United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR JAMES TOWNSEND (Solicitor) Instructed by: Messrs BP Collins Solicitors Collin House 32-38 Station Road Gerrards Cross Buckinghamshire SL9 8EL
For the Respondent	MR NICHOLAS TOMS (of Counsel) Instructed by: Messrs Thompsons Solicitors Congress House Russell Street London WC1B 3LW


 


SUMMARY

NATIONAL MINIMUM WAGE

Minimum Wage Regulations must relate to basic rate of pay even if employee normally only works nights or weekends and receives enhanced pay.


 


HIS HONOUR JUDGE ANSELL

1. This has been the hearing of an appeal from a decision of Employment Judge Hill sitting at a Reading Employment Tribunal who, following hearings in January and March 2009, gave a reserved judgment on 31 March in which she determined that the Respondent's basic flat rate was below the minimum wage in respect of the payments she had received since 2005 and in addition the Employment Judge increased the award by 10 per cent for failure to comply with the statutory procedure under section 31 of the Employment Act 2002.
2. The dispute between the parties was set out by the Employment Judge in paragraph 2 of her judgment in the following terms:

"In essence the difference between the parties that the Claimant said she transferred to the Respondents under a contract which said she should be paid a basic rate of pay; time and a third was paid for night work, Monday to Friday and time and two thirds for night work Saturdays and Sundays. The Respondent said that as the Claimant only even worked nights she was not paid any allowance as she asserted but that the rate of pay which she received for her night work was her basic pay. On that basis the Respondent said she was always paid above the minimum wage."

3. The appeal before me pursues matters that were raised below and in particular contends that on a proper construction of the National Minimum Wage Regulations 1999 the Respondent's rate for night work during the week, which was the type of work that she normally did, was the relevant hourly rate for the purposes of the Regulations. Leave for this hearing was given by HHJ Reid QC.
4. The background facts are that the Respondent was a care assistant and had worked for the Civil Service Benevolent Fund (CSBF) since 1980. Her employment was transferred to the Appellant in 1998 when they acquired the care home where the Respondent worked. Her terms and conditions continued pursuant to the TUPE provisions. The Respondent's basic rate of pay, as per her original contract of employment, was £4.3829 per hour plus a geriatric lead allowance. For some time the Respondent has only worked nights and there is no dispute that employees were paid at a rate of time plus one-third for weekday nights and time and two-thirds for weekend nights. These rates were apparent from the CSBF payslips and also from the attempt by CSBF in 1996 to replace the existing terms and conditions to basic pay for week day nights and time and a quarter for weekends. Those proposals were never accepted.
5. As stated above, the Home was sold in 1998 and the Tribunal record the payslips for the years 2000 to 2002 showed a basic rate of £4.8581 together with enhanced rates for weekday nights and weekend nights. Later payslips in general only showed a rate for night working, although there were occasions when the Respondent attended daytime training when she was paid her basic rate of a slightly increased amount at £5.01 per hour.
6. The Tribunal also noted a letter from the Appellants to the Respondent on 12 February 2008 referred to in paragraph 14 of the Decision as follows:

"Your Civil Service contract when we acquired the home specified a basic pay of £4.8581 per hour enhanced to time and a third Monday to Friday and time and two thirds, Saturdays, Sundays and Bank holidays. By my reckoning your rate should therefore be £6.477 Monday to Friday and £8.0969 Saturday and Sundays. I see that you have actually been paid £6.67 an hour Monday to Friday and I cannot either understand or explain this. Do you have any explanation yourself!

Because you are a night carer we treat your Monday to Friday rate as your basic rate for the purposes of calculating your pay and holiday pay. This is actually different from your contractual entitlement. Your Civil Service Contract awarded holiday pay and sick pay at the basic rate."

7. As a result of these facts the Employment Judge concluded that at the relevant time, i.e. 2005 through to 2008, the Respondent's employment was still subject to a basic rate of pay, which was £5.01 in relation to weekday nights and £4.8581 in relation to weekend nights. The Employment Judge rejected the Appellant's contention that the basic rate was the weekday night rate of £6.67. Referring to the history that I have set out above and also making the point that if that was the correct basic rate, the weekend rate of £8.09 would be at an enhanced rate of 21.29 per cent. The Judge concluded on this issue that it was "simply not credible. As the Claimant put it, enhancements of that nature are usually on the basis of time and a quarter to time and a half." She concluded in paragraph 30 as follows:

"I therefore conclude that by continuing to pay the Claimant at the flat rate that she was on in 1998 the Respondent has failed to pay her the national minimum wage as regards the basic pay. He cannot look at the night rate as the final figure. What the Claimant was entitled to was the national minimum wage plus a third or two thirds according to which day she worked. To fail to pay her that is an unlawful deduction of wages."

8. Before turning to the grounds of appeal it is appropriate to set out the relevant regulations under the National Minimum Wage Regulations 1999. The relevant regulations are as follows:

"3. In these Regulations "time work" means-"

(a) work that is paid for under a worker's contract by reference to the time for which a worker works and is not salaried hours work.

10. (1) The pay reference period is a month or, in the case of a worker who is paid wages by reference to a period shorter than a month, that period.

14. (1) The hourly rate paid to a worker in a pay reference period shall be determined by dividing the total calculated in accordance with paragraph (2) by the number of hours specified in paragraph (3).

(2) The total referred to in paragraph (1) shall be calculated by subtracting from the total of remuneration in the pay reference period determined under regulation 30, the total of reductions determined under regulations 31 to 37.

(3) The hours referred to in paragraph (1) are the total number of hours of time work, salaried hours work, output work and unmeasured work worked by the worker in the pay reference period that have been ascertained in accordance with regulations 20 to 29.

31. (1) The total of reductions required to be subtracted from the total remuneration shall be calculated by adding together-

(a) any money payments paid by the employer to the worker in the pay reference period that, by virtue of regulation 30(b) or (c), are required to be included in the total of remuneration for an earlier pay reference period;

(b) in the case of-

(i) work other than salaried hours work, any money payments paid by the employer to the worker in respect of periods when the worker was absent from work or engaged in taking industrial action;

(ii) salaried hours work, any money payment paid by the employer to the worker attributable to the hours (if any) by which the number of hours determined under regulation 21(2) is required to be reduced under regulation 21(3) (worker entitled to less than normal proportion of annual salary because of absence from work), whether under the direct application of those regulations or the application of them required by regulation 22(5)(a);

(c) any money payments paid by the employer to the worker in respect of-

(i) time work worked by him in the pay reference period involving particular duties that is paid for at a higher rate per hour than the lowest rate per hour payable to the worker in respect of time work worked by him involving those duties during the pay reference period, to the extent that the total of those payments exceeds the total of the money payments that would have been payable in respect of the work if that lowest rate per hour had been applicable to the work;

(ii) particular output work worked by him in the pay reference period that is paid for at a higher rate than the normal rate applicable to that work by reason of the work being done at a particular time or in particular circumstances, to the extent that the total of those payments exceeds the total of the money payments that would have been payable in respect of the work if the normal rate had been applicable to the work."

9. As will be seen from my analysis of the facts found by the Tribunal and the Employment Judge's conclusions, the dispute below appeared to be very much an issue of fact as to whether the Respondent's contractual basic pay during the relevant period (2005-2008) was the lower figure of £4.85/£5.01 or the weekday pay that she normally received of £6.67. Before me the key issue was the meaning of the words in regulation 31(1)(c)(i), namely, "The lowest rate per hour payable to the worker in respect of time worked by him involving those duties during the pay reference period." I raised with Mr Townsend, who appeared on behalf of the Appellant, whether this was an issue which had been raised below, in the light of the well-known principle that the Employment Appeal Tribunal would not normally allow argument on matters that were not raised before the Employment Judge. Although he did not appear below, he assured me that it was an issue and indicated that it had appeared in the Appellant's submissions before the Employment Judge. On that basis I was prepared to hear further argument.
10. Mr Townsend's argument was that for the purposes of regulation 31(1)(c)(i) it was important to look at the minimum rate being paid during the relevant pay reference period, whether it be a month or a year, and it was that minimum payment which should be compared to the national minimum wage ("NMW"). He argued that even if there was historically under the Respondent's original contract a basic rate of pay which was lower than the national minimum wage, since in reality the Respondent, other than on occasional training days, never earned less than the night rate of £6.67, then that figure should be taken as the lowest rate per hour payable to the worker in respect of any particular month. Indeed, as he put it in his written submissions:

"In calculating the deductions, the rate against which one must determine whether there is any enhancement (or premium) is the lowest rate paid to the worker during the pay reference period. It is submitted that what is stated in the contract is irrelevant and to calculate NMW by reference to a contract as opposed to the method for calculation contained in the regulations is an error of law".

In support of this contention he pointed to the fact that the Respondent's payslips during the relevant period, save when she had training days, only specified the Monday to Friday night rate at £6.67. No basic rate was set out on the payslips, certainly for the years in question.

11. In response, Mr Toms, for the Respondent, argued that the wording of regulation 31(1)(c)(i) shows that it was intended to cover payments under the contract and not some other arbitrary amount. He submitted that the Appellant's arguments would only work if, in relation to the relevant regulation, the words "payable to the worker" were substituted by the words "paid to the worker". He argues that the scope of the provisions could be limited to payments actually made to the worker during the pay reference period regardless of any contractual provision. Therefore the term "payable" must be the amount payable under a worker's contract of employment.
12. In support of his contention, he referred to the definition of "time work" in regulation 3, namely, "Work that is paid for under a worker's contract" and also contended that the National Minimum Wage Act also operated through an employee's contract of employment since pursuant to section 17 a worker was entitled to be paid under their contract as if they had been paid at a rate equal to the minimum wage.
13. He argued that the Employment Judge's conclusions were clearly that there still was a contractual basic rate before enhancements of £5.01 during the week and £4.85 at weekends and that had not been varied, and indeed the letter of 12 February specifically stated that it was not the case. He argued that if the Appellant's construction was correct it would mean that the Regulations would have the effect of varying the contract by firstly subsuming the contractual shift payment for anti-social night working during the week into the basic rate of pay and varying the contractual shift premium at weekends from time and two-thirds to an increase of 21.29 per cent. He argued that the Regulations were not intended to effect wholesale variations into the terms of a contract of employment.
14. I agree with the Respondent's submissions. As I discussed during course of argument, if the Appellant's construction was correct it would also mean the Respondent's pay entitlement in any pay reference period would change depending on whether she actually worked during the day for even an hour or worked entirely on nights and weekends, which would be a surprising result and would introduce total inconsistency into the minimum wage calculation. The philosophy of the National Minimum Wage Regulations is clearly that an employee's basic minimum wage before overtime enhancement or other allowances should not fall below the statutory minimum and it seems to me that it would be completely contrary to the purpose of the legislation if that obligation could be avoided simply because an employee chooses to normally work those hours when she would be in receipt of some enhancement. The Appellant's position is indeed to confuse the word "paid" with "payable". The lowest payable during the reference period must clearly be that minimum sum due under the contract of employment.
15. Accordingly, for these reasons this appeal must fail.