United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	Mrs C Bateman (Representative)
For the Respondent	No appearance or representation by or on behalf of the Respondent


 


SUMMARY

Contract of employment – Damages for breach of contract

Unlawful deduction from wages

Whether express term of contract as to mileage expenses was consensually varied by the Claimant's acquiescence. Whether employment continued under protest. Appeal allowed in part and remitted for rehearing.


 


HIS HONOUR JUDGE PETER CLARK

1. This is an appeal by GAP Personnel Franchises Ltd, the Respondent before the Shrewsbury Employment Tribunal, against so much of the judgment of a Chairman, Mr P Cadney, sitting alone on 21 March 2007, as upheld the Claimant, Mr Robinson's claim in respect of unpaid mileage allowance expenses in the sum of £2,049, together with an uplift of 10 per cent pursuant to s31 of the Employment Act 2002. Accordingly the total amount in issue in this appeal is £2,253.90. That judgment was promulgated with reasons on 19 April 2007. I shall describe the parties as they appeared below.

Background

2. In late 2005 the Claimant, then working for another recruitment agency, was approached by Mr Jason Fox, a director of the Respondent company and offered employment with the Respondent as Franchise Operations Manager. One of the terms of employment discussed was provision of a company motor car. This term was reflected in an offer letter signed by Mr Fox and dated 6 January 2006. It read:

"Car Executive Saloon (model to be confirmed) Fuel expenses to be claimed at 25p per mile."

3. The Claimant accepted Mr Fox's offer of employment and commenced work on 23 January 2006. The following day he was asked to sign 2 documents; the first was headed 'Summary of Employment Terms' Clause18 provided:

"Vehicle: Executive Saloon or other suitable vehicle will be provided. Mileage payable at 25p per mile."

4. After the 21 clauses in that document it concluded:

"I acknowledge receipt of this Summary of Employment Terms and confirm that I have read, understand and accept the attached Agreement. I have received and read a copy of the Staff Handbook."

5. The document was signed by the Claimant and dated 24 January 2006. It was also counter-signed and similarly dated by Mrs Bateman, the Respondent's then Human Resources Manager, on behalf of the Respondent.
6. Secondly, both the Claimant and Mrs Bateman signed and similarly dated a copy of what appears to be the Respondent's standard form contract of employment. It contained the following material terms:

"31. Changes in Your Terms of Employment

The employer reserves the right to make reasonable changes to any of your terms and conditions of employment. You will be informed of any such changes in writing, the changes taking effect from the date of the notice. Significant changes to your contract of employment will be notified to you not less than one month in advance."

and

"34. Particulars of Employment

The summary sets out the particulars of your employment with the Employer in accordance with the requirements of the Employment Rights Act 1996."

7. In late February 2006 the Claimant submitted his first expenses claim. He claimed business mileage at the rate of 25p per mile. However, payment of expenses into his bank account showed less then the amount claimed. It seems that ultimately he raised the matter with Mrs Bateman, who informed him that it was company policy to pay 25p per mile to employees using their own vehicle: company car expenses were payable at 15p per mile. Thereafter it is his case that he felt he had no choice but to claim at the lower rate of 15p. He continued to do so until he resigned with 1 months notice on 24 July 2006. He was not required to work out his notice.
8. On 24 October 2006 he raised a grievance with the Respondent under the modified Statutory Grievance Procedure; included was a complaint that his mileage ought to have been paid at the rate of 25p, not 15p per mile. He claimed to be owed £2,064.90. That figure was later adjusted downwards to allow for over-claimed miles travelled.

The Chairman's decision

9. The Chairman's reasoning is set out at paragraphs 16-20 of his reasons. He said this:

"16. Remaining on the subject of expenses, as I set out above the second part of the claimant's claim relates to the sum of £2,049. This is calculated as the amount which would have been payable in addition to the sums received had he been paid at the rate of 25p per mile and not the rate of 15p per mile which he was actually paid and is calculated on the basis of l0p per mile outstanding and owed to him.

17. It will be apparent from the facts outlined above that there can be no dispute that the claimant was contractually entitled to be paid on the basis of 25p per mile. That did not correspond with the respondent's normal practice but the respondent's normal practice cannot override what are clearly express provisions within the claimant's contract of employment. The only basis therefore upon which this money can have been lawfully deducted from the claimant's salary is if there had been a consensual variation of contract.

18. In classical terms either the formation or the variation of a contract requires offer, acceptance and consideration in this case there is no consideration, in that no consideration passed from the claimant in respect of what was a unilateral variation and unilateral deduction from sums which would otherwise have been paid to him. However, it is right to say that in employment cases consideration does not usually play the prominent part it does in ordinary contractual disputes given the flux which takes place in contracts of employment overtime.

19. It appears to me however in this case that I am entitled to give some weight to the absence of consideration given that this is not a contract which was allegedly varied due to changing circumstances, but which within weeks of the claimant signing his contract the respondent unilaterally attempted to vary on the basis of its policy I accept therefore that there is no consideration and in that in this case Consideration plays some significant part. As is usually the case in employment disputes the question is whether the employee has affirmed the contract by continuing to work under the varied terms. That is normally a question asked in terms of constructive dismissal and if this were a constructive dismissal case it may well be that :1 would have concluded that the claimant had lost the right to resign in respect of a breath in which he had apparently acquiesced for six months. Even if that is correct, however, it does not follow that he has necessarily, lost the right to sue for damages.

20. As indicated above in my view there was no consideration. Secondly, I accept the claimant's evidence that he was presented with a fait accompli and had no choice but to accept that he could not enforce his contractual terms. In the circumstances in my judgment the absence of his submitting claims for 25p per mile in the absence of, lodging a grievance cannot of itself be taken as an affirmation of the contract and accordingly in my view there was no consensual variation. Accordingly the claimant is, entitled to the sum of £2,049 as unpaid expenses."

The appeal

10. Both parties have submitted helpful skeleton arguments in advance of this hearing. Mrs Bateman appears today on behalf of the Respondent. The Claimant does not appear and is unrepresented for understandable reasons. He asks me to take into account his written submissions and I have done so.
11. Mrs Bateman challenges the Chairman's approach on the following grounds:

(1) She contends that when she counter-signed the Claimant's contractual documentation on 24 January 2006 she pointed out that the mileage rate was incorrectly stated: company policy was that the rate for company vehicles was 15p per mile.

Mr Robinson submits that this is untrue and does not reflect the evidence which she gave before the Employment Tribunal. He asserts that she made no such comment when counter-signing the documentation on 24 January 2006.

The Chairman does not directly deal with that dispute, however, from his findings at paragraphs 5 and 17 of his reasons I infer that he was satisfied that the offer letter and Summary of Terms of Employment accurately reflected the agreement as to mileage allowance reached between Mr Fox and the Claimant. If Mrs Bateman had identified an error in the documentation on 24 January I would expect her to have made an alteration to that document at the time. She did not do so, nor did she subsequently issue a variation in writing as provided for in clause 31 of the contract of employment. Accordingly I shall proceed on the basis, as the Chairman found, that as at 24 January the relevant express term of the contract of employment was that the Claimant would receive a mileage allowance of 25p per mile.

In argument Mrs Bateman has raised the possibility of an implied term. I can see no room for implying a term where there is a clear express term.

(2) Alternatively, Mrs Bateman submits that once it had been pointed out to the Claimant, after he submitted his first month's expenses at the end of February on his case, that the correct rate was 15p per mile he accepted the position and thereafter submitted claims on that basis. That he did so is common ground, Mr Robinson contending before me that he did so under protest, whilst Mrs Bateman asserts that he fully accepted the position, thus affirming the variation to his contract whereby the mileage rate was reduced from 25p to 15p. She points out that he raised no complaint until after his employment had terminated, that is, in the grievance letter of 24 October.

(3) Whilst the Chairman found that the downward alteration in mileage rate was a 'fait accompli', as Mr Robinson had asserted, it was open to him to raise a grievance during the employment about the mileage rate; he did not do so.

Analysis

12. I have no doubt, like the Chairman, that it was an express term of the contract that the Claimant should receive 25p per mile car expenses. It therefore follows, in my judgment, that the Respondent's refusal to pay the full rate for the first month's expenses claim represented a breach of contract and unlawful deduction from wages. On any view he was entitled to the difference between 25 and 15p for the mileage actually covered during that period.
13. Equally, it is clear to me that the Respondent's insistence on paying the lower mileage rate thereafter constituted a unilateral variation of the contract. The real question is whether the Claimant affirmed the contract by continuing in the employment without protest subsequently submitting expenses claims at the lower rate and if so, when a consensual variation took place, expenses prior to any such date being payable at the higher rate and thereafter at the actual lower rate paid.
14. Before turning to the issue of affirmation I should deal with the question of consideration. In my view it is generally accepted law that consideration for a variation in the terms of a contract of employment is mutually provided by the employer continuing to employ the employee and the employee continuing in that employment. Thus the question of consideration does not assist in resolving the real issue of affirmation.
15. I have not been referred to any authority by the parties and none is cited by the Chairman in his reasons. However, I take into account the learning to be found in the cases.
16. The Respondent's alteration in the rate of mileage expenses was immediately made known to the Claimant when he queried his first month's expenses payment. This is not a case where the variation did not have any immediate effect, of Jones v Associated Tunnelling Co Ltd [1981] IRLR 477. It is well established, on high authority, that an employee who continues to work under protest after a unilateral variation by the employer will not be prevented from bringing a claim for damages for breach of contract: see Rigby v Ferodo Ltd [1988] ICR 29 (HL); Burdett Coutts v Hertfordshire County Council [1984] IRLR 91.
17. The law of constructive dismissal provides some assistance, as the Chairman noted, but is not precisely co-terminous. As Lord Denning MR made clear in Western Excavating (ECC) Ltd v Sharp [1978] ICR 221 (CA) where the employer is in repudiatory breach of contract the employee must make up his mind soon after the breach whether he wishes to treat himself as discharged, otherwise he may be treated as having affirmed the contract by acquiescence, thus terminating and waiving the breach. There is a wealth of case-law on the question as to when the employee will be treated as having affirmed the breach: see Harvey on Industrial Relations Vol 1, D1 paragraph 5-23 and following; each case is fact sensitive.
18. I do not accept that the mere fact that the unilateral variation is a 'fait accompli' (every unilateral variation by the employer may be so described) or that the employee raised no complaint because he did not wish to lose his job, prevents the Employment Tribunal from finding that at a certain point the employee may properly be taken to have affirmed the contract by acquiescence. Further, the absence of a written statement of variation, as provided for in clause 31 of the Claimant's contract and required by s4 ERA, to which I have been referred by Mr Robinson in his written submissions, is not necessarily fatal to the employer's affirmation contention.

Conclusion

19. I am unable to accept the Chairman's reasoning in full. Whilst it must be acknowledged that the Respondent was in breach of contract in not paying the first month's travel expenses at the higher rate, it is equally clear that the Respondent therafter made it known to the Claimant that it would not do so in future. The question then arises as to whether the Claimant continued to work under protest, as to which the Chairman made no finding and if not, when the Claimant could properly be said to have affirmed the contract by acquiescence. The Chairman indicated that had this been a constructive dismissal case "it may well be that I would have concluded that the Claimant had lost the right to resign in respect of a breach in which he had apparently acquiesced for six months" (Reasons paragraph 19). That suggests to me that, asking the correct question in relation to this breach of contract / unlawful deductions claim the Chairman, properly directing himself in law, would have found that before the end of the employment in July 2004 the Claimant had affirmed the contract and that no breach occurred therafter. If so, the Chairman made no finding as to the date of affirmation.

Disposal

20. It follows that the Respondent has satisfied me that the Chairman fell into error and that this part of the decision must be set aside, save for the differential in respect of the first month's proper mileage claim. That figure ought to be capable of agreement between the parties, together with the 10 percent uplift which is not challenged in the appeal by either party.
21. As to the balance of the mileage claim it must be remitted to a fresh Tribunal Chairman for rehearing. I am not in a position to resolve the factual question as to whether or not the Claimant continued to work under protest after submitting the first month's expenses. Further, it is for the fact-finding Employment Tribunal, having heard the evidence, to determine the further, question should it arise, as to when, if at all, affirmation took place.