United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR A HOGARTH (One of Her Majesty's Counsel) Instructed by: Messrs OH Parsons and Partners Solicitors 3rd Floor Sovereign House 212-224 Shaftsbury Avenue London WC2 H8PR
For the Respondent	MR P GILROY (One of Her Majesty's Counsel) Instructed by: Messrs Addleshaw Goddard Solicitors 100 Barbirolli Square Manchester M2 3AB


 


SUMMARY

UNLAWFUL DEDUCTION FROM WAGES

The 78 Claimants were cabin crew employed by BA at their Manchester base. In October 2006 BA closed that base; they did not dismiss the Claimants; but they did not roster them for flying duties. If they had flown, the Claimants could have become entitled, depending on differing criteria, to payment of one or more of a number of allowances. They claimed payment of the allowances they would, but for the closure, have earned as wages under Part II of ERA 1996. Held that the Tribunal had correctly concluded that there was no jurisdiction to hear the claims; albeit for reasons which were not entirely the same as the Tribunal's. The absence of jurisdiction arose not because the claims were not quantifiable but because they were not claims for wages as defined by section 27 of ERA; they were claims for damages for loss of a chance and would not be brought before the Tribunal while employment continued.

HIS HONOUR JUDGE BURKE QC

The History

1. This is an appeal by 78 cabin crew employees of British Airways plc against the judgment of the Employment Tribunal sitting at Manchester, consisting of Employment Judge Coles sitting alone, sent to the parties with written reasons on 13 November 2007. By that judgment the Employment Judge dismissed the Claimants' claims of unlawful deductions from their wages made under part 2 of the Employment Rights Act 1996, on the basis that the Tribunal had no jurisdiction.
2. I shall refer to the parties as the Claimants on the one hand and BA on the other.
3. The Claimants were, at the relevant time, all employed as cabin crew by BA. They were based at Manchester Airport and worked as crew on flights from that airport within Europe. In addition to their basic salary they were entitled to receive in certain circumstances a number of allowances, called generically "flying allowances". Some of those allowances were taxable and some were not. They included meal allowances, night stop incidental allowances, long day payments and the like. They only became payable (save, according to the Tribunal, in exceptional circumstances which did not arise) when cabin crew were rostered to fly and carried out flying duties. Whether any such allowance was payable in respect of a particular turn of flying duty depended upon whether the qualifying criteria for the payment of that allowance were satisfied. No allowances were payable in normal circumstances in respect of days when the employee was not rostered to fly.
4. On 29 October 2006 BA closed their Manchester Airport base. The Claimants were not made redundant; their contract of employment continued; but, as a result, for varying periods of time the Claimants were not rostered to fly, received basic pay only and did not receive any of the allowances which would have become payable had they been rostered to fly and had the qualifying criteria for any allowance been fulfilled.
5. The Claimants therefore made a claim to the Tribunal that the failure to pay them the allowances which they would have earned, had they been rostered to fly by BA, constituted an unlawful deduction or deductions from their wages, contrary to section 13 of the 1996 Act.
6. By their response BA challenged the jurisdiction of the Tribunal to entertain these claims; they asserted, basing themselves on the decision of the Court of Appeal in Coors Brewers Ltd v Adcock & Others [2007] ICR 983, that the alleged deductions were not quantifiable and that they did not fall within the jurisdiction given to the Tribunal under Part II of the 1996 Act. BA contended that the claims were, on proper analysis, claims for damages for breach of contract. Such claims could not be brought in the Employment Tribunal while the Claimants' employment continued, by reason of the effect of article 3(a) of the Employment Tribunal's Extension of Jurisdiction (England and Wales) Order 1994. They could, therefore, only be brought, while employment continued, in the County Court.
7. The Employment Tribunal ordered, on 18 July 2007, that there should be a pre-hearing review to determine the jurisdictional issue which thus arose; the issue was defined at paragraph 5 of the Employment Tribunal's judgment at that pre-hearing review in these terms:

"For the purposes of the Pre-Hearing Review, there is only one discrete legal issue involved. The respondent maintains that the claimants' claims are not capable of being validly quantified and therefore, having regard to the Coors Brewers case, the Tribunal has no jurisdiction to hear the claimants' complaints of unlawful deductions from wages."

8. At the pre-hearing review the Tribunal heard evidence from both sides and resolved the preliminary issue against the Claimants. Having referred to the Court of Appeal's decisions in Delaney v Staples [1991] IRLR 112 and in Coors, the Tribunal said at paragraphs 14 and 15:

"14. In support of his contention that in this case the claimants' claims were quantifiable, Mr Tinkler presented to the Tribunal sample calculations of the claimants' claims. These were based exclusively on sums which the claimants had been paid by way of flying allowances during the weeks prior to 29 October 2006, when of course they were performing flying duties. He relied on Section 224 of the Act which deals with situations where an employee is employed under a contract of employment where there are no normal working hours. Section 224(2) provides as follows:-

'The amount of a week's pay is the amount of the employee's average weekly remuneration in the period of twelve weeks ending -

(a) when the calculation date is the last day of the week, with that week, and

(b) otherwise, with the last complete week before the calculation date.'

15. Mr Tinkler submitted that in this case the claimants were able to quantify their claims by reference to allowances paid during the twelve-week period prior to 29 October 2006."

and they continued, under the heading "Conclusions":

"16. There are a number of situations in which the provisions of the Employment Rights Act 1996 provide that the Tribunal can make monetary awards in favour of a claimant based on a specific number of weeks pay, for example a basic award for unfair dismissal or a redundancy payment. Chapter II of the Act is intended to define "a week's pay" and Section 224 falls within Chapter II. Section 220 reads as follows by way of introductory statement:-

'The amount of a week's pay of an employee shall be calculated for the purposes of this Act in accordance with this Chapter.'

17. In the Tribunal's judgment, Section 224 is simply one method of calculating a week's pay for the purposes of enabling the Tribunal to make an award in respect of employees with no normal working hours. It is intended, in the Tribunal's judgment, exclusively to deal with the situation where Employment Tribunals need to determine 'a week's pay' of the claimant appearing before it.

…

20. Since, in the Tribunal's judgment, the claimants' claims cannot validly be quantified by reference to Section 224 of the Act and, in the absence of any other method of quantifying their claims, it follows, in the Tribunal's judgment, having regard to the Coors authority, that the Tribunal does not have jurisdiction to hear the claimants' claims of unlawful deduction from wages, which are therefore dismissed.

21. Just as was commented in the Coors case, these claimants' claims are, in reality, claims for damages by way of compensation for the loss of the chance to earn flying allowances, that such claims are outwith the Tribunal's jurisdiction in respect of claimants whose employment has not come to an end and their remedy lies in the County Court, not the Employment Tribunal."

9. By this appeal the Claimants challenge that conclusion. They contend that their claims have been properly brought under Part II of the 1996 Act. BA maintain their stance that these claims are in reality claims for unliquidated damages which can only be pursued in the County Court.
10. The Claimants have been represented by Mr Hogarth QC; BA have been represented by Mr Gilroy QC. I am grateful to both for their concise and helpful submissions.

The Statutory Provisions

11. Part II of the 1996 Act is entitled "Protection of Wages." Section 13 provides, so far as is relevant for present purposes, as follows:

"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."

12. Section 23(1) provides as follows:

"23 Complaints to industrial tribunals

(1) A worker may present a complaint to an industrial tribunal—

(a) that his employer has made a deduction from his wages in contravention of section 13 (including a deduction made in contravention of that section as it applies by virtue of section 18(2)),"

Wages are defined in these terms:

"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,"

13. I have referred above to the Extension of Jurisdiction Order; it is common ground that the Claimants, being still in employment at the time when their claims were presented, could not make any claim for damages for breach of contract to the Employment Tribunal and could only make such a claim in the County Court. I was not asked to and need not consider what rationale, if any, there is for this jurisdictional conflict. Whatever such rationale may be, if the Claimants' claims cannot properly be brought under Part II of the 1996 Act the Employment Tribunal has no jurisdiction to hear them.
14. It is also common ground at this appellate stage and was common ground before the Employment Tribunal that, in order for the Claimants' claims to fall within Part II of the 1996 Act, they must be quantifiable. As is clear from paragraphs 16 to 18 of the Tribunal's judgment Mr Tinkler, who represented the Claimants before the Tribunal, relied, in support of his argument that the claims were quantifiable, upon section 224 of the 1996 Act. Because that section featured prominently in the arguments before me, particularly in relation to the preliminary issue to which I am about to come, I need to set that section out and, to give context to it, to set out section 220. Those two sections are as follows:

"A week's pay

Introductory

220 Introductory

The amount of a week's pay of an employee shall be calculated for the purposes of this Act in accordance with this Chapter.

Employments with no normal working hours

224 Employments with no normal working hours

(1) This section applies where there are no normal working hours for the employee when employed under the contract of employment in force on the calculation date.

(2) The amount of a week's pay is the amount of the employee's average weekly remuneration in the period of twelve weeks ending—

(a) where the calculation date is the last day of a week, with that week, and

(b) otherwise, with the last complete week before the calculation date.

(3) In arriving at the average weekly remuneration no account shall be taken of a week in which no remuneration was payable by the employer to the employee and remuneration in earlier weeks shall be brought in so as to bring up to twelve the number of weeks of which account is taken.

(4) This section is subject to sections 227 and 228."

The Preliminary Point

15. I need to start by saying that I was not asked to rule on the preliminary point before proceeding to hear the substantive issues. That was sensible and pragmatic. I heard the arguments on both together; and I was expected to deal with both in this judgment, as I shall do.
16. In their Notice of Appeal the Claimants put forward, at ground 4, the argument that their claims are not incapable of being quantified; they can be quantified by two different routes. One suggested route is that of a calculation using the formula set out in section 224 of the 1996 Act; the alternative method proposed is comparing the Claimants' earnings in the period between the closure of the Manchester base and the presentation of their claims to the same period in previous years. The Notice of Appeal in other grounds, in particular in ground 1, challenges the Tribunal's view that a claim, to fall within Part II of the Act, must be for a fixed or specified sum. In his skeleton argument Mr Hogarth sought to put his case more widely, namely that difficulties of quantification were irrelevant; what was claimed as unlawful deduction, i.e. the unpaid allowances, constituted wages as defined by section 27 of the 1996 Act; and if so the Tribunal had to quantify what had been deducted by whatever route was found to be appropriate.
17. Mr Gilroy objected to these arguments. He submitted that it was not open to the Claimants to put their case forward on any other basis than that the necessary quantification or certainty should be achieved pursuant to section 224, their case had been put forward before the Tribunal by Mr Tinkler only on that basis, i.e. only on the basis of the method of calculation of a week's pay set out in that section. No alternative or wider argument, it was submitted, had been advanced. That argument was demonstrably unsound because section 224 applied only to the calculation of a week's pay for the purposes of the 1996 Act, where the statute required such a calculation (as it does in several places, I interpose - e.g. section 80I, section 119, section 162), see the words of section 220, but Part II of the 1996 Act did not in any way involve the application of section 224. As a result the Claimants should not now be allowed to raise new points not argued before the Tribunal, on the basis of familiar principles established over a long period by the EAT and set out most recently by the EAT, (HHJ McMullen QC) in Secretary of State for Health v Rance [2007] IRLR 665. The one method of quantification put forward to the Tribunal, i.e. section 224, being demonstrably unsound, the appeal must fail without more.
18. Mr Hogarth submitted that (1) Mr Tinkler before the Tribunal did not either limit his case as to how the claims might be quantified to the method of calculation set out in section 224 or contend that section 224 directly applied. (2) As to the former, paragraph 18 of the Employment Tribunal's judgment demonstrates that the Employment Judge had misunderstood Mr Tinkler's argument. It was not that section 224 applied directly to the facts of this case but that it provided an illustration or example of a convenient method by which the claimed allowances could be calculated. (3) As to the latter, that the illustration was not put forward as exclusive can be seen from Mr Tinkler's skeleton argument. (4) In any event, applying the principles set out in Rance the Claimants should be entitled to put forward the arguments which are canvassed in the Notice of Appeal and their Skeleton Argument; no further factual investigation was required; the points were points of law.
19. Mr Gilroy, fairly and professionally, particularly because counsel who had appeared before the Tribunal for the Claimants was not present at the hearing of the Appeal, limited his arguments to what could be seen on the papers and did not seek to add to them from his recollection of what had been said at the Tribunal.
20. In my judgment the Claimants should not be barred from putting forward the arguments which Mr Hogarth on their behalf seeks to develop. I so conclude for two reasons. First, the skeleton argument put before the Tribunal by Mr Tinkler on behalf of the Claimants advances section 224 as "a method of calculating a week's pay" at paragraph 6 and as "a method by which the loss can be calculated" at paragraph 15. Those expressions do not suggest and the skeleton argument does not contain a submission that section 224 provided the only method by which the loss of the allowance claim by the Claimants could be calculated or that these claims were of such a nature that section 224 was directly applicable to them. The Tribunal at paragraph 14 of their judgment, in summarising Mr Tinkler's submissions, do not suggest either of those propositions; they recite his reliance on section 224 but not that he put section 224 forward as the only or as an obligatory method of calculation; and in paragraph 18 the Tribunal indicated, in the second sentence, that section 224 was being put forward as a fall back calculation method if no other satisfactory method could be found.
21. I cannot derive from the papers a conclusion that Mr Tinkler's argument was as limited or narrow as Mr Gilroy suggests. Any argument that section 224 contained a statutory method by which the losses claimed in this case had to be calculated was, as Mr Gilroy correctly pointed out, bound to fail. Section 224 has a specific role; it sets out how a week's pay of an employee is to be calculated for the purposes of the 1996 Act in a case where there are no normal working hours. Section 224 could not have applied directly to the present case. As it seems to me, it is so clear that that is so that it is difficult to believe that Mr Tinkler could have nailed his colours to the section 224 mast in a case in which no statutory calculation of a week's pay arose. Although the Tribunal in paragraph 19 of their judgment state that Mr Tinkler "relied exclusively on Section 224", if by that they intended to state that Mr Tinkler's only argument was based on the direct applicability of section 224, in my judgment they must have misunderstood him.
22. Even if I am wrong about that, I do not accept Mr Gilroy's submission that, in the light of the principles on which the EAT should exercise its discretion to allow a point to be argued on appeal which was not argued before the Tribunal, which principles were synthesised recently in Rance, I cannot or should not exercise that discretion in favour of the Claimants in this appeal. In Rance HHJ McMullen QC set out the following principles at paragraph 50:

"50. I regard those two passages as key statements of the law, together with the interpretation by Brooke LJ of previous judgments of the EAT dealing with concessions. From the authorities reviewed in those cases, I draw the following principles of law:

(1) There is a discretion to allow a new point of law to be argued in the EAT. It is tightly regulated by authorities; Jones paragraph 20.

(2) The discretion covers new points and the re-opening of conceded points; ibid.

(3) The discretion is exercised only in exceptional circumstances; ibid.

(4) It would be even more exceptional to exercise the discretion where fresh issues of fact would have to be investigated; ibid.

(5) Where the new point relates to jurisdiction, this is not a trump card requiring the point to be taken; Barber v Thames Television plc [1991] IRLR 236 EAT Knox J and members at paragraph 38; approved in Jones. It remains discretionary.

(6) The discretion may be exercised in any of the following circumstances which are given as examples:

(a) It would be unjust to allow the other party to get away with some deception or unfair conduct which meant that the point was not taken below: Kumchyk v Derby City Council [1978] ICR 1116, EAT Arnold J and members at 1123

(b) The point can be taken if the EAT is in possession of all the material necessary to dispose of the matter fairly without recourse to a further hearing. Wilson v Liverpool Corporation [1971] 1 WLR 302, 307, per Widgery LJ.

(c) The new point enables the EAT plainly to say from existing material that the Employment Tribunal judgment was a nullity, for that is a consideration of overwhelming strength; House v Emerson Electric Industrial Controls [1980] ICR 795 at 800, EAT Talbot J and members, followed and applied in Barber at paragraph 38. In such a case it is the EAT's duty to put right the law on the facts available to the EAT; Glennie paragraph 12 citing House.

(d) The EAT can see a glaring injustice in refusing to allow an unrepresented party to rely on evidence which could have been adduced at the Employment Tribunal; Glennie paragraph 15.

(e) The EAT can see an obvious knock-out point; Glennie, paragraph 16.

(f) The issue is a discrete one of pure law requiring no further factual enquiry; Glennie para 17 per Laws LJ.

(g) It is of particular public importance for a legal point to be decided provided no further factual investigation and no further evaluation by the specialist Tribunal is required; Laws LJ in Leicestershire para 21

(7) The discretion is not to be exercised where by way of example;

(a) What is relied upon is a chance of establishing lack of jurisdiction by calling fresh evidence; Barber para 20 as interpreted in Glennie para 15.

(b) The issue arises as a result of lack of skill by a represented party, for that is not a sufficient reason; Jones para 20.

(c) The point was not taken below as a result of a tactical decision by a representative or a party; Kumchyk at page 1123, approved in Glennie at para 15.

(d) All the material is before the EAT but what is required is an evaluation and an assessment of this material and application of the law to it by the specialist first instance Tribunal; Leicestershire para 21.

(e) A represented party has fought and lost a jurisdictional issue and now seeks a new hearing; Glennie para 15. That applies whether the jurisdictional issue is the same as that originally canvassed (normal retiring age as in Barber) or is a different way of establishing jurisdiction from that originally canvassed (associated employers and transfer of undertakings as in Russell v Elmdom Freight Terminal Ltd [1989] ICR 629 EAT Knox J and members). See the analysis in Glennie at paras 13 and 14 of these two cases.

(f) What is relied upon is the high value of the case; Leicestershire para 21.

23. Mr Hogarth and Mr Gilroy accepted that those principles apply for present purposes. Mr Gilroy submitted that an application of principles (1), (3), 6(a),(d),(e) and (g) and 7(b) and 7(e) should lead to the conclusion that the Claimants should not now be permitted to argue what he said were new points. Mr Hogarth submitted that an application of principles 6(b) and 6(f) should lead to the opposite result.
24. I recognise the importance of the limitations set out in the third principle in Rance; but in my experience it is rare that a party seeks on appeal, to raise a new point which does not involve any new evidence or new considerations of the facts. The arguments which Mr Hogarth seeks to advance do not require any new evaluation of the facts or any new factual material; all of the factual material necessary to address and adjudicate on Mr Hogarth's arguments is before me; no further factual inquiry is required. While it is true that the circumstances in principle 6(a), (c) and (e) do not apply to this case, it is not necessary for all of the sub-paragraphs in paragraph 6 of Rance to be satisfied; any one will suffice, subject to the principles set out in paragraph 7 as to when the discretion is not to be exercised. As to those, I am satisfied that paragraph 7(b) does not apply in this case. The fact that junior counsel chose to put his case in one way does not lead to the conclusion, when leading counsel wishes to put the case differently on appeal, that junior counsel lacked skill. I am also satisfied that principle 7(e) does not apply here or at least, does not apply with such strength as to prevail over what are, in my judgment, the strong reasons why the Claimants should be allowed to put forward their arguments in full, to which I have referred above. I have in mind, too, that this is an important case, it raises a question of law which is not straightforward, which is raised on behalf of a substantial number of claimants and which needs to be the subject of decision at an appellate level.
25. For these reasons I decide the preliminary point in favour of the Claimants; and I therefore now proceed to consider the substantive arguments raised.

The Substantive Issues

The Appellant's Submissions

26. (1) I have, in explaining how the preliminary point arose, set out in a very summary form the central thrust of Mr Hogarth's argument. He submitted that the true question was not whether the allowances claimed were quantifiable but whether they were wages within the definition set out in section 27.(1)(a) of the Act.

(2) The answer to that question had to be, he submitted, that the allowances were wages as so defined; the Claimants were willing and able to perform flying duties; but BA had not rostered them for such duties; as a result they had not been paid the additional emoluments derived from such duties; BA owed those emoluments to them; they represented a claim in debt, not a claim for damages.

(3) While the Tribunal had, at paragraph 21, directly posed themselves the question whether the Claimants' claims were in reality claims for damages for loss of the chance to earn flying allowances, they had come to the wrong answer to that question, in particular because they had mistakenly relied on the absence of any method by which the claims could be quantified. Difficulties of quantification were not in point; employment tribunals and courts are familiar with the process of calculating an award of wages e.g. lost commission and of damages in circumstances in which the calculation is difficult.

(4) The decision in Coors was consistent with the above analysis. The employees in that case were not able to quantify their claims at all; their claims, according to Wall LJ, did not fall within Part II of the Act not because they were not quantified but because they could not be quantified i.e. were not quantifiable; see paragraphs 54 to 56; but the present claims were radically different from the claims in Coors and were no different from a claim for outstanding bonus the amount of which depended upon certain events or from a claimed payment for piece work.

BA's Submissions

26. Mr Gilroy submitted (in summary):

(1) The claims were claims for damages for the loss of the chance or opportunity to earn flying allowances; the nature of the claim was very similar to that advanced in Coors.

(2) The allowances were several in number; whether, when the Claimants were rostered to fly, each of those allowances would have become payable depend on different conditions. The amounts actually received before the closure of the Manchester base, as to which there was evidence before the Tribunal, fluctuated widely; the difficulties of calculation were very substantial and insuperable; the amounts claimed were not capable of being quantified. There was no material difference between the factual matrix in Coors and that of the present case.

(3) Whereas before Coors the distinction between a wages claim and a breach of contract claim had not been widely recognised, the Court of Appeal in Coors had changed the landscape in a manner which required the Tribunal to reach the result which it had reached in the present case.

(4) The Claimants' claims were not claims for damages as defined; they had not earned the allowances by flying; the true nature of the claims was, as set out in (1) above, for the loss of a chance of obtaining or opportunity to obtain the allowances.

Discussion

27. There is no doubt that the definition in section 27(1) of the Act of "wages" is wide. The words "other emolument" plainly include any of the allowances to which the Claimants became entitled when rostered to fly before BA closed their Manchester base and, as a consequence, were not paid when the Claimants ceased to fly (whether they could or could not reasonably have been expected to have flown from BA's Heathrow's base was not an issue canvassed at or relevant to the preliminary issue which the Tribunal had to decide). Had any such allowances become payable but had been unpaid before the closure of the Manchester base the Claimants would have been able to put forward claims for those allowances under Part II of the 1996 Act. Those claims would have been claims for "wages" just as, in Delaney v Staples, the employee's claim for commission and holiday pay due but unpaid as at the date of her dismissal was a claim for wages; see the decision of the Court of Appeal at (1991) 2 QB 47.
28. However, as the House of Lords decided when Delaney v Staples reached them ((1992) 1 AC 687), upholding the Court of Appeal's decision, what is described as a payment in lieu of notice is, on proper analysis, a claim for damages arising from dismissal in breach of contract. At page 696 Lord Brown-Wilkinson, with whom the other members of the House agreed, said:

"First, in order to demonstrate that the failure to make any payment in lieu is a "deduction", the worker will have to satisfy the requirements of section 8(3). He will have to show that there was an occasion on which "wages" were payable to him and the amount of the wages which should properly have been paid to him on that occasion. These requirements cannot be satisfied in relation to a payment in lieu. There is no "occasion" on which the payment in lieu was "properly" payable. The worker has no contractual or other right to the lump sum of liquidation damages at any time prior to judgment. Even assuming that the occasion for such payment in lieu was the date of summary dismissal, what was the sum "properly" then payable? If the worker obtains alternative employment during the notice period, the damages for wrongful dismissal on account of loss of wages which would be payable by the employer falls to be reduced by the wages received by the worker from the alternative employment during the notice period. It is therefore impossible at the time of dismissal to quantify the correct amount of the payment in lieu. Accordingly there is no way in which the amount of the "deduction" can be calculated under section 8(3).

Next, under section 5(2)(a) a complaint to an industrial tribunal in relation to an improper deduction has to be made within three months of "the date of payment of the wages from which the deduction was made." As I have said, it is impossible to identify the date on which the payment in lieu should have been made, therefore the time limit in section 5(2) cannot be calculated.

Next, under the general law an employer in paying damages for wrongful dismissal or a payment in lieu by way of liquidated damages is entitled to set off any cross-claim he may have against his employee. For example, in the present case the employer, Mr Staples, was asserting a cross-claim against Miss Delaney for an alleged breach of her duty of confidentiality. If a payment in lieu constitutes "wages" for the purpose of the Act, no such deduction of cross-claims is permissible since it would not be authorised by section 1. Moreover, if their employer were to exercise his right of set-off under the general law by deducting the amount of his cross-claim from a payment in lieu, if the payment in lieu is "wages" the worker could apply to the industrial tribunal for an order that the employer repay the unauthorised deduction even if it was a legitimate cross-claim. The industrial tribunal would be bound to order such repayment (section 5(4)) and in consequence the employer would lose his right to enforce his cross-claim in any proceedings to the extent of the sum wrongly deducted: section 5(7). I find it impossible to believe that Parliament in passing this legislation intended, by a side wind, to alter the common law rights of employers and workers on the termination of employment."

29. In the context of Delaney v Staples, the contrast on which those passages are based is that between a sum of falling due as wages during the course of employment and a claim for damages based on the unlawful termination of the contract of employment. However in Coors that difference, between a claim for a sum falling due as wages and a claim for damages arising out of a breach of the contract of employment, had to be considered in the different context of continuing contracts of employment. The Claimants' claims, brought under Part II of the 1996 Act, were founded on the employers' alleged failure to put in place an incentive scheme which, it was said, the employers had promised to establish, which would be as advantageous as a previous scheme which had been withdrawn. The Court of Appeal decided that the Employment Tribunal had no jurisdiction to hear the claim. They could not have been and had not been brought as claims for damages because of the provisions of article 3 of the Extension of Jurisdiction Order to which I have referred earlier. They, therefore, had to be pursued in the County Court.
30. Chadwick LJ set out his reasons for that conclusion at paragraphs 69 to 71, as follows:

"69 It is important, also, to recognise that there will be a number of different schemes -that is to say, scheme which differ in the targets set and incentives offered - which will meet the test. To put another way, given a realistic prediction of the employer company's likely financial performance for the year ahead (which, itself, allows some flexibility within a range of possible outcomes, the prediction of any of which can be said to be realistic), it will be possible to choose different combinations of targets and incentives. All that is required is that the chosen combination, in conjunction with the prediction of likely performance for the year ahead, can be expected to give rise to benefits equivalent to those which claimants would have received under the BEPS scheme,. If there are a number of different combinations of targets and incentives, any one of which satisfies that requirement, it is impossible to hold that the employer company was bound to choose one rather than another. And, of course, different combinations or targets and incentives can be expected to give rise to different outcomes when applied to the company[s actual financial performance at the year end.

70 if follows that it is impossible to hold that, if the employer company had met the requirement imposed on it by the claimants' employment history, the amount of the wages paid to any individual claimant on the relevant date for payment of benefits accrued in respect of the year 2003 would have been greater than the amount of the wages actually paid to that claimant on that date. The most that can be said is that it might have been. And, accepting that it might have been, it is impossible to say by how much the amount of the wages actually paid was less than the amount that would have been properly payable if the employer company had met the requirement to put in place a substitute scheme which, properly and fairly operated, would be capable of replicating the benefits of the BEPs scheme. It is that feature which, to my mind, makes it impossible to hold that there had been a "deduction form wages" for the purpose of Part II of the 1996 Act.

71 As I have said, I am content to assume for the purpose of this appeal that the claimants have claims against the employer company for breach. But, on a true analysis, those claims are, as it seems to me, claims for damages by way of compensation for the loss of the chance that, if the employer company had put in place a substitute scheme which met the requirement imposed by the claimants' employment history, the effect of such a scheme, when applied to the company's actual financial performance for the year 2003, would have been the claimants received some benefit which (absent such a scheme) they did not receive, I have no reason to doubt that, in the context of a claim for damages advanced on that basis, a court could measure the loss of chance by an appropriate award. But that task is outside the jurisdiction which (in the case of a claimant whose employment ahs not come to an end) the legislature has chosen to confer on an employment tribunal by the 1996 Act. I agree with Wall LJ that, if and for so long as the claimants remain in the company's employment, they seek their remedy in the county court."

31. Wall LJ said, at paragraphs 51 to 57:

"51. I agree with Chadwick LJ, whose judgment I have had the advantage of reading in draft, that if the scheme put in place by Coors was not a proper implementation of its obligation to its workforce, then the critical question in this appeal is that which I have identified in para 42 above, namely whether the claim for damages which arises from Coors's failure to perform its obligation can be said to be an identifiable sum, failure to pay which is to be treated as an unauthorised deduction of wages.

52. in answering these questions, and in particular the critical questions identified in paras 42 and 51, I have to say that I prefer the submissions made by Mr Linden. In my judgment, the highest the case can be put for the claimants is that Coors was under an obligation to put in place a scheme which, properly and fairly operated, was capable of replicating the benefits of the BEPSS scheme. Whichever way one examines the case, however, the result is that any payment due to the workforce under the 2003 incentive scheme was incapable of quantification in the Delaney v Staples sense. To put the matter another way, none of the claimants could properly say that on any given date in 2004, let alone the March date operated under the previous scheme, Coors had made an unlawful deduction of a quantified amount from their wages. For the reasons which Chadwick LJ sets out in his judgment, with which I respectfully agree, the claimants' remedy (if they have one) sounds in damages for breach of contract, not under the Employment Rights Act 1996, Part II.

53. I therefore conclude that if the scheme, as operated, did not represent a fulfilment of Coors's obligation to create a replacement for the BEPSS, the result in jurisdictional terms is that the claimants would have suffered a loss, but that the amount of the loss was unquantified.

54. Had Mr Basu been able to advance his claim to the tribunal on the basis that there had been a breach of an obligation on the part of the employer to pay a bonus of a specified amount (whether expressed in monetary term or as a percentage of gross earnings)- or even, perhaps, a term to be implied by custom an practice-that, every year on 30 March, they would receive a bonus of x (whether expressed as £x or as a percentage of basic salary) I think it would be arguable that the claim was quantifiable, and that, as a consequence, the claim was unjustifiable as an unlawful deduction of wages.

55. Mr Basu was, however, constrained to accept that the claim could not properly be advanced to the tribunal on that basis. The fact is that the claimants were unable to quantify the breach, and required the tribunal to do so. That, in my judgment, renders the claim one for damages for breach of contract, as opposed to a quantifiable claim for unlawful deduction of wages.

56. Part II of the Employment Rights Act 1996, as I read it, is essentially designed for straightforward claims where the employee can point to a quantified loss. It was designed to be a swift and summary procedure. Of course such claims would throw up issues of fact. The example canvassed in argument was of an employee being paid piece work, and asserting that his employer had deducted sums properly payable to him for work undertaken on the grounds that some of the items produced by the employee were defective. Delaney v Staples [1992] ICR 483 provides another example. Such a dispute would not take the case outside Part II of the Act. I also accept that Part II is capable of expansion along Farrell Matthews & Weir v Hansen [2005] ICR 509 lines as envisaged by section 27(3) of the Act. However, in my judgment to extend it to the present case is a step too far.

57. I am therefore of the clear opinion that the tribunal did not have jurisdiction to entertain the claimants' claims, and that the appeal tribunal was wrong to remit them to another tribunal which, equally, would not have jurisdiction to hear them, I would therefore allow the appeal on the issue of jurisdiction, and set aside the appeal tribunal's remission of the claims."

32. Wilson LJ agreed with both judgments.
33. Counsel for Coors had argued that a claim under Part II of the 1996 Act could only be brought if there was an obligation on the employers to pay a specific sum or a particular amount; see paragraph 30. At paragraph 46 Wall LJ said:

"46. In my judgment, the underlying facts of Delany v Staples are a paradigm of the circumstances in which Part II of the Employment Rights Act 1996 is designed to operate. The employee complains that there has been unlawful deduction from his wages. He has not been paid an identified sum. He makes a claim under Part II. The employer may have a number of defences. Those defences may raise issues of fact. Those issues will be for the tribunal to determine. But the underlying premise on which the case is brought is that the employee is owed a specific sum of money by way of wages which he asserts has not been paid to him. That, it seems to me, is the proper context both of Delany v Staples and Part II of the 1996 Act."

It was this passage on which Mr Gilroy, not unnaturally, heavily relied; for in the present case the Claimants have to rely, in order to put forward a sum which they say ought to have been but was not paid, on an average calculation of past allowances or some other calculation based on the same months in previous years, which may or may not represent accurately the sum which they would have earned by way of allowances had they been rostered for flying duties after the date on which the Manchester base was closed. However, as I understand their judgments, neither Wall LJ nor Chadwick LJ based their ultimate conclusion on a requirement that the amount claimed should be a specific or quantified sum. At paragraph 51 Wall LJ referred to "An identifiable sum" (although I recognise that he used the word "quantified" in paragraph 56). Chadwick LJ did not use that terminology at all; his reasons are based on the fact that there was no more than a chance that the scheme which the employers, on the employees' case, should have introduced if they had complied with their contractual obligations, would have resulted in receipt by the Claimants of more than they had in fact already received.

34. Employment tribunals are familiar with difficulties of quantification, such as may arise in a number of jurisdictions or contexts, including claims under Part II of the 1996 Act. When an employee who is entitled to commission, in addition to his ordinary wage or salary, claims that commission has not been paid or paid in full, he may not, until after detailed disclosure, be able to specify the amount owing; and there may be complex disputes as to the correct quantification or calculation of commission due, if any, which the tribunal may have to resolve. Such disputes are not restricted to mathematical issues; a tribunal may have to determine, for example, whether the employee played a sufficient role in the obtaining of a particular sale to qualify for commission. The same exercise may have to be carried out by a Tribunal in assessing compensation for unfair dismissal. Similar difficulties may arise in relation to unpaid bonuses and in many other ways. In such circumstances, albeit often with difficulty, the Tribunal has to quantify and does quantify the relevant sum; such claims are quantifiable albeit not necessarily brought for a quantified sum. To this extent I agree with Mr Hogarth's arguments. I can see no reason based on principle or upon the judgment in Coors which would prevent a tribunal from considering under Part II a commission-based employee's claim to unpaid commission, even if the employee was not able to put a figure upon the unpaid amount, at least until after disclosure. It surely cannot be the case that there is jurisdiction to hear such a claim if the employee guesses a figure and puts it into his claim form but there is no such jurisdiction if he claims "Whatever commission is found on the evidence to be owing".
35. While I agree with Mr Gilroy that the number of different allowances which the Claimants might have received, had they continued to be rostered for flying duties, and the different criteria which applied as between the various allowances would or might have made the correct calculation of the present claims very difficult, I conclude that such difficulties did not, of themselves, have the effect in law that the Tribunal had no jurisdiction to hear these claims, brought as they are under Part II of the 1996 Act. If they were unquantifiable, save in terms of the loss of a chance, as was the claimed loss in Coors, I would of course take a different view; but they are not unquantifiable; they are merely potentially very difficult to quantify.
36. Mr Hogarth did not seek to argue that section 224 of the Act applied directly to these claims; but in general terms where an employee claims a shortfall in remuneration which remuneration is variable from week to week or from month to month, whether by way of commission, bonus, allowance or otherwise, the use of averaging - of which section 224 prescribes, for limited statutory purposes, a particular mode or regime - is or may be, depending on the facts of the individual case, an appropriate method of calculation; and the Tribunal did not need to find in the statute an express provision as to the method of calculation required in the circumstances of this case or an implied power to use the provisions of section 224, contrary to the Tribunal's view as expressed in paragraph 18. Section 224 might have provided guidance; it was not and was, in my judgment, not said to be the only method of quantification which could be adopted.
37. It is helpful to consider what, in the present case, would have happened if the facts were that, for the period for which the claims relate, the Claimants had been rostered for flying duties, had discharged those duties but had then not been paid any of the various allowances. I am not suggesting that BA would, on this hypothetical analysis, have withheld such payment capriciously; but one can envisage reliance by BA on some form of collective agreement or a dispute about whether the conditions for payment of some of the allowances had been met. If the Tribunal decided that BA were not entitled to decline to pay the allowances, there could be little doubt that the Tribunal would then have gone on to decide, despite the difficulties of calculation, how much by way of allowances had become payable.
38. However although the conclusions which I have set out thus far indicate that the Tribunal, in my judgment, erred in law insofar as it based itself on the absence of a method of qualification and the inability of the Claimants to rely on section 224, it does not follow that the Claimants, as a result, succeed in this appeal; for, as Mr Hogarth accepted, he needs to establish that the claim relates to unpaid "wages" as defined in section 27; and it is at this point that, in my view, his argument breaks down. There is an obvious and fundamental difference between basic wages or salary payable periodically to an employee who works or is ready, willing and able to work if no work is provided e.g. he is on "gardening leave" and remuneration which is only earned if specific tasks are carried out, such as commission from sales, allowances for flying or allowances for overnight stays (this is by no means an exhaustive list). The latter form of remuneration, in my judgment, can only become payable to the employees if the applicable task is carried out. For example a lorry driver who is entitled, if he is on the road overnight, to a meal allowance (whether he actually incurs the cost of a meal or not) is not owed such allowance in a period in which he is not driving by reason of his employer's breach of contract (such as in a period while he is under a suspension which the employer is not lawfully entitled to impose). In the present case, after the closure of the Manchester base the Claimants did not carry out flying duties; they did not, therefore, earn allowances; and as in Coors, the present claims are, in my judgment, not claims for wages i.e. for payable emoluments but for damages for loss of the opportunity to earn the allowances claimed or of the chance of earning them, if the Claimants established that the closure of the Manchester base and/or the failure to roster them for flying duties amounted to a breach of contract on the part of BA. Accordingly because of the jurisdiction, restriction imposed by article 3(c) of the Extension of Jurisdiction Order the claim could not be pursued in the Employment Tribunal.

Conclusion

39. While, therefore, my reasons for reaching the conclusion that this appeal fails differ from those on which the Employment Tribunal based their decision, there is no doubt that the point is a point of law which I am in a position to and indeed am bound to decide. The Tribunal posed the right question in paragraph 21 and, in my judgment, came to the right conclusion. They did not have any jurisdiction to hear the claims.
40. For these reasons this appeal is dismissed.