Appeal No. UKEAT/0230/12/KN
EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX
At
the Tribunal
On
9 October 2012
Before
HIS
HONOUR JUDGE HAND QC
(SITTING ALONE)
LTRS
ESTATES LTD T/A ORWELLS APPELLANT
MR
M HAMILTON RESPONDENT
Transcript of Proceedings
JUDGMENT
SUMMARY
UNLAWFUL DEDUCTION FROM WAGES
Appeal allowed from the Judgment of Employment Judge John Warren,
whereby he held that there had been an unlawful deduction from the wages of a
restaurant manager by not paying him in respect of Bank Holidays and overtime,
because of a paucity of factual findings and analysis. Remitted for a complete
re-hearing before a different Employment Judge.
HIS HONOUR JUDGE HAND QC
Introduction
1.
This is an appeal by the Respondent below against the Judgment of Employment Judge Warren,
sitting at Reading, on 19 August 2011, his Judgment and written reasons
having been sent to the parties on 3 October 2011. The Judgment
appears at pages 1 to 5A of the hearing bundle. There is a
postscript, because Employment Judge Warren was asked in a letter
sent by this Tribunal on 12 July to give his comments, and he did so in a
letter sent on 20 August 2012, which is at pages 89 and 90
and which must also be considered alongside his reserved Judgment.
2.
In that Judgment the Respondent, the Claimant below, Mr Hamilton,
succeeded on his claim for unlawful deduction from wages to a limited extent.
In short, he succeeded on two points, first in respect of six Bank Holidays and
a Monday on which he had worked and for which he had not been paid; in respect
of those the Appellant was ordered to pay £678.29. He also succeeded on his
further claim that he ought to have been paid for 38 half‑days that he
had worked and not been paid for; in respect of that, he was awarded
£1,841.08. The total amount was therefore £2,519.37. This was therefore not a
case that involved an enormous amount of money, but it was nevertheless a case
of importance to both parties, and as the appeal has developed it has raised
issues that justify the comment that was made at the rule 3(10) hearing of
this case by HHJ Peter Clark when he said, “There may be more to this
little case than meets the eye”; that was a most prescient comment.
The Employment Tribunal decision
3.
The reserved reasons of the Employment Tribunal, to be found at
page 2 of the hearing bundle, start with a synopsis of the claims and
indicate that the Employment Tribunal heard evidence. There then follows under
the subheading “The Facts”, from paragraphs 3 to 21, a
collection of findings that present some picture, but only a partial picture,
of the factual matrix of this case.
4.
The Claimant was employed as a restaurant manager by the Respondent.
Where he worked may not be material, but it is not clear from paragraphs
3 to 21 what his location actually was. He had resigned over a
period of time by various methods of communication, including at least one
telephone conversation and one letter. As a result of those communications, he
had confirmed that he was happy to work out three months’ notice, although he
would be prepared to go earlier. The Appellant indicated that it was not
prepared to pay any money in lieu of notice and that the Claimant could either
work out his notice or leave with immediate effect.
5.
These communications took place against the factual background of the
Claimant being absent through illness. The Appellant’s position appears to
have been that were the Claimant to produce a medical certificate, he would be
paid sick pay, but if he was absent without certification, he would receive no
pay. He produced certificates until mid‑April and was paid; thereafter,
he was not paid. It was agreed that his effective date of termination would be
15 May 2011, and Employment Judge Warren found that there
was an agreement between the parties to that effect. Further, the Employment
Judge concluded that there was no entitlement to notice pay because the
Claimant had been absent through illness, either being paid sick pay or being
absent whilst uncertificated and thus not paid (see paragraph 22.1 of the
Judgment).
6.
Those issues that had led to claims by the Claimant and were all
dismissed by Employment Judge Warren. On the other hand, the learned
Judge accepted the claim in respect of additional pay for working Bank
Holidays; this is dealt with at paragraph 22.2 of the Judgment. The
Claimant also succeeded in his claim that he had not been paid for 38 half‑days
when he should have been; this is dealt with at paragraph 22.3, the
Employment Judge, summarising his reasoning as being “the same reasons as
above”. The “reasons above”, at paragraph 22.2, are these:
“The Claimant had waited some seven months to obtain his
contract of employment, which provided that extra time worked, including bank
holidays should be recovered as taking time off in lieu. It is quite clear
from the evidence of the Claimant and indeed from the Respondent’s response
that the Claimant would only have known about that once he received his
contract and the handbook, which was the end of December 2010; he had been
ill during March and resigned at the end of March; he did not have the
opportunity to take the time off in lieu. Introducing the clause when the
contract was produced some seven months after the Claimant commenced employment
cannot deprive the claim to his full entitlement to be paid. I therefore find
in his favour and his claim for working the 6 bank holidays and the Monday near
to the Valentines Day succeeds.”
7.
It is that reasoning that apparently Employment Judge Warren
regarded as capable of transmission into the second issue, relating to the 38
half‑days. It is not obvious to me, in terms of reasoning, how one makes
that translation from one to the other.
8.
In his letter sent on 20 August 2012 (see
pages 89 and 90) Employment Judge Warren was answering
an enquiry about what had been referred to as “the gentlemen’s agreement”. At
paragraph 1 at page 89 Employment Judge Warren says:
“[…] the only reference to Gentlemen’s Agreement is the
reference in the Claimant’s witness statement on page 85. There was no
cross‑examination.”
9.
The reference to “page 85” is in fact a reference to the Claimant’s
letter at page 87 of the bundle. The letter is dated 7 July 2011.
The penultimate paragraph on page 87 reads as follows:
“I am aware of our contractual agreement but must stress that I
waited nearly 7 (seven) Months for my contract and was told that due to the
nature of my senior role that time owed would be honoured by a Gentlemens [sic]
Agreement, I took this as honourable as surely waiting 7 Months constituted a
relationship of trust between us both, especially from my part. Due to the
nature of the hours regarding not taking time owed within the 3 Month limit
would too fall under our Gentlemens Agreement.”
10.
There had been no reference to any gentlemen’s agreement in the
Judgment, and paragraph 1 of the letter from
Employment Judge Warren sent on 20 August, but dated
20 July, does not enable the reader to know what has actually been
accepted by the Employment Tribunal in relation to this or indeed whether it
was of any significance. It seems likely that this evidence was disputed at
the Employment Tribunal, and it is impossible to know exactly what the sentence
“there was no cross‑examination” in paragraph 1 of Employment Judge Warren’s
letter means. Mr Bernard Watson, who appears on behalf of the
Appellant, is not able to say exactly what happened. It is asserted, however,
in the Notice of Appeal that there was evidence from another ex‑employee
that extra hours were often worked without extra pay.
11.
Employment Judge Warren did record accurately, however, the
general position of the Respondent at paragraph 15, the last sentence of
which reads:
“As for the extra hours worked, the company pointed out that
they do not pay for in lieu days, which had to be taken within 3 months of the
extra time worked or forfeited.”
12.
At paragraph 2 of the letter of 20 July 2012 sent on
20 August 2012 from Employment Judge Warren he explains the
conclusions in the Judgment as follows:
“2.1 I arrived at the conclusion that the Claimant should be
paid for the extra hours worked as I found on the evidence that the Claimant
was employed to work 48 hours per week. I found as a fact that the Claimant
worked and was pressurised to work far more than 48 hours per week.
2.2 Bank Holidays and the half days for which the Claimant
claimed were days when he was not scheduled to work. He was required to work.
2.3 The pressure on the Claimant to work was so great that not
only could he not take his normal days off, but there was no hope of taking off
‘time in lieu’ where he had worked previous days off.
2.4 There was never any opportunity for the Claimant to take
time in lieu because of the Respondent’s pressure on him.
2.5 I found that the Claimant had worked hours which should have
been his days off. Therefore he was entitled to be paid for those hours.
2.6 It is totally unjust and unfair to provide that excess hours
work can be rewarded by taking time off in lieu and then not allowing the
employee to take that time off in lieu. Put simply, the Claimant worked hours
outside of his contractual obligation. He worked those hours at the request,
at the pressure, of the Respondent. There was an expectation that he be paid
and in my view he was entitled to be paid.”
13.
I entirely understand that this was a relatively small claim even in
terms of the general jurisdiction of the Employment Tribunal, that the Claimant
was unrepresented, that it is the overriding objective of Employment Tribunals
to dispose of cases justly and that one of the key factors set out in
Regulation 3 of the Employment Tribunals (Constitution and Rules of
Procedure) Regulations 2004 is to deal with cases in a way that
is proportionate to their complexity and/or to the importance of the issues, to
ensure that the case is dealt with expeditiously and fairly and to save expense
(see Regulation 3(2)(b), (c) and (d)). Nevertheless, in order
to deal with a case justly it seems to me that it is necessary to set out the
facts in sufficient detail as to form a basis for the legal analysis that leads
to the conclusions reached.
The submissions
14.
Mr Bernard Watson, on behalf of the Appellant, submits that
this decision falls well short of a rational analysis and that it is a case in
which the conclusions expressed in terms of paragraph 2.6 at page 90
of the bundle, whilst they might satisfy a general arbitration upon the basis
of doing what is reasonable, are by no means a proper analysis of either the
factual matrix or the applicable law, or the conclusions to be drawn from a
synthesis of both.
15.
Mr Andrew Watson, who appears, under the auspices of the Free
Representation Unit, on behalf of the Respondent, does not dispute that there
are, as he puts it in his skeleton argument, “problems with the ET’s Judgment”.
Indeed, he does not seek to uphold the Employment Tribunal’s Judgment as set
out at pages 1‑5A of the bundle, nor does he seek to support the
reasoning set out in the letter at pages 89 and 90. Instead, he
submits that there is in the Judgment a minimum of factual material that
entitles him to present an argument that the result reached by Employment Judge Warren
can be supported on the very different grounds, not advanced before him, that
there should be implied into the contract in this case two terms that, if
implied, would justify the conclusions reached. Those two terms are described
by Mr Andrew Watson as “standardised terms”. They are, firstly:
“[…] where an employee is required to take a day off in lieu
within a certain period, but does not have a reasonable opportunity to do so,
they are entitled to be paid a reasonable sum for working that day.”
and secondly:
“In a contract which specifies the number of hours and days to
be worked per week, and which contains a provision that an employee may be
requested to work overtime, there is an implied term that this provision does
not extend to the employee working, without remuneration, a regular period of
overtime which has the effect of increasing the number of days per week worked
over that specified in the contract.”
16.
There is no need, Mr Andrew Watson submits, for this case to
go back to the Employment Tribunal; the factual findings are sufficient for me
to substitute my own conclusions, reaching, indeed, the same end result but by
the very different route of implying terms into the contract of employment.
Conclusion
17.
I cannot accept that argument. It seems to me that there exists in this
case no clear finding as to what the contract comprised of at the outset.
There is a recognition that the terms and particulars were only proffered seven
months after the contract had started, but there is a very imperfect
exploration of what that amounted to, and no conclusions are drawn as to the
terms of the contract, save that at paragraph 15 of the Judgment there is
an acknowledgement that the company have pointed out what their stance is. It
is quite clear that at pages 89‑90 Employment Judge Warren
is setting out what he believes to be the position in law, but it is very
unclear from what that derives. Is it from a construction of the contract; is
it, with a degree of foresight, an anticipation of the fuller argument mounted
by Mr Andrew Watson today; or is it simply a suggestion of what might in
broad and general terms be regarded as “just”? It is impossible to know.
18.
Moreover, Mr Bernard Watson has submitted that were the
Appellant to have been faced with these arguments at the Employment Tribunal it
might have wanted to deploy more evidence, different evidence, or both. I do
not accept Mr Andrew Watson’s submission that there is here a
sufficient factual platform for me to start now on this appeal to construct an
alternative view as to how the Claimant’s case might be sustained.
19.
I have come to the conclusion that it would be best if I said nothing as
to Mr Andrew Watson’s arguments in terms of my view as to their
merits. At one point he submitted that I could make findings in principle
about the applicability of such terms and then the matter could go back for a
factual investigation. Without any discourtesy to him, I must say that strikes
me as having the cart and the horse in entirely the wrong order. First of all,
there must be findings of fact as to what the parties agreed, what the contract
was and how the parties conducted themselves in relation to the contract. The
latter is not always a key or even an admissible factor in construing the
contract, but frequently it is important to know what actually happened.
Disposal
20.
In my judgment, this appeal should be allowed, because the Employment Judge
has neither set out completely the terms of the contract, the basis on which he
finds the terms of the contract nor how the contract was operated. His
Judgment contains elements of all three, but the picture presented is
incomplete and imperfect. For those reasons, this appeal will be allowed, and
the matter will be remitted for a re-hearing. The case will start afresh, the
parties will be at liberty to call what evidence they like and to make whatever
submissions they wish both as to fact and law. In the well‑known case of
Sinclair Roche & Temperley v Heard
[2004] IRLR 763, which is one of the familiar authorities in the familiar
authorities bundle of this Tribunal, a division of this Tribunal presided over
by Burton J, the then President, amongst many other aspects of the case,
considered the terms upon which cases should be remitted to an Employment
Tribunal for a re-hearing. These are to be found at paragraph 46 of the
Judgment on page 23 of the electronic version of the report that is in the
familiar authorities bundle and on page 774 of the IRLR.
21.
This is, in my judgment, a totally flawed decision (see
paragraph 46.4) and would be a case in which a remission to the same
tribunal would allow for what Burton J called, so aptly, a “second bite at
the cherry”. The Tribunal has already made up its mind as to this, and there
may be a real risk of an appearance of pre‑judgment or bias if the
Tribunal is asked to do this all over again. Accordingly, this matter will be
remitted for a complete re-hearing to a differently constituted Tribunal; that
is to say, an Employment Judge other than Employment Judge Warren, to
be chosen by the Regional Employment Judge for the relevant area.
