SUMMARY
CONTRACT OF EMPLOYMENT – Implied term/ variation/construction
of term
UNLAWFUL DEDUCTION FROM WAGES
Agreement between drivers as employer provided that time for
breaks should be calculated by reference to planned hours rather than hours
actually worked. The Employment Tribunal held that drivers’ breaks should be
calculated more by reference to hours worked. Employment Tribunal construction
flawed. Appeal allowed.
HIS HONOUR JUDGE SEROTA QC
1.
This is an appeal by the Respondent from the decision of the Employment
Tribunal at Liverpool, presided over by Employment Judge Ryan, who sat alone,
which was sent to the parties on 29 October 2010. The Employment
Judge found in favour of the Claimant and 83 fellow employees in similar
circumstances to those of the Claimant, and held that the Respondent had made
unlawful deductions from their wages. The matter was referred to a full hearing
by me on 19 January 2011.
The factual background
2.
This case concerns a construction of an agreement contained in an
agreement known as Supply Chain North 2; an agreement negotiated between an
employer’s association and various trade unions. I am told that the agreement
had been in force for some considerable time. It is not in dispute that the
agreement formed a contractual document as concern both the Claimants and the
Respondent.
3.
The Claimants are drivers. I think they would describe themselves as
draymen, and they had become employees of the Respondent through a succession
of TUPE transfers. I have been told today that there are hundreds of other
potential claims in addition to the 84 which I am dealing with today.
4.
The Respondent is a logistics company predominantly supplying the drinks
market and the licensed trade. It is agreed that Supply Chain North 2, which I
think I can refer to as “the agreement”, covered various aspects of the working
arrangements, including the planned and actual hours, including rest periods
and breaks to give effect to statutory regulations dealing with working time
drivers’ hours and health and safety requirements. Adherence to the conditions
is mandatory; non‑compliance constituted a disciplinary matter; and
drivers’ records were regularly analysed and enforcement action taken for non‑compliance
in relation to breaks in working time.
5.
I was told that the agreement was intended to comply with, but did not
mirror, the statutory regulations, including in particular the working time
regulations. I understand there are special regulations relating to drivers.
The regulations impose unpaid breaks as does the agreement.
6.
The agreement has been in effect, I was told, since February 2003
and this is the first claim that has been made under it. The relevant section
of the agreement is paragraph 2.2.1(c):
“c) Breaks From Work
Drivers will at all times comply with all legal requirements
contained in the Drivers’ Hours Regulations with particular reference to breaks
and maximum driving hours.
Where an operator’s day/shift is planned to be up to six hours
there will be no compulsory break planned into the shift.
Where an operator’s day/shift is planned to be between
6 hours and 9 hours an unpaid break of 30 minutes will be
planned into the day/shift.
Where the day/shift is planned to be in excess of 9 hours the
unpaid break time will be 45 minutes.
Where the day/shift consists of two or more trips the break
will, where possible and practicable, be planned between trips at the distribution
centre.
Where an operator’s day/shift is planned to consist of one trip
only it is deemed the responsibility of that individual operator to ensure that
break time of 30 or 45 minutes as appropriate is taken within the working
day.
All break time will be taken account of and deducted when
calculating actual hours worked.”
7.
The effect of these terms is that there is no compulsory planned break
for a planned working day under 6 hours; a planned working day of between
6 and 9 hours will provide for a planned 30‑minute break (the time when
the break is to be taken is not specified but the extent of it is; it is left
to the driver to decided when to take it); where the planned working day
exceeds 9 hours the plan will provide for a 45‑minute break. The
break time is inbuilt into the shift time as planned, so a drayman with a shift
of 5 hours 55 minutes will have 5 hours 55 minutes of planned
work, but a drayman working a 6‑hour and 5‑minute shift will in
fact be required to do 5 hours and 35 minutes of work - or it is planned
that he would do that - together with his 30‑minute unpaid break.
8.
Although it is not relevant to the construction of the agreement, it is
common ground that the agreement has not been applied according to what the
Respondent would say is its proper construction. The Respondent would say in
fact that it has been implemented or applied by the Respondent in a way that is
favourable to the Claimants. The Claimants, I think, might dispute this.
9.
The Claimants’ daily routine entails receiving a manifest on reporting
for work. This will show the planned duration of the working schedule and
specifies the planned breaks according to the time allotted for performing the
scheduled tasks. After completing the work the driver will report with his record
to a debriefing clerk and a record is made of the time actually worked. It is
accepted that the plans are not prescriptive; flexibility is needed having
regard to such matters as fluctuating traffic conditions and I assume late
customer requirements and variations of their orders. The clerk will record
the hours worked and bank them. If over 43 hours are worked in a week
overtime is payable.
10.
The Respondent’s practice is to calculate the duration of the time spent
working on and, therefore, for which payment is allowed, not on the basis of
planned hours under the planned working day on the manifest or the actual hours
worked, but on the basis of what are described as attended hours, which is not
defined in the agreement but is in essence time spent working plus the time on
break. The Supply Chain North 2 agreement does not provide for pay to be
calculated by reference to attended hours but by reference to the time worked.
11.
In his skeleton argument at paragraph 16 the counsel for the
Respondent, Mr Bryant, explains the way in which the times are actually
calculated and this is also explained - although not as clearly - in
paragraph 2.15 of the decision of the Employment Tribunal:
“The Respondent has adopted a practice of calculating the
duration of a shift, time spent working and therefore payment not on the
planned hours under the manifest or the actual worked hours but on what it
calls “attended hours”. This is not defined in N2. By “attended hours” the
Respondent refers to the time that is spent working plus time spent on break
periods. It follows from this practice that the attended hours on which
payment is calculated includes non‑working time for which no payment is
due. The Respondent calculates the working day by reference to the attended hours;
in establishing whether or not a shift is 6 hours, 9 hours or some
other duration it will include the unpaid break periods in calculating the
length of day “attended”.”
12.
I hasten to add that although it is a matter of interest as to how the
Respondent actually applied the agreement, this has no bearing at all on its
true construction. There is no argument in the present case that the terms of
the contract were somehow varied by custom and practice, so I need not concern
myself beyond looking at the matter for the purposes of curiosity as to how the
agreement worked in practice.
13.
I now turn to the decision of the Employment Tribunal. The Employment
Tribunal set out the facts and the relevant provisions of the agreement largely
as I have set them out. The Employment Judge referred himself to s.13 of the Employment
Rights Act 1996 relating to unauthorised deductions:
“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 on 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 deduction), 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.
(4) Subsection (3) does not apply in
so far as the deficiency is attributable to an error of any description on the
part of the employer affecting the computation by him of the gross amount of
the wages properly payables by him to the worker on that occasion.
(5)For the purposes of this section a
relevant provision of a worker’s contract having effect by virtue of a
variation of the contract does not operate to authorise the making of a
deduction on account of any conduct of the worker, or any other event
occurring, before the variation took effect.
(6) For the purposes of this section
an agreement or consent signified by a worker does not operate to authorise the
making of a deduction on account of any conduct of the worker, or any other
event occurring, before the agreement or consent was signified.
(7) This section does not affect any
other statutory provision by virtue of which a sum payable to a worker by his
employer but not constituting “wages” within the meaning of this Part is not to
be subject to a deduction at the instance of the employer.”
14.
The Employment Judge considered that the contractual provision should be
interpreted purposively and he should not imply a term unless it was a
purposive interpretation of the agreement and the agreement should take effect
accordingly. He did consider, I think - although he did not make this clear - that
he needed to give some purposive interpretation for the agreement.
15.
At paragraphs 4.1 to 4.5 he commented on the reference to attended
hours. He considered that the calculation of pay by reference to attended
hours was not essential for the Claimant to carry on its business or for the
contract of employment to work. He considered that what was essential was the
time spent on performing the work and the work that was performed:
“4.2 In this instance unpaid time spent in break periods was
being added to time that was worked and paid for, so as to enforce an
additional, arguably unneeded, break, whether or not it was taken. This
amounted to an unjustified deduction of 15 minutes in all shifts that
exceeded 8½ hours actual working time, that is time in which duties were
performed.
4.3 The Claimant did not consent in writing to what was in
effect a deduction of pay for 45 minutes on those shifts where he might
only work slightly over 8½ hours (which with a 30‑minute break equates
to in excess of 9 hours “attended time”); by virtue of N2 he consented to
a deduction of 30 minutes in respect of an unpaid break in respect of
shifts of between 6 and 9 hours actually worked. He consented to
deductions in respect of 45‑minute breaks in any period of actual work that
exceeded 9 hours (what the Claimant might attended time exceeding
9 hours 45 minutes).
4.4 The Respondent’s practice required that in addition to his
8½ hours actually worked he must have a break of 30 minutes duration
thus making his attended hours of 9 hours duration; any further work would
trigger an assumed additional 15‑minute unpaid break. 15 minutes
pay was therefore taken from the Claimant’s wages for that period of assumed
break.
4.5 N2 was the only written documentation concerning these provisions
relating to break periods and payment. That agreement provided that unworked
hours, the rest break periods, should not be taken into account when
calculating pay. Clearly the 30 minutes break taken during the
9 hours “attended” was being taken into account by the Respondent and
served to reduce the Claimant’s pay on the assumption that after 9 hours
attended work the Claimant had an additional 15‑minute unpaid break. The
Respondent should have measured the actual time worked and only required
45 minutes total break when the total number of worked hours, excluding
break periods, exceeded to 9 hours. That would be in accordance with the
strict application of N2 and makes more sense in the context of the working
time directive, drivers’ hour’s regulations and health and safety
requirements. It does not make sense to impose an additional break for rest
purposes on the basis in part of time already spent not working but resting.”
16.
I note that in paragraph 4.5 the Employment Judge held that the
Respondent should have measured the actual time worked and only required
45 minutes total break when the total number of hours, excluding break
periods, exceeded 9 hours. I quote again when he said: “That would be in
accordance with the strict application of N2.” I pause to note that, if
anything, it would be inconsistent with rather than in accordance with the
strict application of N2.
17.
As the construction placed on the agreement by the Employment Judge was
not altogether clear, I invited Mr Allen to make his submissions as to
what he considered to be the true construction so Mr Bryant could reply.
Mr Allen and Mr Bryant kindly agreed this suggestion.
18.
The main point that has been made, and is a point that was clearly made
to the Employment Tribunal with some force by Mr Allen, is that the way in
which the agreement is said to work by the Respondent and has been applied by
them is anomalous. For example, if a drayman has a planned shift of
5 hours and 55 minutes or 8 hours and 55 minutes he will be
paid more than if his planned shift is for 6 hours and 5 minutes or
9 hours and 5 minutes as the case may be. Mr Allen has provided
a helpful table in his skeleton argument that I understand was also provided to
the Employment Tribunal which shows what is suggested was an anomaly.
19.
It is also suggested that there has been no written agreement to make
deduction from wages because he submits, does Mr Allen, that here there
has been a deduction from wages because the Claimants should have been entitled
to be paid for the hours they actually worked as opposed to those that they
were notionally expected to work. He submitted it would be absurd and no
driver would agree to work more hours for less pay in accordance with the
examples that I have referred to and those suggested by Mr Allen.
20.
He also submits that break time should be deemed to be taken at the end
of the six or nine‑hour period, as the case may be, that triggers the
compulsory break so that if a shift was planned to last for six hours and
five minutes, only five minutes of the break time would be taken into
account as in determining the hours of work. Similarly, if a shift was planned
for nine hours and ten minutes, only ten minutes should be deducted - the time
for deduction not starting until the nine hours had elapsed.
21.
Mr Bryant submitted that the reasoning of the Employment Tribunal was
unclear. It appears to have implied terms but what terms are by no means
clear. Mr Bryant relied on what he submitted was the unambiguous wording
of the agreement, but he countered this suggestion that there was an anomaly,
as I have described it earlier, that somebody who worked less than six hours or
nine hours, as the case may be, might be paid more than someone who was
scheduled to work for just over the six or nine‑hour period. There was,
he submitted, no anomaly because the agreement provides that the break time is
built in so the work time for somebody working a 5‑hour 55‑minute
shift would be more than the work time built in to someone who was scheduled to
work, say, for 6 hours and 5 minutes. So, although the shift appears
longer, the actual work time provided for, because it also includes a break, is
less.
22.
Accordingly, submitted Mr Bryant, as the break is built in, if the
Claimants failed to take the break, as they are required to do, they are not
entitled to be paid for it. There was further no deduction made in this case
because the deemed hours are what the Claimants are to be paid for. If they
are paid for 6 hours work then they are required to take a 30‑minute
break in a shift. If their shift was 6 hours and 5 minutes and only
the last 5 minutes was to be deducted, they would have a double benefit because
not only would they receive payment for the 5 minutes over the
6 hours, but they would not have had to work the complete scheduled work
component of the shift (6 hours), and would have failed to take the mandatory
30 minute break. The deduction, effectively, would already have been built in.
23.
I am unable to accept that the last part of s.2(1)(c), that is break
time taken into account of and deducted when calculating actual hours work, requires
that the deduction should only take place on the basis that it is added only
when the initial trigger period has elapsed. It was submitted by
Mr Allen, as I have said, that the deduction was to be made immediately
after that time had elapsed.
24.
Mr Bryant pointed out that there is nothing in the agreement apart
from the provision, which I have just referred to, that deals with how hours
are to be calculated. I do not consider myself that an agreement as to how
hours are to be calculated can amount to an agreed deduction from wages. The
employees are only entitled to be paid according to the terms of their
agreement for the hours that they have agreed should be treated as having been
worked. I agree with what Mr Bryant has set out in paragraphs 10 and
11 of his skeleton argument, namely that there is no deduction because the
agreement relates to how the hours worked are to be calculated and does not
refer simply to the hours that are actually worked, regardless of breaks,
whether taken or not.
25.
I prefer Mr Bryant’s submissions. I do not consider there is any
unfairness or anomaly because the hours planned will have included the break
time which the draymen were bound to take and which were not deemed to be
working hours. I can see no reason, therefore, not to follow the literal
meaning of the agreement. The planned hours would determine the hours to be
paid for, regardless of whether the break is taken actually or not. The
agreement, in relation to deeming the hours, does not trigger the provisions in
relation to unlawful deductions. There have been no deductions. The Claimants
are paid according to the hours they have worked as defined in the agreement.
26.
As this has been an extempore Judgment which I have given today in order
to accommodate the parties, I am conscious that I may not have dealt with
matters as completely and fully as I might otherwise have done, but I would
invite counsel to draw my attention to any obvious errors or omissions and I
would like to thank them both very much for their helpful submissions and skeleton
arguments.
27.
Accordingly, I will allow this appeal.
