United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	Miss K Newton (of Counsel) Messrs Beachcroft Wansbroughs Solicitors 100 Fetter Lane London EC4A 1BN
For the Respondent	Mr K Atchoe (The Appellant in Person and Ms Reid, friend)


 


Summary

Unlawful Deduction from Wages – Ready, Willing and Able to Work

As the Employment Tribunal had found that the Respondent had the right to take the Claimant off stand-by duties on health and safety grounds, the consequent reduction in pay was not an unauthorised deduction. He was then paid what was properly payable under Employment Rights Act 1996 s 13(3). The Employment Tribunal also relied on authorities without giving the Claimant the opportunity to make submissions, and the authorities did not support the Employment Tribunals reasoning. Albion Hotel applied. Employment Tribunal Judgment reversed.


 


HIS HONOUR JUDGE McMULLEN QC

1. This case is about unlawful deductions from pay. The judgment represents the views of all three members. We will refer to the parties as Claimant and Respondent.

Introduction

2. It is an appeal by the Respondent in those proceedings against a reserved judgment of an Employment Tribunal sitting at London (Central), Chairman Mr R Wilson QC registered on 9 January 2006. As here, the Claimant represented himself and the Respondent was represented by Miss Kathryn Newton of Counsel.

The issues

3. The essential issues as defined by the Employment Tribunal were these:-

"2. "Whether the Claimant is entitled to be paid a sum by the Respondent in respect of on-call allowances that would have been paid but for the fact that the Claimant was taken off the on-call rota, as an unauthorised deduction from wages?"

3. In order to reach a determination on the principal issue, the Tribunal will have to consider the following:

(1) Did the Respondent make a deduction from the Claimant's wages?

(2) Was the deduction unauthorised?

(3) What amount, if any, is payable by the Respondent to the Claimant in respect of any unauthorised deduction?"

The contract claim referred to there was dismissed as it did not arise on the termination of employment, for the Claimant is still employed.

4. The arguments put by the parties were these:-

"8. The Respondent denied that the Claimant was entitled to any amount on ht grounds of an unauthorised deduction of wages. The Respondent contended that it was a contractual requirement for the Claimant to hold the relevant trade qualifications and that failure to hold these qualifications would amount to a breach of contract oh his part. The Respondent maintained that it had a right under the Claimant's contract of employment to remove him from the on-call roster duties on Health and Safety grounds, and that consequently the Claimant had no right to be paid for work he did not carry out . The Respondent further contended that the Claimant's alleged refusal to provide copies of his core trade qualifications when requested amounted to a failure to comply with a reasonable management instruction."

The Tribunal decided in the Claimant's favour, the Respondent appeals. Directions sending this appeal to a full hearing were given in chambers by Mr Justice Elias President.

The legislation

5. Part II of the Employment Rights Act 1996 deals with protection of wages in the following terms:-

"13. Right not to suffer unauthorised deductions

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

(a) the deduction is required or authorised to be made by virtue of a statutory provision or a relevant provision of the worker's contract, or

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

(2) In this section "relevant provision", in relation to a worker's contract, means a provision of the contract comprised-

(a) in one or more written terms of the contract of which the employer has given the worker a copy on an occasion prior to the employer making the deduction in question, or

(b) in one or more terms of the contract (whether express or implied and, if express, whether oral or in writing) the existence and effect, or combined effect, of which in relation to the worker the employer has notified to the worker in writing on such an occasion.

(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 to the 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 Tribunal directed itself by reference to those provisions and to five authorities which are cited in its extended reasons. Two are uncontroversial but three are the subject of this appeal, since no authority at all was cited to the Employment Tribunal, or by it, at the hearing.

The facts

6. The Respondent is a Primary Care Trust administering the Health Service in North London. The Claimant has from 1990 been employed by it as a maintenance fitter at a basic salary of £2,000 a month. The Employment Tribunal resolved two issues which had concerned the Respondent. There had been, to put it neutrally, some questions about what certificates the Claimant had to attest to his training. He had produced authentic certificates on two occasions 1990 and 1997 but the Respondent had no copies it having taken over from a predecessor, and then a third time by order of the Employment Tribunal itself in 2005.
7. The Claimant had come from West Africa and qualified as a fitter with the appropriate certificates produced at the appropriate time to his employer. The background to this dispute is summed up in Miss Newton's argument. The Claimant is employed by the Respondent as a multi-skilled technician in the Maintenance Department of the Respondent's Estates and Facilities Directorate. Contained within the Claimant's Job Description is a list of the main duties and responsibilities of the role which include undertaking repairs, diagnosing defects, servicing specialist equipment, and importantly for the purposes of this appeal, contributing to an out-of-hours emergency on-call system and reacting to emergency situations during normal working hours. This was a safety critical role and the Claimant's job was to make sure that the equipment was safe. The emergency on-call system operated in the following way. There were six technicians, including the Claimant, who worked on the out-of-hours emergency on-call roster. Each technician would be on-call about once every seventh week. If they were on call, the technicians were paid two separate payments in addition to their 'basic' salary. First they were paid a daily allowance for participating in the on-call roster. This is equivalent to a stand-by payment which they receive for being on-call. The employees were paid this amount regardless of whether or not they were actually called out on an emergency. Secondly, if they were called out, they received a further payment for the time spent on the actual call-out. This was calculated on an hourly basis akin to overtime.
8. The documents relating to the dispute consist of the following:-

"General Terms

Your employment is governed by the Terms and Conditions of the Trust, in particular the Trust's General Conditions of Service and Pay and Conditions relating to Professional and Technical staff as set out in the relevant handbook.

This post is also subject to local policies and agreements appropriate to your post.

The Trust reserves the right to alter or amend your Terms and Conditions from time to time, and will provide you with notification of such changes in writing.

Duties

Your main duties and responsibilities are outlined in your Job Description issued to you on your appointment and are also laid down by your Head of Department. The Trust reserves the right to vary your duties and responsibilities and the content of your job from time to time in order to meet the changing needs of the Trust's services."

These are part of the terms and conditions which are to be notified as particulars pursuant to statutory obligations now contained in the Employment Rights Act 1996.

9. The Job Description itself is to provide an effective and comprehensive building maintenance service throughout the trust. Under the heading of main duties and responsibilities there is this:-

"Contribute to an out-of-hours manager emergency on-call system and react to emergency situations during normal working hours."

10. The Person Specification includes a requirement that the post-holder hold City and Guilds Technical Qualifications and is capable of working safely on his own initiative, including an understanding of Health and Safety requirements. These were summarised together with implied terms found as a matter of law by the Employment Tribunal in the following way:-

"5.5 With effect from 2 December 1996, the Claimant was promoted to Craftsman Technician, Estates Office Grade 1 (EO 1) in the Maintenance Department of the Estates Facilities Directorate. On 24 July 1997, the Claimant signed an up-dated Terms and Conditions (bearing the date, 16 July 1997). The following contractual terms were relevant to the issues the Tribunal had to determine:

(2) The Respondent reserved the right to vary the Claimant's duties and responsibilities and the content of his job from time to time to meet the changing needs of the Respondent's services (clause 12 of the Terms and Conditions [p.57]).

(3) The Claimant's new Job Description provided that one of his main duties and responsibilities were to: "Contribute to an out-of-hours manager emergency on-call system and react to emergency situations during normal working hours" [p.65, clause 3.13].

(4) The "Person Specification" form provided that the qualifications, experience, skills, knowledge and abilities required to effectively carry out the responsibilities of the post (as outlined in the Job Description) included: (i) City & Guilds Technical Qualifications and (ii) "Capable of working safely on own initiative" [p.67].

20. As to the contractual provisions in writing, the following were express written terms of the Claimant's contract of employment:

(1) that it was an essential requirement that the Claimant held a relevant City and Guilds Technical Qualification.

(2) that the Respondent retained the right to vary the Claimant's duties and responsibilities and the content of his job from time to time in order to meet the changing need of the Respondent's services.

23. First, in the circumstances, the Tribunal finds that the Respondent was authorised under the Claimant's contract of employment to remove him from the on-call roster on Health and Safety grounds. The Respondent sought proof of the Claimant's trade qualifications by production of the originals or copies. In the absence of production of the same, the Respondent was entitled (and indeed would have been under a legal duty) to take steps to safeguard the health and safety of all relevant persons. Such steps would include at its reasonable discretion, the removal of the Claimant from the on-call roster until the matter was satisfactorily cleared up."

11. In March 2004 the Claimant was taken off the on-call rota, for a letter was written to him which said this:-

"I refer to the recent event where you were taken off the duty on call roster for safety reasons. While you will receive the daily allowance you would have received if you participated in the on call rota, the equivalent overtime carried out by your replacement will not be paid."

It is now accepted by the Respondent that that letter contained an error because he was taken off the on-call rota payment as well as the actual payment for work done or to be done.

12. The Employment Tribunal made the following findings:-

"24. Second, the Tribunal finds that the Respondent was not entitled to make deductions from the Claimant's wages. The reasons are as follows. The mere fact that the Respondent was entitled, as found by the Tribunal, to remove the Claimant from roster duties, does not thereby mean that it was entitled to deduct his wages.

28. On the facts of the instant case, the Tribunal finds that the Claimant was at all material times willing and able to attend and carry out his on-call rota duties. Further, there was no express contractual term authorising deduction from the Claimant's wages for non-production of his certificates. The contractual term authorising deduction from "salary/wages" related to other matters, such as sums owed to the Respondent, and over-payments or loans made to the Claimant by the Respondent.

30. Although it is to be noted in passing, that the Claimant had provided his original certificates to the Respondent and/or its predecessors not once, but on tow previous occasions. What the Respondent was clearly not entitled to do under the terms of the contract was to make a deduction from the Claimant's wages on the ground that he had failed to produce his original certificates or copies of them."

The Respondent's case

13. The Respondent submitted that the Tribunal had failed correctly to construe and to apply section 13(3), for had it done so properly it would have found that the payments to the Claimant could have been removed by the Respondent in accordance with the finding relating to Health and Safety reasons. The first question under section 13(3) is to determine what is properly payable, and what is properly payable is what the trust says is properly payable by way of on-call duties which may be removed on Health and Safety grounds. Secondly the Tribunal wrongly relied on three authorities to support its judgment without giving the Claimant the opportunity to make submissions about them. Thirdly if there were a deduction then proper notice was given; but this is accepted to be an academic point if the earlier parts of the Notice of Appeal are accepted. The claim based on perversity was not pursued before us.

The Claimant's case

14. On behalf of the Claimant, it is contended principally that the Respondent was wrong to have taken him off the rota without giving him the one-month notice, necessary he says when there is any significant change. When this was done on 5 March 2004 he objected. The Claimant produced, to us for the first time, a "risk assessment", contending that there had been no risk assessment, on the grounds of health and safety, before he was taken off safety rota. It is contended that if the employer succeeded in this case, every employer would have the right to change contracts of employment and to reduce pay. As Mr Atchoe and his friend Ms Reid, asserted, the certificates had been produced by the Claimant by 7 April 2005 and yet he was still not on the rota system.

The legal principles

15. The legal principles to be applied in this case appear to emerge from the following authorities. The correct approach to determining whether an illegal deduction is made is that set out by the EAT Mr Justice Wood (P) and members in White v Reflecting Roadstuds Ltd [1991] IRLR 331 at paragraph 17.

"Let us take each of these matters in turn. It is clear on authority binding upon us that where an employer acts within the contract of employment the fact that thereby there is caused to the employee a loss of income does not render the employer's act a breach of contract."

The EAT directed itself to the judgment of the Court of Appeal in Spafax v Harrison (1980) IRLR 443 CA. Both those authorities were followed and applied by the EAT Lord Johnston and members sitting in Edinburgh in Hussman Manufacturing Ltd v Weir [1998] IRLR 288, where this was said:-

"10. Secondly, it is to be noted in White that the EAT expressly sated that there was clear binding authority, which is quoted in its decision, that where an employer acts within the contract of employment the fact that thereby there is caused a loss of income to the employee does not render the employer's act a breach of contract. If the respondent is to succeed in this matter, it is necessary to distinguish that case and we are unable t do so upon the facts.

12. In these circumstances, we are clearly of the view that the fact that the consequence of a permitted or lawful act may have an economic impact upon the earnings of the employee does not in itself render that impact, if it constitutes a drop in income, an unauthorised deduction in terms of the legislation. In our opinion, the wages properly payable for the employee, once he was moved lawfully in terms of his contract, albeit under protest, to the back shift were those payable to all persons working on the back shift, and we accept the proposition that to continue in force payments to him to reflect what he received on the night shift would be perverse, and contrary to sound industrial practice."

16. When reliance is to be placed by an Employment Tribunal on a legal proposition or on legal authorities, an opportunity must be given to the parties to make submissions on them, otherwise there is a material irregularity in the proceedings, see Albion Hotel (Freshwater) Ltd v Maia E Silva [2002] IRLR 200 EAT, HHJ Serota QC and members.

"34. …. In our opinion the right to a fair hearing requires notice of all material matters of fact and law to be given to the parties, if the employment tribunal wishes to make determinations on points not argued by the parties. The consideration of the three authorities to which we have referred by the employment tribunal in the present case was material to their decision. Even though no complaint was made as to the principle to be deduced from these authorities, the application of that principle to the facts was highly material to the decision. The parties were not able to make submissions as to the relevant acts that were material to the somewhat fine distinction between asking for a bonus (which would not be regarded as an assertion of a breach of a statutory right) and asking persistently, which might amount to an assertion of breach of a statutory right. We can well understand how Albion Hotels is aggrieved at having been deprived of the opportunity to make submissions in this regard.

35. In our opinion, where an employment Tribunal considers that an authority is relevant, significant and material to its decision but has not been referred to by the parties, it should refer that authority to the parties and invite their submissions before concluding its decision. This is more than mere good practice. Failure to do so may amount to a breach of natural justice and of the right to a fair hearing. The failure of the tribunal to invite submissions from the parties on the three authorities was doubtless inadvertent. The employment tribunal may not have recognised the particular significance it attached to the authorities, and the balancing exercise it undertook in relation to the relevant facts. However, the consideration of the authorities played a significant and material part in the decision. It seems to us, accordingly, that there has been significant procedural unfairness and this ground of appeal succeeds."

Discussion and conclusions

17. We uphold the submissions of the Respondent and will allow the appeal. Mr Atchoe said that the Employment Tribunal Judgment was the best piece of literature he had ever read. That it may be. It had every virtue, bar correctness. First, ground 1 is a pure point of law. In our judgment Miss Newton is correct when she submits that the right approach is to determine what the proper pay is. In this case, the Employment Tribunal did not address directly section 13(3) in the first place in order to determine what the proper amount to be paid was. The payment for the on-call duties is, both as a matter of contract and common sense, to be made when the Claimant is obliged to be on-call. If he is called out in fact than the additional payment akin to overtime will also be made.
18. Since the Tribunal expressly found that the Claimant could be removed from the rota for health and safety reasons, the only issue in the case is whether or not there were such reasons. The Tribunal has found that there were and has attributed to the Respondent a reasonable discretion to remove him until the matter, which was his certification, was satisfactorily resolved. That being the primary finding of the Tribunal, it must follow that it was not a deduction unlawfully made from the Claimant's contract for him to be removed from the rota. Removal from the rota takes with it removal from the right to be paid. Put simply, if he did not actually do any work, he could not claim the payments akin to overtime; and similarly if he did not make himself available in his spare time to be called upon, if so required, then that payment would not be made either. The logical conclusion from that simple finding by the Tribunal is at the heart of this case and means that there was no breach of the Claimant's contract. We do not see that it follows that the second proposition cited above (para 5,12 and 24 of the Tribunal's judgment) applies.
19. Further, and this also relates to the second ground of appeal, the reliance on the three authorities is wrong in principle. Miss Newton complains with justice that there arose a material regularity during the eight months when the Tribunal was sitting on this judgment, for it to have prayed in aid the authorities which were not cited to it. These are not incidental but are directly relevant to the Tribunal's thinking in this case. The finding shows this would require the case to be remitted to the Employment Tribunal for submissions to be made orally or in writing by both parties upon these authorities. However, we do not consider that that is necessary for we have found in favour of the Respondent on the first point.
20. In any event, it seems to us, with respect to the Employment Tribunal, that the analogy which it drew from these three authorities is inapt. In each of the cases Four Seasons Health Care Ltd v Maughan [2005] IRLR 324, Miller v Hamworthy Engineering Ltd [1986] ICR 846 CA and Lindsey Veveridge v KLM (UK) Ltd [2000] IRLR 765 EAT, the essential question was a suspension without pay at all on various grounds (including for example discipline and the investigation of matters by the police). None is an apt analogy with the situation facing the Respondent here, which was that it needed to be satisfied as to the Claimant's authority to do the work required by reason of certificates showing his qualifications. That, as the Tribunal found, constituted a health and safety reason which gave the Respondent the right to remove him from the roster. It follows therefore that it was inappropriate for the Tribunal to rely upon those cases. We have no doubt that had Miss Newton made the submissions to it which she made to us, it would have realised that these authorities were not helpful in the resolution of the current dispute.
21. Ground 3, relating to the notice point which arises under section 13(1), is not necessary to be the subject of a decision by us and Miss Newton did not press the perversity point.
22. The point raised with some force by the Claimant this morning is that he is entitled to one month's notice, for what occurred was a significant change. We can see the strength of that argument. On the case he made to the Employment Tribunal, his claim would have to have been made much earlier than it was, for to make this claim he was, as Miss Newton submits eight months out of time. He could not say that there was a series of deductions, for on this way of putting the case his right was self contained and lasted only for one month. He cannot raise it now, as there are no exceptional circumstances which would justify the EAT hearing a new point when it has not been raised below. He may however still be entitled to make that case in the County Court, which as we see it would be for one month at the rate of pay of the on-call allowance and possibly for some averaging of the attendance allowance, but that is a matter which he must consider himself.
23. We have to say that he did not help himself by giving a no-comment interview when taxed about his certificates, when asserting that he would need £2000 in order to produce them and by asserting flippantly that he was not there to do the Respondent's book keeping. The Respondent cannot come out of here unscathed either. It could have been more efficient and less suspicious. As the Tribunal has found, Mr Atchoe is properly qualified, presented his certificates and indeed has been working for this Respondent now for 16 years. It could have expressed itself better, with better timing of the decision to remove him from the rota and it could have got its letter right for it required counsel today to accept that this was an error; it was extremely misleading. Those however are not matters which fall for our judgment, and it is clear to us that the Tribunal fell into error in making the legal decision which it did.
24. We are very grateful to Miss Newton and Mr Atchoe and to Ms Reid for coming along to make submissions to us today. The appeal is allowed.