R Taffler v Devon Doctors Ltd and Practice Plus Group Urgent Care Ltd: 1402522/2022
EMPLOYMENT TRIBUNALS
Case No 1402522/2022
Between
R TafflerClaimantDevon Doctors Ltd and Practice Plus Group Urgent Care LtdRespondent
Before
Employment Judge GibbPeter Edwards (instructed by counsel) for claimantMikhael Paur (instructed by counsel) for respondentMr Puar (instructed by counsel) for claimantMr Edwards (instructed by counsel) for respondentDate 4 May 2023
JUDGMENT
The claimant’s claims for unlawful deduction from wages is not well-founded and is dismissed. JUDGMENT OF THE EMPLOYMENT TRIBUNAL HELD AT Bristol (via VHS) ON 2, 3 and 4 May 2023
REASONS
[1]In this case the Respondents seek their costs of defending this action against the Claimant. I am grateful for the helpful and detailed submissions of Counsel on behalf of the respective parties. General Background[2]The Claimant submitted his ET1 against the First Respondent on 9 August 2022. The claims arose out of the First Respondent’s decision to remove two enhancements: the GP Cover Enhancement (“GPCE”) & Overnight Allocation Enhancement (“OAE”). On 9 September 2022, the First Respondent filed its ET3. Following a transfer of the business pursuant to TUPE, on 11 January 2021, the Second Respondent was added to the proceedings and filed its ET3 on 3 February 2023.[3]There was no agreed list of issues before the tribunal at the final hearing, however, the parties were in broad agreement as to the issues to be decided. It was agreed that the Claimant’s cause of action was whether or not there had been an unlawful deduction of wages pursuant to section 13(3) of the ERA 96 and whether or not Regulation 4(4) of TUPE was engaged. The tribunal determined the following questions in relation to both GPCE and OAE: i. Was the Claimant contractually entitled to these payments? ii. If yes, was the decision to remove the payments effective or did it constitute an unlawful variation? iii. Whether these purported variations were void because the sole or principal reason for the variation was the transfer of the Claimant’s employment from the First Respondent to the Second Respondent. iv. If either or both of the variations are void as a result of the application of regulation 4(4) of TUPE, the quantum of any subsequent unauthorised deductions.[4]The following findings were made in the tribunal’s ex tempore judgment at the end of the hearing: GPCE i. The parties agreed that the Claimant was entitled to work shifts which attracted the GPCE enhancement and to claim the hourly uplift when he worked those shifts. ii. The evidence showed that the Claimant chose shifts which attracted the hourly uplift over shifts which did not. However, there was no agreement or contractual entitlement that the Claimant was entitled to be paid the GPCE enhanced rate on all his shifts. iii. Therefore, the nature of the contractual terms was that the Claimant was entitled to be paid the GPCE enhanced rate when he worked a shift which attracted that payment but had no legal entitlement to demand such shifts or to be paid the enhancement on every shift. iv. On 7 February 2022, the First Respondent implemented restructuring of the payment for shifts worked by introducing the Advanced Clinical Practitioners (“ACP”) role. The GPCE payment was removed and replaced with increased rates for the senior ACP roles. The Claimant was paid legacy rates and already paid the top pay scale under the ACP rates. v. The First Respondent was contractual entitled to vary assign jobs duties in accordance with business need and was entitled to restructure with the effect of removing the GPCE payment. Alternatively, the contract of employment permitted the First Respondent to introduce reasonable changes on general or specific notice. Specific notice was provided of the change and it was a reasonable change to introduce. OAE vi. The OAE was an enhancement payment which was designed to compensate clinicians who undertook nightshifts where the rota was not at full capacity. If there was a shortfall in practitioners, the total payable was divided between those who signed up. On 21 July 2021 this was extended to apply generally to paramedics. It was not a guaranteed payment and depended on uptake on each particular shift. vii. The Claimant was unable to establish a legal entitlement to OAE payments. There was no evidence that it was enforceable as an express or an implied term sufficient to create an entitlement. It was a discretionary payment designed to compensate staff when they worked an undermanned shift, however, it was not guaranteed in amount or at all, and the staff could not know when they signed up for the shift whether it would be payable or not. viii. There was no legal entitlement to the OAE payment and it did not form part of the wages properly payable within the meaning of section 13(3) of the ERA. It therefore could not found a claim for an unlawful deduction. ix. Given those findings, it was not strictly necessary to consider whether or not the variation was void pursuant to Regulation 4(4) of TUPE. However, on the evidence, the tribunal was satisfied that transfer was not the sole or principal reason for the withdrawal of either pay enhancement. The Application for Costs No Reasonable Prospects of Success[5]The Respondents make an application for its costs on the basis that the Claimant has:[6]Brought and pursued claims for which the tribunal has no jurisdiction and which had no reasonable prospects of success: rule 76(1)(b). In the ET1, the Claimant stated that his claim was for other payments: i. Protection from disciplinary proceedings for withdrawal of prescribing. ii. Uplift of contractual gross pay rates by £5.85 per hour. iii. Compensation for loss of the GOCE equivalent to 12 years of work in the sum of £84,000. iv. Compensation for loss of the OAE equivalent to 12 years of work in the sum of £312,000.[7]However, the Respondents say that there was no jurisdiction for these claims for the following reasons: i. The Claimant remains employed by the Second Respondent and cannot bring a breach of contract claim: Re 4(c) of the Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994 (“the 1994 Order”). The limit of any award is £25,000. This prevents that Claimant seeking rectification. ii. The tribunal has no power to protect an applicant from disciplinary proceedings. This constitutes injunctive relief and the High Court has sole jurisdiction. iii. No court has jurisdiction to unilaterally impose an hourly rate of pay increase as that is a matter between the parties to the contract. iv. As regards unauthorised deductions claims, these can only be pursued for past and not future deductions.[8]The tribunal only had jurisdiction for the claim for unauthorised deductions from wages.[9]The Respondents say that none of these claims had reasonable prospects of success. None of them were withdrawn following the Claimant securing legal representation. Unreasonable Conduct of the Proceedings[10]Acted unreasonably in conducting the proceedings: rule76(1)(a). Specifically:a. Rejected reasonable settlements offers: Kopel v Safeway Stores [2013] IRLR 753. The Respondents made the following offers: 1. 30.03.23: £8,500. 2. 18.04.23: £10,000. This email also included a costs warning as to the risk of non-acceptance of the offer in the circumstances where the Claimant was unsuccessful and / or did not recover more than the offer;b. Failed to adduce evidence to support his claim pursuant to Regulation 13(3), such that his claim was bound to fail;c. Only abandoned the claim for compensation for unauthorised deductions during the course of his counsel’s closing submissions; andd. Continued to pursue his unauthorised deductions claims to judgment, having conceded that no compensation could be awarded. The Respondents say that this can only be for a collateral abuse and amounts to an abuse of the process in the tribunal.[11]The Respondents seek an order that the Claimant do pay the Respondents’ reasonable costs for the entirety of the proceedings, subject to detailed assessment, if not agreed: rule 78(1)(b). Alternatively, from 20 April 2023 running from the date upon which the Claimant unreasonably refused the settlement offer. The Claimant’s Grounds of Resistance[12]The Claimant resists the application and states that costs in the ET are the exception rather than the rule and it is a high hurdle to overcome. The matters complained of do not engage rule 76, but even if the rule is engaged, the court should not exercise its discretion to make a costs order. No Reasonable Prospect of Success[13]As regards the claims which the Respondents say had no reasonable prospects of success, the Claimant argues: i. The Respondents clearly understood this was a claim arising under TUPE and understood the issues. This is reflected in the contents of its Grounds of Resistance. ii. As regards the remedies claimed, these were not addressed in the Grounds of Resistance, did not challenge jurisdiction and did not ask for further and better particulars. iii. The Respondents did not challenge the breach of contract claim. iv. The Respondents did not apply for a deposit order or strike out. Generally, the claim was not case managed. v. The Claimant avers that there was a tacit understanding these were not being pursued. vi. What the Claimant might have asserted regarding his claims during W/P negotiations has no bearing on the claim itself. COT3 are outside the jurisdiction of the tribunal. Unreasonable Conduct Not Accepting Settlement Offer[14]The Claimant does not accept he unreasonably refused settlement offers. It was perfectly reasonable to refuse to accept an offer to settle future claims in a situation where there was ongoing loss. The case of Kopel does not apply. Failure to Adduce Evidence[15]Causation is an important element. The tribunal found that the GPCE was a contractual benefit but that it had been lawfully withdrawn so that the provision of proof of loss would have made no difference.[16]The Respondents’ calculation of loss in the offer led the Claimant to understand that they were willing to approach the calculation by way of average earnings as opposed to actual loss. The Claimant only understood that the Respondents were arguing that this was an error of law at the final hearing.[17]The payslips were within the Respondents’ control and they did not disclose them either.[18]The claim under section 13 of the ERA was not abandoned but there was no evidence before the tribunal. It was therefore not unreasonable for the tribunal to give judgment.[19]The Claimant also relies upon regulation 84 and costs would be disproportionate. He is already experiencing financial difficulties as his outgoings were based on the enhancements. The Rules[20]The relevant rules are the Employment Tribunals Rules of Procedure 2013 (“the Rules”).[21]Rule 76(1) provides: "a Tribunal may make a costs order or a preparation time order, and shall consider whether to do so, where it considers that –(a) a party (or that party's representative) has acted vexatiously, abusively, disruptively or otherwise unreasonably in either the bringing of the proceedings (or part) or the way that the proceedings (or part) have been conducted; or(b) any claim or response had no reasonable prospect of success. Or(c) a hearing has been postponed or adjourned on the application of party made not less than 7 days before the date on which the relevant hearing begins.[22]Under Rule 77 a party may apply for a costs order or a preparation time order at any stage up to 28 days after the date on which the judgment finally determining the proceedings in respect of that party was sent to the parties. No such order may be made unless the paying party has had a reasonable opportunity to make representations (in writing or at a hearing, as the Tribunal may order) in response to the application.[23]Under Rule 78(1) a costs order may –(a) order the paying party to pay the receiving party a specified amount, not exceeding £20,000, in respect of the costs of the receiving party;(b) order the paying party to pay the receiving party the whole or a specified part of the costs of the receiving party, with the amount to be paid being determined, in England and Wales, by way of detailed assessment carried out either by a county court in accordance with the Civil Procedure Rules 1998, or by an Employment Judge applying the same principles …"[24]Under Rule 84, in deciding whether to make a costs, preparation time, or wasted costs order, and if so in what amount, the Tribunal may have regard to the paying party’s (or, where a wasted costs order is made, the representative’s) ability to pay. The Relevant Legal Principles[25]The correct starting position is that an award of costs is the exception rather than the rule. As Sedley LJ stated at para 35 of his judgment in Gee v Shell Ltd [2003] [2003] IRLR 82 CA “It is nevertheless a very important feature of the employment jurisdiction that it is designed to be accessible to people without the need of lawyers, and that in sharp distinction from ordinary litigation in the UK, losing does not ordinarily mean paying the other side’s costs …” Nonetheless, an Employment Tribunal must consider, after the claims were brought, whether they were properly pursued, see for instance NPower Yorkshire Ltd v Daley EAT/0842/04. If not, then that may amount to unreasonable conduct. In addition, the Employment Tribunal has a wide discretion where an application for costs is made under Rule 76(1)(a).[26]As per Mummery LJ at para 41 in Barnsley BC v Yerrakalva [2012] IRLR 78 CA “The vital point in exercising the discretion to order costs is to look at the whole picture of what happened in the case and to ask whether there has been unreasonable conduct by the claimant in bringing and conducting the case and, in doing so, to identify the conduct, what was unreasonable about it, and what effects it had.” However, the Tribunal should look at the matter in the round rather that dissecting various parts of the claim and the costs application, and compartmentalising it. It commented that the power to order costs is more sparingly exercised and is more circumscribed than that of the ordinary courts, where the general rule is that costs follow the event and the unsuccessful litigant normally has to foot the legal bill for the litigation.[27]There is no need for the tribunal to find a causative link between the costs incurred by the party making the application for costs and the event or events that are found to be unreasonable, see McPherson v BNP Paribas [2004] ICR 1398 CA, and also Kapoor v Governing Body of Barnhill Community High School UKEAT/0352/13 in which Singh J held that the receiving party does not have to prove that any specific unreasonable conduct by the paying party caused any particular costs to be incurred. it is unnecessary to show a direct causal connection, (McPherson-v-BNP Paribas [2004] ICR 1398 and Raggett-v-John Lewis [2012] IRLR 911, paragraph 43), but there nevertheless has to have been some broad correlation between the unreasonable conduct alleged and the loss (Yerraklava-v-Barnsley MBC [2010] UKEAT/231/10). Regard had to be taken of the ‘nature, gravity and effect’ of the conduct alleged in the round (both McPherson and Yerraklava above).[28]When considering an application for costs the Tribunal should have regard to the two-stage process outlined in Monaghan v Close Thornton [2002] EAT/0003/01 by Lindsay J at paragraph 22: "Is the cost threshold triggered, e.g. was the conduct of the party against whom costs is sought unreasonable? And if so, ought the Tribunal to exercise its discretion in favour of the receiving party, having regard to all the circumstances?” No reasonable prospects of success[29]Under rule 76(1)(b) the focus is on the claim or response itself had reasonable prospects of success. In Radia v Jefferies International Ltd EAT 0007/18, the EAT gave guidance on how tribunals should approach such costs applications. The test is whether the claim had no reasonable prospect of success, judged on the basis of the information that was known or reasonably available at the start. The tribunal must consider how, at that earlier point, the prospects of success in a trial that was yet to take place would have looked. In doing so, it should take account of any information it has gained, and evidence it has seen, by virtue of having heard the case, that may properly cast light back on that question, but it should not have regard to information or evidence which would not have been available at that earlier time. The EAT clarified that the mere existence of factual disputes in the case, which could only be resolved by hearing evidence and finding facts, does not necessarily mean that the tribunal cannot properly conclude that the claim had no reasonable prospects from the outset, or that the claimant could or should have appreciated this from the outset. That still depends on what the claimant knew, or ought to have known, were the true facts, and what view the claimant could reasonably have taken of the prospects of the claim in light of those facts. Unreasonable Conduct[30]Unreasonable has its ordinary English meaning and is not to be interpreted as if it means something similar to vexatious (Dyer v Secretary of State for Employment EAT 183/83). When considering making an order under this ground account should be taken of the ‘nature, gravity and effect’ of a party’s unreasonable conduct (McPherson v BNP Paribas [2004] ICR 1398 CA). It is important not to lose sight of the totality of the circumstances and when exercising the discretion it is necessary to look at the whole picture. We had to ask whether there has been unreasonable conduct by the paying party in bringing, defending or conducting the case and, in doing so, identify the conduct, what was unreasonable about it, and what effect it had. I reminded ourselves to be careful not to label conduct as unreasonable when it could be legitimate in the circumstances.[31]In the case of Kopel v Safeway Stores plc [2003] IRLR 753, the EAT commented that whilst the concept of a Calderbank letter has no place in the employment tribunal, a rejection of a settlement offer can result in costs if the rejection was unreasonable. Costs Warnings[32]With regard to deposit orders, Underhill P in Vaughan acknowledged that respondents do not always, for understandable practical reasons, seek such an order even where they are faced with weak claims, so that failure to do so “is not necessarily a recognition of the arguability of the claim.” On the facts of Vaughan, neither the failure to seek a deposit order nor the failure otherwise to warn the claimant of the hopelessness of her claims was “cogent evidence that those claims had in fact any reasonable prospect of success” and neither failure was “a sufficient reason for withholding an order for costs which was otherwise justified”. Ability to pay[33]With regard to the paying party's ability to pay, Rule 84 allows the tribunal to have regard to the paying party's ability to pay, but it does not have to, see Jilley v Birmingham and Solihull Mental Health NHS Trust [2008] UKEAT/0584/06and Single Homeless Project v Abu [2013] UKEAT/0519/12. The fact that a party’s ability to pay is limited, does not, however, require the tribunal to assess a sum that is confined to an amount that he or she could pay see Arrowsmith v Nottingham Trent University [2011] ICR 159 CA which upheld a costs order against a claimant of very limited means and per Rimer LJ “her circumstances may well improve and no doubt she hopes that they will.”[34]One reason for not taking means into account is the failure of the paying party to provide sufficient and/or credible evidence of his or her means. The authorities also make it clear that the amount which the paying party might be ordered to pay after assessment does not need to be a sum which he or she could pay outright from savings or current earnings. In Vaughan v LB of Newham [2013] IRLR 713 the paying party was out of work and had no liquid or capital assets and a costs order was made which was more than twice her gross earnings at the date of dismissal. Underhill P declined to overturn that order on appeal because despite her limited financial circumstances, there was evidence that she would be successful in obtaining some further employment. Per Underhill P: “The question of affordability does not have to be decided once and for all by reference to the party’s means at the moment the order falls to be made” and the questions of what a party could realistically pay over a reasonable period “are very open-ended, and we see nothing wrong in principle in the tribunal setting the cap at a level which gives the respondents the benefit of any doubt, even to a generous extent. It must be recalled that affordability is not, as such, the sole criterion for the exercise of the discretion: accordingly, a nice estimate of what can be afforded is not essential.”[35]Insofar as it does have regard to the paying party's ability to pay, the tribunal should have regard to the whole means of that party's ability to pay, see Shield Automotive Ltd v Greig UKEATS/0024/10 (per Lady Smith obiter). This includes considering capital within a person's means, which will often be represented by property or other investments which are not as flexible as cash, but which should not be ignored. Assessing the amount[36]The purpose of the award is to compensate the party in whose favour the order is made and not to punish the paying party (Lodwick v Southwark London Borough Council [2004] ICR 884). It is necessary to determine what the loss is to the receiving party and the costs should be limited to what is reasonably and necessarily incurred (see Yerrakalva). In the case of a preparation time order it is necessary to asses what is a reasonable and proportionate amount of time for the party to have spent.[37]The Tribunal is permitted to take into account the paying party’s ability to pay, but if it does not it should say why. If it does take it into account the effect must also be stated. (Jilley v Birmingham and Solihull Mental Health NHS Trust and ors EAT 0584/06)[38]If ability to pay is to be taken into account the party’s capital, income and expenditure must be taken into account. The Tribunal is not limited to what the payer can afford to pay. The conduct of the parties may also be relevant to the question of assessment.[39]The Tribunal does not have to determine whether there is a precise causal link between the unreasonable conduct in question and the specific costs being claimed, but that is not to say causation is irrelevant. It is necessary to look at the whole picture of what happened and consider the conduct, what was unreasonable about and what effects it had (see Yerrakalva). Conclusion No Reasonable Prospects of Success: Rule 76(1)(b) Brought and Pursued Claims not within the Tribunal’s Jurisdiction
Conclusion
[40]The Respondent is correct that four of the Claimant’s claims were not ones which the tribunal has jurisdiction to decide; these are the claims set out at paragraph 6 above. The Claimant did not disagree. The Claimant’s case is that it was clear all along at that his central claim was brought in respect of unlawful deductions from wages and the application of Regulation 4(4) of TUPE.[41]The First Respondent’s ET3 denied that other payments were due, but otherwise made no comments on these claims. The Second Respondent’s ET3 was relatively brief and largely relied upon the First Respondent’s pleading. Neither Respondent raised the issue of jurisdiction or applied for deposit orders or strike out in relation to those claims.[42]The parties implicitly focussed on the unlawful deduction from wages and TUPE claims and this is reflected in the witness statements as prepared for trial and their agreement at the outset as to what the issues were to be decided. There was a lack of case management in this instance, no doubt because the case as originally set down for a two-hour listing which was subsequently adjourned and extended to a three-day listing. Whilst it is correct that the ET1 contained claims which had no reasonable prospects of success, it also contained claims which the tribunal did have jurisdiction to hear and the parties sensible focussed on the latter. There was no evidence put before the tribunal to show that expense was spent dealing with the four claims which lacked jurisdiction.[43]When the ET1 was issued, the Claimant was acting in person. Once he instructed solicitors, it would have been helpful for these matters to have been clarified and it would appear that none of the parties took the initiative in this regard.[44]I do not think there is much force in the Respondents’ complaints that the Claimant demanded an increase in his hourly rate as part of the negotiations. The without prejudice correspondence reflects that the Claimant wanted to negotiate an increase in his hourly rate going forward. I do not agree that raising this in negotiations, which are outside the tribunal process, is unreasonable.[45]Overall, whilst it is unhelpful for extraneous claims to be included and recognising that these claims were outside of the tribunal’s jurisdiction, it does not appear that these claims added much to the preparation or costs of the trial. There was an agreed list of issues and these claims were only referred to by counsel for the Respondents in his closing submissions. I am not satisfied that there was an any real inconvenience or cost arising from them being pleaded in the ET1 and I do not find that the Claimant’s conduct was unreasonable in this regard, either in the pleadings themselves or the subsequent conduct. Unreasonable Conduct of the Proceedings: Rule 76(1)(a)[46]This head includes two elements:(1) failure to adduce evidence in support of the unlawful deduction claim and(2) failure to accept reasonable settlement offers. Failure to Adduce Evidence[47]The issue of how the Claimant proposed to evidence the unlawful deduction from wages claim was raised during the course of the hearing. It would appear that the Claimant had proceeded on the basis that he was entitled to claim an average monthly figure from the date the enhancements were withdrawn. During the course of the without prejudice discussions, the Respondents made an offer to the Claimant which was calculated by reference to the average monthly shortfall following withdrawal of the enhancements until the date of the hearing. The Claimant says that he assumed therefore that the Respondents were willing to approach this claim on the basis of average earnings as opposed to monthly calculations. It was made clear at the start of the trial that the Claimant would have to prove his case.[48]It was suggested on behalf of the Claimant that absent such evidence, he would seek instead declaratory relief. The Respondents’ submissions suggest that the Claimant abandoned the claim in closing, but that is not correct. The Claimant initially applied for an adjournment to allow him time to obtain the payslip evidence, but this was refused.[49]It was clearly an error not to produce a schedule of loss for the unlawful deductions claim based upon actual deductions, The burden of proof is on the Claimant to establish the deductions which are the subject of the claim. However, the Claimant was seeking to establish an entitlement to these enhanced payments not only in relation to the claims before the tribunal but in respect of future claims as he remained employed by the Second Respondent. It might be an unusual approach to seek a judgment which establishes the contractual right to a payment without seeking damages, but I do not consider that it was unreasonable in this case in the sense required by the rules. It is clear from the without prejudice correspondence that the Claimant considered that he would be entitled to be paid these enhancements on an ongoing basis. The law in this area is not straightforward; the Respondents’ written submissions ran to 16 pages and were accompanied by a comprehensive authorities bundle. It required the hearing of the witness evidence and cross examination to come to a determination.[50]Against these considerations, I have also considered the effect on the Respondents in presenting the claim in this way. Considering all the circumstances and recognising that this ground of claim was quite finely balanced, I have come to the conclusion that the Claimant did not behave unreasonably in failing to adduce evidence of the unlawful deductions. Exercise of Discretion[51]However, even if I am wrong about that and the Claimant’s conduct was unreasonable, I would still decline to exercise my discretion to make an award for the following reasons: i. Costs are the exception rather than the rule. ii. I conclude that the nature of the conduct was quite serious, in that without the evidence, the claim could not be made out. The gravity of the omission is of a similar degree. iii. Whilst the tribunal did find that the GPCE had been incorporated as a contractual term, it was also found that there had been a lawful variation. Given that neither the GPCE nor the OAE were ‘properly payable’, the Claimant’s case failed on this basis. From a causation point of view, the failure to adduce evidence of loss made no difference to the outcome of the case. In my view, the overall effect of the failure is therefore negligible. I consider this to be a compelling point. iv. The hearing proceeded and the parties fully argued their positions. The Respondents did not raise the issue of failure to adduce evidence until the hearing itself. It does not appear to have been raised in the without prejudice correspondence. v. The Claimant did not adduce any evidence about affordability of any costs ordered although it was suggested that the removal of the enhancements from his overall pay meant that he could no longer afford to pay his mortgage. Failure to Accept Reasonable Settlement Offers[52]The Respondents made two offers to the Claimant as already set out. They say that these offers were entirely reasonable and the Claimant was unreasonable in not accepting them. The second offer included a costs warning. The Claimant says that if it the offers had been made only in relation to these claims, he would no doubt have accepted it. However, the settlements were to include future claims / ongoing loss as well and were rejected for that reason.[53]I am satisfied that it was not unreasonable for the Claimant to reject the settlement offers because he wished to retain the right to claim future losses in relation to the unlawful deduction claim, which at the time he estimated might be considerable.[54]In the circumstances, the Respondents’ application for costs against the Claimant is dismissed.