United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant (2 March 2005) For the Appellant (24 May 2005)

MR M FOSTER (Solicitor) MS NAOMI ELLENBOGEN (Of Counsel) Instructed by Messrs Jacksons Commercial & Private Law Innovation House Yarm Road Stockton on Tees TS18 3TN

For the Respondent

MR DAMIAN McCARTHY (Of Counsel) Instructed by Law for All PO Box 230 Brentford Middlesex TW8 9FL

SUMMARY

Unlawful Deduction from wages and Working Time Regulations

Interesting point on C/M alone jurisdiction to consider WTR points on 'Wages Act' claim. See Ainsworth (CA). Jurisdiction of Employment Appeal Tribunal Judge alone to consider substantive WTR argument.


 


HIS HONOUR JUDGE PETER CLARK

1. This appeal raises a jurisdictional point. It is brought by British Bakeries Limited, the Respondent before the Watford Employment Tribunal against the reserved judgment of a Chairman (Ms Karon Monaghan sitting alone), promulgated with extended reasons on 11 October 2004, upholding the Claimant, Mr Nascimento's complaints adjudicated upon under sections 11 and 23 of the Employment Rights Act 1996 (ERA). It is necessary to set out the history of this matter in some detail.
2. By an application to the Tribunal received on 2 June 2004, the Claimant described his complaint as 'Holiday Entitlement'. The claim was brought against the Respondent, by whom he was and continues to be employed as a driver based at their Greenford Depot, that employment having commenced on 6 March 2003. The claim was resisted.
3. The application was listed before a Chairman sitting alone on 23 July 2004. Having received notice of that hearing the Respondent's solicitors wrote to the Tribunal on 29 June querying whether the matter should be heard by a full Employment Tribunal, that is a Chairman and two lay members. It was pointed out in that letter that the Tribunal had no jurisdiction to hear the Claimant's claim by way of a claim for breach of contract since he was still in the Respondent's employment (see Article 3(c)). Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994, (the 1994 Order). The claim appeared to be brought, it was contended, under regulation 30(5) of the Working Time Regulations 1998, (WTR), in which case it could not be heard by a Chairman alone, see section 4 of the Employment Tribunals Act 1996 (ETA).
4. On 5 July 2004 a Chairman, Mr Adamson, directed the Claimant to inform the Tribunal by 13 July whether his application was brought pursuant to:

"1 WTR 1998.

2. Part 2 ERA 1996, that is a claim for unauthorised deductions from wages (see section 13 ERA) brought under section 23 ERA.

3. The 1994 Order (breach of contract)."

The Claimant, then acting in person (although he was assisted by Mr Huw Thomas, a friend at the hearing before Ms Monaghan), replied on 7 July, stating that he was seeking legal advice and requesting an extension of time. On 14 July a Chairman, Mr R Postle extended time for the Claimant's response to the 16 July and referred to the Claimant's request for a postponement of the hearing listed for 23 July on the grounds that he would then be on holiday in Portugal.

5. On 16 July the Claimant faxed a letter to the Tribunal. He still had not received legal advice although he raised the possibility of a named solicitor acting for him. Meanwhile, he formally requested a postponement until after he returned from Portugal on 8 August.
6. On 19 July a Chairman, Mr Mahoney, granted the postponement request and extended time for the Claimant to specify his cause(s) of action until 15 August.
7. On 19 August another Chairman, Ms D Thomas gave the Claimant notice that if he did not comply with the order to specify his cause(s) of Action his Application may be struck out. In response the Claimant wrote a letter, received by the Tribunal on 24 August, stating:

"My claim is Breach of Contract and claim for unlawful deduction of wages."

8. On this basis the contested application came on for hearing before Ms Monaghan, sitting alone, on 10 September 2004. Both parties were present; the Claimant was represented by Mr Thomas and the Respondent by its solicitor, Mr Foster.
9. As appears from paragraph 1 of her reasons, the Chairman acknowledged that she could not deal with a claim brought under WTR 1998 because she was sitting alone. Such a claim is not included in the list of 'Chairman alone' claims contained in section 4(3) ETA.. Pausing there, I cannot understand the rationale for that exclusion from Chairman alone jurisdiction, which extends, among others, to unauthorized deductions claims (section 4(2) and (3)(c)). Nevertheless, that is the clear intention of Parliament and can only be changed by Parliament.
10. The Chairman held, correctly, at paragraph 13 of her reasons that she had no jurisdiction to entertain a complaint for breach of contract under the 1994 Order (see Article 3(c) referred to earlier. The Chairman also recorded that it was agreed between the parties that she should deal with the matter (a) under Part 2 ERA (as the Claimant had indicated in his letter of 24 August) and (b) under section 11 ERA (a permissible Chairman alone claim under ETA section 4(3)(c)), that is, a reference to the Tribunal in relation to the written Statement of Particulars of the Claimant's Terms and Conditions of Employment issued to him by the Respondent. At paragraph 1 of her Reasons the Chairman describes the section 11 application as being "for the purposes of making a determination as to what the Claimant's true terms and conditions of employment are, having regard to the disputed claim in respect of holiday entitlement."
11. At paragraph 2 of her Reasons the Chairman identified the following substantive issues in the case.

"a) whether the Applicant (Claimant) has a contractual or other lawful entitlement

to 25 days holiday per year in total and in addition to any rostered rest time;

b) whether it is lawful to treat rostered rest periods as holiday for the purposes of the Working Time Regulations 1998."

12. In making certain findings of fact (Reasons paragraphs 5-12) the Chairman referred to a collective agreement made between the Respondent and the United Road Transport Union (URTU) in about 1999. It provided for a fixed rota system and holiday arrangements as follows:

"a) a 6 week rolling rota;

b) a requirement that drivers work for the first 5 weeks of their 6 week block;

c) a working week from Monday-Saturday inclusive with every Sunday off;

d) a provision that the sixth week of the 6 week block be a period during which the driver is not required to work. (The Chairman described this as a rostered rest period);

e) provision that the sixth week will be treated as made up of (a) accrued time that the drivers had built up by virtue of the fact that during the first five weeks they work a longer week than they would have done prior to the implementation of the collective agreement and (b) a portion of their annual leave;

f) an entitlement to 25 days annual leave – 13 of which will be allocated by management to form part of the sixth week, during which the driver is not required to work;

g) an entitlement to take the remaining 12 days in holiday at a time of the driver's choosing in blocks of 1 or 2 weeks subject to the needs of the business."

13. Prior to commencing employment with the Respondent the Claimant was interviewed by Mr Ingram, the Distribution Operations Manager at Greenford, in February 2003. After he commenced work the Claimant was issued with written particulars of his Terms and Conditions of Employment, which he signed as having read and understood the contents. The term relating to holiday entitlement read:

"a) holiday allowance is 25 days per annum, the company's holiday year runs from 1 April to 31

March……. Please note that 13 days of your entitlement will be allocated by your department

manager to ensure smooth running of the shift pattern and you will be able to agree, seek the

remaining 12 days with management."

14. The Chairman described that term as ambiguous. An issue of fact arose in the oral evidence of the Claimant and Mr Ingram as to what, if anything, Mr Ingram told the Claimant about his holiday entitlement at the interview in February 2003. The Chairman resolved that issue by preferring Mr Ingram's evidence to that of the Claimant. She found (Reasons paragraph 8) that Mr Ingram explained that 13 days of the Claimant's holiday entitlement would be treated as having been taken during the rostered rest period. She rejected the Claimant's evidence that he was told that the 25 days holiday was in addition to the rostered 6^th week off.
15. In relation to the two claims before her (the unauthorized deductions claim under section 23 ERA and the section 11 reference) the Chairman found, at paragraph 17 of her Reasons:

"As for the question whether the "deduction" was contractually authorised I find that it was so authorised. I conclude that the holiday arrangements which form the subject of the collective agreement described above form part of the applicant's contract of employment. In so concluding I bear in mind in my findings above that the arrangements were fully explained to the Applicant at the interview and he accepted employment on those terms. Whilst the written particulars were ambiguous they did not vary those terms and the Applicant's misunderstanding in relation to the same does not affect the objectively determined contractual position."

16. Pausing there, on those findings there were no unauthorized deductions. The contract of employment, properly construed, provided for 13 of the Claimant's 25 holiday days to be allocated to rotating weeks off every 6 weeks; the Statement of Terms and Conditions of Employment, although ambiguous, did not depart from the contractual terms. It followed that both heads of claim failed.
17. However, the Chairman went on to consider what she described (Reasons paragraph 18) as the only issue remaining, namely, whether the Respondent was lawfully entitled to require the Claimant to treat certain of his holiday entitlements as having been taken during his rostered rest periods.
18. Whilst emphasizing that she had no jurisdiction , sitting alone, to hear a claim under WTR, she nevertheless went onto hold that WTR provided a relevant context for the determination of the issues before her and proceeded to consider the application of the Regulations to the Claimant.
19. She found that although the Claimant was not a worker for the purposes of a number of protections afforded by the Regulations by virtue of regulation 18(4), that exclusion did not apply to holiday entitlement under regulation 13; that under WTR holiday and rest time were to be regarded as distinct periods; that under regulation15 a worker may take leave to which he is entitled on days which he elects by giving notice to his employer, but that the employer is only entitled to require a worker to take leave on a particular day where the day is specified. The 6 week rota arrangement, she held, did not identify specific days allocated as holiday and thus offended Regulation 15(3).
20. In these circumstances the Chairman reached the following conclusion expressed in her Reasons thus at paragraphs 30-31:

"30 - For the reasons given above, I conclude that a) the Applicant is entitled to 24 days holiday a year in addition to his rostered rest periods by reason of the Working Time Regulations 1998; b) the Applicant is entitled to an additional day in holiday by reason of his contractual entitlement; c) the Respondent's arrangements for holiday are inconsistent with the requirements of Regulation 13 of the Working Time Regulations 1998 because they do not allow for discreet rest and holiday periods and nor do they satisfy the requirements of Regulation 15 in respect of notice."

"31 Accordingly the Respondents are not entitled to require the Applicant to treat his rostered days off as holiday. The failure to pay him for 12 days holiday therefore constitutes an unlawful deduction from his wages within the meaning of section 13 of the Employment Rights Act 1996, to the extent that I am required to do so, I conclude that the Applicant's particulars of employment should include an entitlement to 24 days holiday per annum by reason of the Working Time Regulations, in addition to the Applicant's rostered rest days, and a further day to which he is contractually entitled."

21. Against the Chairman's judgment the Respondent appealed by a Notice lodged on 19 November. Four separate grounds of appeal were advanced. I should set them out in full:

"1. That the Employment Tribunal being a Chairman sitting alone, did not pursuant to section 4, Employment Tribunals Act 1996, have jurisdiction to deal with any matter under the Working Time Regulations 1998. In paragraphs 2.16 and 2.18-.31 of its Reasons, the Employment Tribunal has demonstrated that it did so deal with the matter under the Working Time Regulations 1998.

2. That the Employment Tribunal did not have jurisdiction to hear a claim under the provisions of the Working Time Regulations 1998 because the Respondent had on enquiry by the Regional Secretary of the Watford Employment Tribunal, confirmed by an undated letter, received by the Employment Tribunal on 24 August 2004, elected to pursue claims of breach of contract and unlawful deduction from wages only.

3. That the Employment Tribunal erred in law in finding that a relevant agreement for the purpose of Regulation 15(5) Working Time Regulations 1998 must mention that Regulation if it is to validly vary or exclude the notice requirements of Regulation 15(3) Working Time Regulations 1998 (paragraph 25 Reasons).

4. That the Employment Tribunal erred in law in taking account in its judgment (paragraphs 21, 22, 26, 27, 30 and 31 Reasons) of the provisions of Regulations 4(1) and (2), 6(1), (2) and (7), 10(1), 11(1) and (2), and 12(1) of the Working Time Regulations 1998. The Respondent is a worker who performs mobile road transport activities and is excluded by virtue of Regulation 18(4) Working Time Regulations 1998, from the benefit of those provisions.

22. The appeal was sifted on paper by Burton P who ordered a Full Hearing of the appeal before a Judge sitting alone, this being an appeal from a Chairman sitting alone, (see section 28(4) ETA). He also directed that the parties address, in their skeleton arguments, the rolled-up holiday pay question considered in Marshalls Clay (Employment Appeals Tribunal and Court of Appeal) and Smith v Morrisroe's (Employment Appeals Tribunal 0563/04/SM) insofar as relevant.
23. Thus the appeal came before me, sitting alone, on 2 March 2005. On that occasion Mr Foster appeared on behalf of the Respondent; Mr Damian McCarthy represented the Claimant. Prior to the hearing both advocates submitted skeleton arguments. In his, Mr Foster indicated that he would not be relying on his fourth ground of appeal and accordingly Mr McCarthy did not prepare himself for the hearing in relation to this point, although he had referred to it in his skeleton argument.
24. During the course of oral argument Mr Foster reconsidered his withdrawal of the fourth ground of appeal and sought permission to reinstate that ground before me. Mr McCarthy opposed that application. I heard further argument and granted permission to the Respondent to restore that ground of appeal on terms, not opposed by Mr Foster, that the appeal be adjourned to allow Mr McCarthy to consider his position, with the Respondent paying the costs thrown away by the adjournment.
25. The matter now returns to me today. On this occasion Miss Naomi Ellenbogen of Counsel appears on behalf of the Respondent. She has submitted a supplementary skeleton argument which addresses substantive issues in relation to the Chairman's findings as to the application of WTR to the Claimant's employment with the Respondent. Those submissions do not detract from what she there described as the Respondent's primary contention, namely that the Chairman did purportedly determine a complaint under WTR, having, as she herself acknowledged, no jurisdiction to do so, sitting alone, by virtue of section 4 ETA. I must deal with that primary contention.
26. Listening to the argument advanced by Mr Foster on behalf of the Respondent on the last occasion I confess that I was less than impressed with the first two grounds of appeal. My view was then coloured by the line of authority in the Employment Appeal Tribunal, first List Design Group Ltd v Douglas [2002) ICR 686, (Mr Justice Bell presiding), later followed by a division on which I sat in Canada Life Ltd v Gray [2004) IRR 673, to the effect that a claim which may be brought under Regulation 30 WTR may equally be brought by way of an unauthorized deductions claim under Part II ERA.
27. However, there has been an important development in this area of the law since 2 March; that is the Court of Appeal decision in Commissioners of Inland Revenue v Ainsworth [2005] EWCA Civ 441 delivered on 22 April 2005. I have drawn Counsel's attention to the judgments in that case and received submissions on its effect in relation to the current appeal. The material passage is to be found in the judgment of Lord Justice Maurice Kay (with which Laws and Kennedy LJJ agreed) at paragraphs 21-24. The approach in List Design v Canada Life was disapproved. A claim which relies on WTR can only be brought under regulation 30 of the Regulations, as I understand the judgment.
28. The effect of the Court of Appeal decision in Ainsworth, it seems to me, is to make absolutely plain that the Claimant here could only succeed in his claim by bringing a complaint under regulation 30 WTR. The real basis of the Chairman's decision, as I read her Reasons, is that the contractual term, as she found it to be, offended Regulations 13 and 15 WTR. The Claimant could not, contrary to the Employment Appeal Tribunal's decision in List Design and Canada Life, rely upon the provisions of WTR in a claim for unauthorized deductions from wages. That is what the Chairman understandably permitted him to do on the state of the Employment Appeal Tribunal authority at the time. The law has now been revealed differently by the Court of Appeal in Ainsworth. In my judgment she had no jurisdiction to entertain that complaint by virtue of her sitting alone. Consequently the Tribunal decision must be set aside for want of jurisdiction insofar as it relies upon WTR; it must be set aside on the Chairman's findings as to the merits of the section 11 and Part II ERA claims properly brought. Accordingly, the appeal succeeds.
29. That leaves the question as to whether I am able now to deal with the substantive issues raised as to the Chairman's findings on the construction of WTR applied to the facts of this case as both parties urge me to do. I find that I cannot for two reasons:

(1) Since a Tribunal Chairman sitting alone has no jurisdiction, in my judgment to consider a claim brought under WTR, neither do I, sitting alone. Having found that the Chairman purported to exercise a jurisdiction which she did not have it would be wrong for me to go further and assume that jurisdiction myself.

(2) In any event, the Claimant was put to his election. He indicated on 24 August 2004 that his claims were for breach of contract and unauthorized deductions from wages. He did not advance a claim under WTR, either then or at the hearing before the Chairman. A tribunal is required only to determine the claims before it. Chapman v Simon [1994] IRLR 124. It seems to me that it would be wrong to remit this case to a full Tribunal to consider a claim now formulated under WTR.

30. Miss Ellenbogen has raised the spectre of issue estoppel and the rule in Henderson v Henderson should the Claimant now bring a fresh claim under regulation 30 WTR arising out of the same contractual term which has continued to apply in his employment with the Respondent. I make no observations on the merits or otherwise of such argument which would be a matter for the Employment Tribunal seized of any such new claim.
31. Accordingly, having allowed the Respondent's appeal, I shall dismiss the Application.