsequently does not prevent a Tribunal, hearing a complaint and acting in its investigatory capacity, from ruling in the Appellant's favour on this point, having regard to the totality of the evidence adduced and in particular to the oral evidence from the Respondent's witnesses. There is a broad discretionary power within the Rules and in particular Rules 11 and 12 which enable a Tribunal to conduct a fair enquiry and to determine this issue without an Applicant having specifically asked for it in his pleaded case.

14. As a secondary submission Mr. Reade contends that, if we are not sure that the Tribunal failed to make a decision on this point, but are of the view that they may have considered it and decided against the Appellant on the last day of the hearing, then we cannot consider the matter further and conclude this issue without first obtaining the Chairman's notes. Whilst notes of the final oral submissions on the last day of the hearing from the solicitors for both parties have been obtained and are included in the bundle they are not agreed documents and we can therefore place no reliance upon them for the purposes of this hearing. In that event an adjournment of this appeal would be necessary, no order for the Chairman's notes having been made previously.
15. Mr. Jones for the Respondent contends that this analysis is incorrect. He makes the following submissions.

(i) The Appellant had made it clear throughout, from the time of service of the Further and Better Particulars on his behalf, that his case depended on the 1981 Regulations, the 1989 Circular and the 1966 Memorandum and that the "emoluments" for the purposes of his pension calculation comprised the basic pay figure together with his personal/protected pay. It had always been open to him to claim that "emoluments" included every element of final salary but he had never done so.

(ii) The Respondent's witness, Mr. Latif, did not in fact concede in evidence, as Mr. Reade suggests, that all elements of the salary should be taken into account for the purposes of calculating pension entitlement. A correct reading of paragraph 54 of leading counsel's closing submissions (referred to above) shows that it is not in fact suggested that he did. Mr. Latif agreed only that the word "salary" in document 1.282 (our page 69), the "salary table of home based employees of Sonali Bank", was there being used to include all the elements referred to. This was a document produced by the Respondent for the purposes of determining individual employees' entitlements on termination and consists of columns of figures set out for this purpose. It makes no reference to pension entitlement or method of calculation. If Mr. Latif had expressly made the concession that Mr. Reade suggests he made there is no doubt that experienced leading counsel would have said so. Mr. Millar did not say in terms that the full final monthly salary should be taken into account for pension purposes. Instead he is careful to express himself in a more limited way and furthermore repeats that "the claim as pleaded and articulated in evidence …. is limited to basic plus protected pay".

(iii) If leading Counsel, in paragraphs 54 and 55 of his closing submissions, meant only that, whilst this could not form part of the Applicant's claim or result in any award for him personally but that an indication from the Tribunal that the calculation in reality should be on the basis of full final monthly pay would assist in relation to the remaining claims, then the Tribunal rightly ignored the invitation. The "invitation" could not assist the Appellant and this appeal is misconceived. If on the other hand it was being suggested that the Tribunal could make an award on this more generous basis in favour of this Applicant then there would have had to be an application to amend the claim. There was no such application and there was therefore no decision required from the Tribunal.

(iv) A Tribunal does not have a general power to make an award in these circumstances. The only complaint before them on the pension calculation issue was that the Respondent had unlawfully deducted the sum of £1,440 from the payment made to the Appellant, contrary to the provisions of the Employment Rights Act, because no account had been taken of the protected pay element for the purposes of calculating his pension entitlement. If any other unlawful deduction was to be claimed this could only be by way of an application to amend and no application was made. There was therefore nothing for the Tribunal to determine. Mr. Jones relies upon the case of Ahuja v Inghams (Accountants) [2002] ICR 1485.

16. In the alternative Mr. Jones submits that, if the Tribunal did exercise their discretion and decide not to consider the full monthly salary point at such a late point in the proceedings then:

(a) This appeal is out of time because the 42 days run from 5^th June 2001 since no extended reasons have been given (see Practice Direction paragraph 3(1)); and

(b) We cannot decide that matter without obtaining the Chairman's notes, there being no agreed account of what took place on the last day of the hearing and what, if anything, the Tribunal decided; and

(c) Further, if it was an exercise of discretion, this would be an interlocutory decision made in the proceedings not a decision of proceedings, which requires to be entered in the register and to have extended reasons provided. There cannot therefore be a complaint made about it.

17. After considering Counsels' submissions and the documents in this case we find in favour of the Respondent in this matter. We are not persuaded, firstly, that Mr. Latif ever conceded in evidence that the full final monthly salary was the figure to be used in calculating pension entitlement. There is no note of Mr. Latif's evidence before us and no notes of evidence have ever been requested by the Appellant. Mr. Reade's submission on this point relies entirely upon paragraphs 54 and 55 of leading Counsel's closing submissions. Our reading of paragraphs 54 and 55 of those written submissions is that leading Counsel recognised that such a claim was not and could not be advanced on behalf of this Appellant, but that a general observation about the matter from the Tribunal might be helpful in relation to resolving the remaining applications. If such a claim were possible for this Appellant we consider that an application to amend would have been made. Such an application was not made and the Tribunal entirely properly did not accept the invitation offered to them to make any general comment on the matter which went beyond the particular complaint before them. As the Court of Appeal pointed out in the Ahuja case:

"…. The Tribunal has a very wide and flexible jurisdiction to do justice in the case, as appears from Rule 11 of the Employment Tribunal's Rules of Procedure and they should not be discouraged in appropriate cases from allowing Applicants to amend their applications, if the evidence comes out somewhat differently than was originally pleaded. If there is no injustice to the Respondent in allowing such an amendment, then it would be appropriate for the Employment Tribunal to allow it rather than allow what might otherwise be a good claim to be defeated by the requirements that exist – for good reasons – for people to make clear what it is they are complaining about, so that the Respondents know how to respond to it with both evidence and argument." (Paragraph 42 in the judgment of Mummery LJ.)

18. In any event we accept Mr. Jones's submission that the Employment Tribunal's jurisdiction is limited by statute and that, in relation to an unlawful deduction from wages claim, contrary to the provisions of the Employment Rights Act 1996, they have jurisdiction to consider only the particular complaint which has been made pursuant to the provisions of that Act. Section 23 of that Act provides, so far as is relevant:

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

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

(2)…an employment 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…"

Section 24, dealing with the determination of complaints provides, so far as is relevant:

"Where a tribunal finds a complaint under section 23 well-founded, it shall make a declaration to that effect and shall order the employer –

in the case of a complaint under section 23(1)(a), to pay to the worker the amount of any deduction made in contravention of section 13,"

19. This Appellant's complaint, in accordance with section 23 of the 1996 Act, was and remained throughout that the Respondent had made an unauthorised deduction from his wages, contrary to section 13 of that Act, by failing to include the "personal protected pay" element of his salary in calculating his pension entitlement. No complaint was ever made of any other unauthorised deduction by reference to any other elements of his salary. Nor was this a complaint of a "series of deductions", contrary to section 23(3).
20. All the Tribunal's case management powers contained in the procedural rules are premised upon a complaint having lawfully been brought before it. Each complaint in relation to an unlawful deduction from wages is a discrete complaint, so that an applicant who alleges the unlawful deduction, for example, of a number of different allowances and of a protected pay element would be presenting several discrete claims, on some of which he might succeed whereas on others he might fail. In the Ahuja case the Court of Appeal agreed with the well-known dicta of Peter Gibson LJ. in the case of Chapman v Simon [1994] IRLR 124, which have been approved and adopted in a number of other cases since that time. At page 129, paragraph 42 he said:

"Under section 54 of the 1976 [Race Relations] Act, the complainant is entitled to complain to the tribunal that a person has committed an unlawful act of discrimination, but it is the act of which complaint is made and no other that the tribunal must consider and rule upon. If it finds that the complaint is well founded, the remedies which it can give the complainant under section 56(1) of the 1976 Act are specifically directed to the act to which the complaint relates. If the act of which complaint is made is found to be not proven, it is not for the tribunal to find another act of racial discrimination of which complaint has not been made to give a remedy in respect of that other act."

Whilst the factual context for the decision in Ahuja was a complaint of racial discrimination, the provisions conferring jurisdiction upon Employment Tribunals are materially similar as between the Race Relations Act of 1976 at section 54(1), section 56(1) and correspondingly section 23(1) and section 24 of the Employment Rights Act 1996. In our judgment the Chapman dicta apply equally to the present case.

21. In this case the Appellant pleaded, through his Further and Better Particulars, and at the hearing relied upon an alleged unlawful deduction of £1,440. We are unpersuaded by Mr. Reade's submission that a broad generalised claim of the kind made in this Originating Application is not constrained by subsequent, narrowing Further and Better Particulars. If this were the case then applicants would be well advised always to lodge a broad un-particularised originating application because they would not be bound by any further particulars served subsequently which narrow or limit the claim in a particular way. This is hardly consistent with good practice in Tribunal cases and the efforts now being made through exercise of good case management under the relevant procedural Regulations to ensure that the issues for determination by the Tribunal in any particular case are clarified at an early stage, enabling both parties to prepare sensibly and proportionately for the case they must present or resist.
22. We therefore conclude that an application to amend would have had to be made in this case if the Appellant wished the Tribunal to consider additional complaints of unlawful deductions. No such application having been made, no decision upon it was required by the Tribunal.
23. Our conclusion upon that issue is sufficient to dispose of this appeal and there is therefore no necessity for us to go on to consider whether we require the Chairman's notes in order to determine the remaining issues in the case. For these reasons we therefore dismiss this appeal.