United Kingdom Employment Appeal Tribunal

Appeal No. UKEAT/0417/12/KN

EMPLOYMENT APPEAL TRIBUNAL

FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON, EC4Y 8JX

At the Tribunal

On 5 February 2013

Judgment handed down on 25 April 2013

Before

HIS HONOUR JUDGE PETER CLARK

(SITTING ALONE)

SOMERSET COUNTY COUNCIL APPELLANT

MR C J CHAMBERS RESPONDENT

Transcript of Proceedings

JUDGMENT

APPEARANCES

SUMMARY

UNLAWFUL DEDUCTION FROM WAGES

JURISDICTIONAL POINTS – Worker, employee or neither

New jurisdictional points permitted on appeal; Rance and cases there cited applied.

Respondent’s appeal allowed on those jurisdictional bars to Claimant’s ‘Wages Act’ claims.

Unnecessary to decide Claimant’s employee/worker status in these circumstances.

HIS HONOUR JUDGE PETER CLARK

Introduction

1.            The parties before the Employment Tribunal were Mr Chambers, Claimant, and Somerset County Council, Respondent.  On 17 April 2012 the matter came before Employment Judge Cresswell sitting alone at Taunton.  By a reserved judgment with reasons dated 14 May 2012 that Judge upheld the Claimant’s claims of unauthorised deductions from wages in relation to (a) his ordinary pay (b) holiday pay and (c) superannuation payments.  The matter was adjourned for a remedy hearing in the event that no agreement was reached as to compensation.  Against that judgment the Respondent now appeals.

2.            Before the ET the Respondent was represented by counsel, Mr Chidgey.  In this appeal it is represented by Mr Daniel Oudkerk QC, leading Ms Katherine Eddy.  The Claimant has represented himself throughout.

3.            Presumably as a result of the change in representation for the Respondent, what is now advanced on appeal raises jurisdictional issues not raised below.  Thus the first question for me is whether those new points may be raised for the first time on appeal, applying the principles stretching back to Kumchyk v Derby CC [1978] ICR 1116 and helpfully summarised by HHJ McMullen QC in Secretary of State for Health v Rance [2007] IRLR 665, para. 50.

4.            I accept Mr Oudkerk’s submission that the Respondent ought to be permitted to take the new points relating to jurisdiction.  No further evidence is required.  The argument goes directly to the ET’s jurisdiction to entertain the claims of unauthorised deductions (the ‘Wages Act’ (WA) claims).  It raises hard-edged points of law giving rise to potential knock out points, as envisaged by the Court of Appeal in Glennie v Independent Magazines (UK) Ltd [1999] IRLR 719.  I raised with the parties two examples of this approach by the CA in cases which I heard in the EAT, namely Aparau v Iceland Frozen Foods plc (No. 2) [2000] IRLR 196, see the judgment of Moore-Bick LJ, paras. 25-26 and Bates van Winkelhof v Clyde & Co [2012] IRLR 992, para. 40, per Elias LJ.  Those cases confirm my conclusion that the new points ought to be permitted in this appeal.

The ET decision

5.            The relevant facts founds by the Employment Judge were that the Claimant was a full-time employee of the Respondent until his retirement on 1 January 2003.  He had been employed as a qualified social worker at the top of his pay scale, grade 9, on point 41.  He was a member of the relevant superannuation scheme to which both employer and employee contributed.

6.            On 4 June 2003 the Claimant commenced work as a locum social worker with the Emergency Duty Team (EDT).  He continued in that role up to the ET hearing (and beyond).  The Judge found (para. 13) that he worked an average of about one-third of a full-time post, save for a period between June-November 2011 when he was caring for his seriously ill wife.

7.            The letter of appointment (by Somerset staffing) to the locum role dated 31 July 2003 is referred to at para. 9 of the reasons.  It states that the Claimant’s temporary placement with the EDT was on a daily basis, working on an ad hoc basis.  The rate of pay was then £17.44 per day, which I am told represented point 37 on the pay scale; the bottom point on grade 9.  He continued to be paid at that point on the scale between 2003-2012.

8.            Initially the Claimant was allowed to continue his membership of the Local Authority Pension Scheme whilst working as a locum.  Both parties made appropriate contributions to the Scheme.  However, in 2008 there was a change to the Scheme rules flowing from Regulations dated 2007 (reasons, para. 16).  Those regulations provided that a person may not be a member of the Scheme unless he was employed under a contract of employment of more than three months duration.  The Respondent regarded the Claimant as a casual worker, not an employee and ceased making contributions on his behalf.  He contended that he was an employee with the necessary service and appealed the Respondent’s decision not to make contributions.  On 8 September 2008 he was reinstated into the Scheme, without explanation and later treated as ineligible for the Scheme and his contributions refunded.

9.            As a locum he received holiday pay, based on his rate at point 37 in the pay spine.  However, he did not receive holiday pay reflecting his unsocial hours uplift, an enhancement of 26.3 per cent.

10.         Against this factual background I turn to the Claimant’s claims, the issues identified by the EJ and his resolution of those issues.

11.         The critical question addressed by the Judge, as he was asked to do, was whether, when working as a locum, the Claimant was continuously employed by the Respondent.  Having considered that issue at length in his reasons the Judge concluded that he was so employed and that the following consequences flowed from that finding:

12.         The Respondent challenges the EJ’s finding that the Claimant was an employee.  However, before that finding is engaged it is first necessary to resolve the new jurisdictional points.

13.         I begin with the law.  The right to bring a WA claim under Part II Employment Rights Act 1996 is granted to workers; it is not limited to employees (see s.230(3)).  It is therefore unnecessary to determine whether the Claimant is an employee as defined in s.230(3)(a) for the purposes of bringing these WA claims.  I infer, from the concession in relation to the unsocial hours element of holiday pay maintained before me by Mr Oudkerk, that there is no dispute but that the Claimant’s work as a locum brought him within the extended limb (b) definition of worker.  Equally, he would fall within the extended definition contained in the Working Time Regulations 1998 were it necessary to rely on the holiday pay provisions there set out.

14.         The right not to suffer unauthorised deductions is to be found in s.13 ERA.  An employer shall not make a deduction from wages of a worker employed by him (subject to immaterial exceptions).  ‘Wages’ are defined, for present purposes, in s.27(1)(a), excluding the payments listed in s.27(2).  Mr Oudkerk has referred me specifically to s.27(2)(c), which excludes:

15.         The precise ambit of the WA jurisdiction has led to extensive judicial consideration.  I reviewed the history in Tradition Securities & Futures SA v Mouradian [2008] WL 168832, paras. 8-17.  I shall not repeat that exercise here.  Unlike the earlier cases of New Century Cleaning Co Ltd v Church [2000] IRLR 27 and Coors Brewers Ltd v Adcock [2007] ICR 983, in which I wrongly held that the WA jurisdiction was engaged, the CA agreed in Tradition [2009] EWCA Civ 60 that it was engaged in a case involving a declared, quantified discretionary bonus.  That may be contrasted with the two earlier cases; in New Century the claim related to the employer’s reduction of the price offered for jobs done by a window cleaning team of workers.  The majority held that there was no legal entitlement to work on the same jobs at the same price.  Hence the claim failed on legal entitlement to wages in accordance with s.27(1)(a).  In Coors the claim related to loss of benefits under a profit share scheme.  However, because the loss was unquantified the claim lay in breach of contract, not under a Part II WA claim.  I pause to observe that no breach of contract claim is here raised under the Extension of Jurisdiction Order 1994; not could it be since, on the Claimant’s case, his ‘employment’ was continuing.

16.         Turning to the issues in the present case, I deal first with the Judge’s finding that the Claimant was entitled to be paid at the top of grade 9 in the pay scale (point 41) rather than point 37 forming the basis on which he was in fact paid as a locum.  This affects both ordinary pay and holiday pay.

17.         That finding appears to be based on a ‘concession’ by Mr Deverell in evidence that if the Claimant was a full-time employee throughout his time as a locum he would have been paid at the top of the relevant scale (reasons, para. 21).  That is plainly correct: but he was not full-time; he worked about one-third of a full-timer’s hours.  Thus, regardless of employee status the ‘concession’ does not assist the Claimant.  The reality here is that the agreement between the parties as to the Claimant’s level of pay as a locum is contained in the letter of 31 July 2003.  He was paid accordingly, thus his WA claim for the higher rate of pay at point 41, both in relation to ordinary pay and holiday pay, fails.  The ET had no jurisdiction to embark on an enquiry into what he ought to have been paid if he was to be regarded as an employee in the context of a WA claim, any more than it would be appropriate under a s.11/12 reference: see Southern Cross Healthcare v Perkins [2011] ICR 285; Mears v Safecar [1982] ICR 626, both CA (assuming that he was an employee and therefore entitled to make such a reference).  Any such claim lies in breach in contract.

18.         As to the employer’s pension contributions to the superannuation fund on the Claimant’s behalf, ordered to be paid by way of unauthorised deductions (reasons, para. 46), I accept Mr Oudkerk’s submission that the EJ had no jurisdiction to so order.  Although it is well recognised in the European jurisprudence that entitlement to a pension is deferred pay that does not mean that an employer’s contributions to the pension fund on behalf of an employee amounts to ‘wages’.  As s.27(1)(a) makes clear, wages means any sums payable to the worker in connection with his employment, it does not mean contributions paid to a pension provider on his behalf.  On this footing his WA claim in relation to pension contributions necessarily fails, regardless of whether or not he was at the relevant times an employee entitled to membership of the Scheme.  For completeness I reject Mr Oudkerk’s alternative submission that this part of the claim is excluded by s.27(2)(c) ERA.  Pensions contributions are not payments by way of a pension in connection with the worker’s retirement.  The former is a payment into the Scheme; the latter is a payment out.

19.         Finally, I return to the question as to whether, whilst working as a locum the Claimant was an employee of the Respondent.  I accept that the point is highly arguable.  On the one hand there is the Claimant’s apparent concession that the necessary mutuality of obligation was absent (see Carmichael v National Power plc [1999] ICR 1226), recorded by the Judge at para. 37 of his reasons; on the other hand the Judge then went on to conclude that that was not the reality of the parties’ relationship, relying on the judgment of Langstaff J in Khan v Checkers Cars Ltd (EAT 0208/05, 16 December 2005, unreported).  Arguably the approach in that case has now been endorsed by the Supreme Court in Autoclenz v Belcher [2011] IRLR 820.  Similarly, there are real issues as to whether, if an employee, the Claimant had the necessary continuous service for the purposes of membership of the superannuation scheme whilst a locum.

20.         However, before embarking on those interesting questions, which formed the principal battleground between the parties below and has been the subject of considerable argument before me, I remind myself of the effect of my jurisdictional findings on appeal.  They are that the EJ had no jurisdiction to make the WA declarations which he did (save for the unsocial hours element of holiday pay).  In these circumstances neither do I, in disposing of the appeal, have jurisdiction to consider the continuous employment issue.  Accordingly I shall not do so.  It is simply not necessary for my determination of the appeal.

21.         It follows that I shall allow the Respondent’s appeal and set aside the orders of the EJ, including his finding as to the Claimant’s employment status, save and except that the issue of the unsocial hours element in the Claimant’s holiday pay, which ought to be capable of quantification and agreement, remains with the EJ for determination at the remedy hearing, absent compromise.

22.         I appreciate that Mr Chambers, who has conducted his case with great courtesy and skill, may feel aggrieved that he has lost on appeal after the goal posts have been moved.  I am also conscious of the inequality of arms in terms of legal expertise.  Mr Chambers did not actively oppose Mr Oudkerk’s application to take new points on appeal, although I did not decide that application by implicit concession but strictly on its merits.  Faced with the jurisdictional arguments Mr Chambers did not feel qualified to engage in that argument, save that he relied on the EAT decision in Chambers (no relation) v Cromwell Group (Holdings) Ltd (EAT 1178/98), 4 November 1999, unreported, HHJ Harold Wilson presiding) for the proposition that the employer’s pension contributions is recoverable by way of a WA claim.  Whilst that appears to have been the outcome in that case it is clear that the jurisdictional point now taken by Mr Oudkerk (and not taken below) was not raised by the parties in Chambers v Cromwell.  The case was therefore decided per incuriam.

23.         It is in these circumstances that I reserved my judgment in order to critically evaluate the analysis advanced by Mr Oudkerk.  For the reasons given above, I accept that analysis (save in relation to the s.27(2)(c) point).

24.         It follows that the Respondent’s appeal is allowed.  The case will return to the ET solely in relation to the unsocial hours element in the Claimant’s holiday pay entitlement.