Mr A Dad and Mr J Walker v Capita plc: 1807616/2024 and 1807617/2024

EMPLOYMENT TRIBUNALS

Case No 1807616/2024, 1807617/2024

Between

Mr A Dad and Mr J WalkerClaimant

Capita plcRespondent

Before

Employment Judge Edwards

Mr Mills (instructed by Counsel) for claimant

Mr Lockley (instructed by Counsel) for respondent

Date 26 July 2025

JUDGMENT

[1]The complaint of unauthorised deductions from wages is not well-founded and is dismissed.

REASONS

[1]The claimants, Mr Dad and Mr Walker, made claims of unauthorised deductions from wages. The claimants claimed that they were contractually entitled to an annual pay increase based on the grading they received in their annual performance appraisal and that the respondent had failed to pay the annual increase between 2019 and 2024. Mr Dad claimed that he was entitled to a 1.25% pay progression increase each year in 2020, 2021, 2022, 2023 and 2024. Mr Walker claimed that he was entitled to a pay progression increase each year as follows:a. 2020 – 0.5%

b. 2021 – 1.25%

c. 2022 – 1.25%

d. 2023 – 1.25%

e. 2024 – 0.5%

[2]The respondent defended the claim on the basis that the claimants were not contractually entitled to a pay increase, only to negotiation with the CWU or that a 0% increase had been expressly or impliedly agreed with the CWU and that, in any event, the claimants had reached the top of their applicable salary range and were not entitled to a pay progression increase. Further, the respondent submitted that the Tribunal had no jurisdiction to hear the claim as the claim was for an unquantifiable sum and could not be brought as an unauthorised deduction from wages.

[3]The legal and factual issues were agreed at the outset of the hearing to be as follows: a. Did the respondent make unauthorised deductions from the claimant’s wages and if so, how much was deducted? In determining this issue, the factual issues between the parties were: i. Did TSPEC employees have a contractual entitlement to pay progression, at contractually-determined rates? ii. If so, what were those rates? iii. If pay progression was a contractual entitlement for TSPEC employees, were the claimants within the applicable pay band for TSPEC employees in each relevant year – 2020, 2021, 2022 and 2023, such that they were individually entitled to pay progression? iv. If the claimants were entitled to, but did not receive, pay progression in any relevant year, what is the amount of wages properly payable to them which has been subject to an unauthorised deduction by the respondent and on what dates?

[4]The parties agreed at the outset that if the claimants were successful in respect of i. to iii. a separate remedy hearing would be required to determine quantum under iv.

[5]The claimants sought to include an additional issue; namely that the respondent had made an unauthorised deduction from wages by failing to pay the claimants a bi-annual bonus at the rate of 8%. The respondent had, since 2020 paid the claimants’ bonus at a rate of 4% bi-annually. Having considered the contents of the claim form and representations from the parties, I determined that this was not a claim that had been made in the claimants’ claim forms. An application by the claimants to amend their claim forms to include a claim for the bonus was refused on the basis that it was not in the interests of justice or in accordance with the overriding objective to allow it. In particular, the amendment would prejudice the respondent as they did not have notice of the claim and were not prepared to defend it at the hearing. Evidence

[6]I had the benefit of witness statements from Mr Asif Dad and Mr John Walker, the claimants in this matter, Ms Tracey Fussey, National Officer of the Communication Workers Union on behalf of the claimants and Ms Abbey Hargreaves, Senior HR Business Partner on behalf of the Respondent. There was a joint bundle of documents running to 563 pages.

[7]I heard oral evidence from Mr Dad on behalf of both claimants. I was invited to accept Mr Walker’s witness statement as his evidence and adopt the answers provided in oral evidence by Mr Dad as Mr Walker’s evidence. Mr Walker confirmed that he agreed with the information provided by Mr Dad and that evidence was so adopted on behalf of both claimants. I heard oral evidence from Ms Fussey in support of the claimants’ claims and by Ms Hargreaves on behalf of the respondent.

[8]I heard oral submissions from Mr Mills on behalf of the claimant and Mr Lockley on behalf of the respondent.

Findings of Fact

[9]The claimants’ employment transferred to the respondent from Telefonica in July 2013 under the Transfer of Undertakings (Protection of Employees) Regulations 2006. Both claimants were employed on Technical Specialist (TSPEC) contracts.

[10]The terms of employment for employees transferring to the respondent in 2013 were contained in a TUPE Matrix, which the claimants, the respondent and CWU relied upon to identify the terms of the claimants’ contracts including in relation to pay reviews and pay progression. The TUPE matrix states that the following terms are contractual:  “NewGrid grades  Must have an APR of 3 or above  Must be below the top of the pay range  Employees receive annual incremental steps, in line with Trade Union agreements, until they reach the maximum of the salary range. Increments are calculated as 5% of the salary range maximum.  T&C / Tech Spec and BS grades  % of APR ratings negotiated with CWU during pay review negotiations  2013 pay progression:  APR 1: 3%  APR2: 2%  APR3: 1%  APR4: 0%”

[11]Mr Dad’s contract of employment with Telefonica dated March 2011, under which he was employed with the respondent states: a. “Your basic salary will be reviewed annually in April. Any increase will be entirely at the discretion of O2. Any increase in salary in any year does not create an expectation or oblige O2 to make an increase in any subsequent year. The salary range for your grade will be reviewed in April each year with the Communication Workers Union (CWU).”

[12]Prior to the transfer of their employment to the respondent and from 2013 until 2019 the claimants received two pay rises each year. The first was a cost of living pay rise and the second was a pay progression pay rise connected to the claimants’ annual performance review. The claimants’ claims are made only in respect of the pay progression pay rise. The respondent carried out an annual performance review and the claimants were awarded a score based on their performance as follows:a. APR 1 - exceeds expectations

b. APR 2 - above expectations

c. APR 3 - meeting expectations

d. APR 4 - below expectations

[13]The score assigned to the claimants related to the year between 1st January and 31st December and determined whether and at what rate they would receive a pay progression pay rise. The pay progression pay rise was designed to progress the claimants through their salary band. Upon reaching the top of their salary band, the claimants were no longer entitled to receive a pay progression pay rise. In July 2013, when the claimants’ employment transferred to the respondent, their salary band was £21,866 - £26,101 per annum. In 2019, the claimants’ salary band was £24,213 - £28,902. The salary band did not increase between 2019 and 2024.

[14]In April each year, the respondent would enter into collective pay review negotiations with the CWU to determine whether and at what rate a pay progression pay rise would be awarded in respect of the previous financial year. For example, negotiations that commenced in April 2020 were in relation to the year 1st January to 31st December 2019.

[15]Both claimants were members of CWU and the CWU negotiated on their behalf. Agreements reached in the pay review process between the respondent and the CWU were contractually binding on the claimants. The value of the pay progression pay rise to which the claimants were entitled was negotiated after an agreement had been reached on the cost of living pay rise each year but would be back dated to 1st April.

[16]In November 2014 the CWU and the respondent agreed the following pay progression pay rises:a. APR 1 – 2%

b. APR 2 – 1%

c. APR 3 – 0%

d. APR 4 – 0%

[17]On 15th July 2015 the CWU communicated to its members that the respondent had made a final and definitive offer in respect of pay progression for TSPEC and that the following payments had been agreed for 2015:a. APR 1 – 1.25%

b. APR 2 –0.5%

c. APR 3 – 0.25%

[18]On 20th April 2016 the CWU communicated to their members that Capita had made a final offer on the issue of pay progression and proposed to keep the percentage increases the same as those agreed in 2015. The CWU stated “The CWU is disappointed that Capita are not in a position to improve the offer but on the basis that there is no mileage for further progress this year we have accepted and requested talks to resolve the long term mechanism in advance of next year’s review”

[19]In 2017, 2018 and 2019, the respondent and CWU negotiated and agreed that the pay progression pay rise rates would remain at the 2015 rate. On 17th July 2019 the CWU communicated to their members that they had received and accepted the final offer from the respondent, which remained at 2015 rates. The communication stated “Pay progression increases for TSPEC and T&E grades are based on APR review grade, and whether they are at the top of their banding.”

[20]On 21st August 2020 the CWU wrote to Mr Dad and informed him that the situation regarding pay progression was different to previous years. Mr Dad was informed “Our National Officer has also explained the rationale behind his teams reluctant acceptance of this final offer which as you are aware contains an upper pay cap imposed across Capita Group by its board. In essence this means that anyone across the whole of the Capita group who’s [sic] current salary exceeds £28k will not receive any further pay increases this year. However as part of the final offer, we have managed to ensure that a review of this is to take place at the end of 2020 in order to challenge the ongoing issues around pay, particularly for those members whose salary exceeds the above threshold.” As at the date of this communication, Mr Dad’s salary was £28960.96. On 16th July 2019 Mr Walker’s salary had increased to £28,462.51.

[21]In September 2022 during a one to one meeting with his manager Khalil Rashid, Mr Dad queried the lack of pay progression salary increase for the previous two years. Mr Dad emailed Mr Rashid on 14th September 2022 to ask him to look into the reason why he had not received a pay progression increase since 2019. On 2nd October 2022 Mr Rashid responded and informed the claimant that “Having reviewed the pay progression document attached to the Tef transferring matrix, I can confirm that pay progression was stated in these documents with a list of criteria to be met to qualify for pay progression. One of the criteria is that “once an individual has reached the maximum of the salary range for their grade, further pay progression does not apply.” (Quoted from the matrix). All pay is covered by Collective Bargaining Agreement with CWU including the pay progression scales. There has been no increase on the top of the scale due to the business’ focus on the lowest paid colleagues.”

[22]On 4th May 2023, Claire Rawson of the respondent, emailed Mr Dad and stated “Jean has advised Pay Progression stopped in 2019, therefore currently there is no TSPEC pay range to our knowledge. As you know, I have spoken to so many people in the business and nobody seems to have the current pay range for TSPEC, calculations and payments stopped in 2019.”

[23]On 28th September 2023, Ms Fussey emailed Linda Hodgson, Senior HR Business Partner, requesting a discussion regard TSPEC grades. Ms Fussey outlined the CWU’s view that the respondent had a contractual obligation to pay annual pay progression salary increases and there had been no agreement to cease pay progression after 2019 and it only stopped for 2020 due to an agreement influenced by the respondent’s financial difficulties. Ms Hodgson responded to Ms Fussey on 11th October 2023 stating that there was a difference of opinion regarding the contractual nature of the pay progression increases. Ms Hodgson stated that the respondent reviewed TSPEC grades between 2020 and 2023 but the reviews did not result in an increase due to a decision to focus increases on the lowest paid workers within the respondent organisation, which did not include the claimants. Ms Hodgson indicated that pay increases were subject to negotiation.

[24]On 12th October 2023 Ms Fussey responded to Ms Hodgson requesting sight of relevant documents and reiterating that it was the CWU’s opinion that the pay progression increases were contractual.

[25]On 18th October 2023 Ms Hodgson indicated that she would refer the matter for further internal discussion. On 25th October 2023 Ms Hodgson emailed Ms Fussey and stated “I confirm that Capita’s position remains as has been discussed both on email and in meetings during recent weeks, i.e. that there is insufficient budget to increase TSPEC grade pay without reducing the budget available to non TSPEC grades and, that to increase TSPEC pay would be against the Capita Pay Principles that seek to increase the pay of the lower paid as part of our Reward strategy. We note the TUPE matrix refers to pay progression is “negotiated with CWU during pay review negotiations” and, that we have met this obligation to review TSPEC pay; the matrix doesn’t oblige us to increase pay but to enter into negotiation.” I find that Ms Hodgson was expressing the position of the respondent and not her own personal opinion as it’s clear that discussion took place with her colleagues before responding to Ms Fussey’s emails, the emails were copied to the respondent’s CEO, Paul Stanfield, who raised no objections or concerns regarding the contents of Ms Hodgson’s email.

[26]On 18th and 19th December 2023 Mr Dad and Mr Walker respectively, raised formal grievances regarding the failure to award pay progression increases between 2020 and 2023. The claimants received no response to their grievances and resubmitted them on 13th June 2024.

[27]At some point between October 2023 and the resubmitted grievances being raised in June 2024, Ms Hodgson had left the respondent organisation.

[28]The respondent indicated the grievances would be investigated. On 1st July, Ms Hargreaves emailed her colleagues in HR and stated “We met with Jean Mvalo and Natalie Irwin last week who informed us that this scheme was paying out until 2019 but during the pandemic we communicated to the unions that we were struggling financially, and it was supported that no monies would be paid out for that particular year and there after it was not spoken of or highlighted again until the dispute for 2023.” Law 29. s. 13 Employment Rights Act 1996 (ERA) sets out that:(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 in 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 deductions), 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.

[30]In order to determine what is “properly payable” for the purpose of s.13(3) ERA, the Tribunal has jurisdiction to interpret contractual terms (Agarwal v Cardiff University & anor

2019 ICR 433

CA). The interpretation of contract is based on ordinary principles of common law and contract (Greg May (Carpet Fitters and Contractors) Ltd v Dring

1990 ICR 188

EAT).

[31]Contract terms may be implied if they are customary in the particular trade or calling, or form the usual practice of the particular employer, if it is sufficiently well known. Such a custom or practice must be 'reasonable, certain and notorious' (Bond v CAV Ltd

[1983] IRLR 360

; Henry v London General Transport Services Ltd

[2002] ICR 910

[2002] IRLR 472

). In order to become an implied term, a custom must be followed with regularity such that it becomes legitimate to infer that the parties follow the practice because they regard it as a legal obligation rather than that the practice is followed as a matter of policy (Solectron Scotland Ltd v Roper

[2004] IRLR 4

). But it should be borne in mind that neither custom and practice nor any of the other legal bases for implying terms into a contract permit the courts to displace specific express terms that deal fully with the same subject matter as that on which a party is seeking to imply a term.

[32]For there to be a claim for unauthorised deductions from wages under s.13 ERA, the complaint by the employee must be that he or she has not been paid an identified sum. The underlying premise on which such a claim is brought is that the employee is owed a specific sum in wages. Part II of the ERA is essentially designed for straightforward claims where the employee can point to a quantified loss (Coors Brewers Ltd v Adcock & others

[2007] EWCA Civ 19

). Conclusion Did TSPEC employees have a contractual entitlement to pay progression, at contractually determined rates? And if so, what were those rates?

Conclusion

[33]The claimants’ contracts confirm that they were contractually entitled to have their pay reviewed in April each year including the salary range for their grade. The pay review was a matter for collective bargaining between the respondent and the CWU. As such, the contractual right was to pay review negotiation. I find that it was an implied term of the contract, as a result of custom and practice, that the pay review negotiations would include negotiations regarding a cost of living pay rise and a pay progression pay rise. It was an express term of the contract that the respondent and the CWU would review salary ranges annually each April.

[34]The claimants were entitled to benefit from the implied contractual obligation to negotiate a pay progression increase if they achieved an APR rating of 3 or more and had not reached the top of their salary range.

[35]The rate of any pay progression salary increase was a matter for negotiation each year between the CWU and the respondent. There was no fixed rate of salary increase. The claimants’ contracts of employment expressly stated that they were entitled to have their salary reviewed annually in April. It also expressly stated that any increase in salary is at the discretion of the respondent and an increase in one year does not create a right to an increase in any subsequent year.

[36]The rate at which pay progression was awarded could increase or decrease depending on the negotiations. This is clear from the variation in rates between 2013 and 2015 and the language of the communications issued by the CWU between 2014 and 2020, which refers to pay offers being made by the respondent and those offers being accepted by the CWU following negotiation.

[37]Between 2016 and 2019 the pay progression salary increase was agreed at the same rate as 2015, but it is clear that it was intended to apply only to the year in which it was agreed and not subsequent years. This is evident from the communications issued to CWU members and email correspondence between the CWU and the respondent, which state the figures for the specific year and indicate an intention to discuss a plan for the future.

[38]I do not find that the retention of the 2015 rates for a period of 5 years resulted in an implied contractual term, as a result of custom and practice, that the claimants were entitled to a pay progression increase at the 2015 rates. It is clear that negotiations were required each year to decide the rate of salary increase, if any, and, following those negotiations, it was annually agreed to retain the 2015 rates. The express contractual term contained in the claimants’ contracts that their salary would be reviewed annually but there would not be any contractual entitlement to an increase in salary each year, was not varied through custom and practice.

[39]Mr Dad accepted in oral evidence that the APR percentage was to be negotiated each year between CWU and the respondent and that in each of the years 2013, 2014 and 2015 the outcome of negotiations was a different set of figures. Ms Fussey stated in oral evidence that the claimants had a contractual right to progress through the salary range and the rate of progression would be determined by the rate agreed between the CWU and the respondent, but negotiations did not take place as the respondent refused to engage.

[40]In 2020 pay negotiations the CWU agreed an offer by the respondent, which included a salary cap. The effect of that cap was that any employees whose salary was £28,000 per annum or more would not receive a pay progression increase in 2020. It is clear that this was temporary for 2020 and would be renegotiated the following year. The reason for the proposed salary cap and the CWU’s acceptance in 2020 was because of financial difficulties faced by the respondent as a result of Covid-19. It was not associated with Capita Pay Principles. Both claimants’ salaries were over £28,000 and they were not entitled to a pay progression salary increase in 2020 as a result.

[41]From 2021 to 2024 the claimants did not receive a pay progression salary increase. The respondents failed to negotiate with the CWU regarding pay progression salary increases in 2021, 2022, 2023 and 2024 and failed to negotiate regarding salary ranges in 2020, 2021, 2022, 2023 and 2024. That failure was a breach of their contractual obligation to enter into negotiations regarding these matters in April each year. The email from Ms Rawson on 4th May 2023 clearly states that “nobody has the current pay range for TSPEC, calculations and payments stopped in 2019”. I reach my conclusion that formal negotiations with the CWU did not take place regarding pay progression and salary ranges in the years outlined above for the following reasons:a. The contents of Ms Rawson’s email confirm there were no calculations or payments and that nobody knew the salary ranges.

b. The Respondent’s pleaded case at paragraph 8c of their Grounds of Resistance, was that “There was no specific request from CWU for a pay progression increment in subsequent years, and it is to be inferred that no increment, or an increment of 0%, was thereby impliedly agreed between Capita and CWU.”

c. The claimants and the CWU repeatedly raised questions regarding the reason for there having been no pay progression increase and for confirmation of salary ranges between 2020 and 2024. Had these matters been the subject of negotiation between the respondent and CWU, the CWU would not have needed to raise the questions that they did.

d. Ms Hodgson relies on Capita’s Pay Policy as the basis for there being no pay progression for the claimants between 2021 and 2024. However, in 2020 the reason had been financial difficulties. There was no evidence that Capita’s Pay Policy of rewarding lower paid staff and effectively precluding the claimants from any salary progression had been negotiated with the CWU to the extent that it was agreed the claimants would receive zero percent pay progression.

[42]Whilst the respondent failed to comply with their contractual obligation to negotiate pay progression increases and salary ranges, there was no contractual entitlement to a fixed pay progression salary increase. It is not possible to know what percentage rate of pay progression salary increase may have been agreed by the respondent and the CWU between 2021 and 2024.

[43]The value of what was properly payable or deducted cannot be determined by the Tribunal. As the value of what was properly payable or deducted is not quantifiable, the Tribunal does not have jurisdiction to determine the claim for unauthorised deduction from wages and the claim consequently fails. The tribunal cannot determine damages for loss of the chance that the claimants would have been awarded a pay progression increase as there is no jurisdiction to hear the claim as a breach of contract because the claimants remain employed by the respondent. If pay progression was a contractual entitlement for TSPEC employees, were the claimants within the applicable pay band for TSPEC employees in each relevant year – 2020, 2021, 2022 and 2023, such that they were individually entitled to pay progression?

[44]It is not necessary to determine this issue as the claim fails as outlined above. Approved by: Employment Judge Edwards 26 July 2025 Notes Judgments (apart from judgments under rule 51) and reasons for the judgments are published, in full, online at www.gov.uk/employment-tribunal-decisions shortly after a copy has been sent to the claimant(s) and respondent(s) in a case. If a Tribunal hearing has been recorded, you may request a transcript of the recording. Unless there are exceptional circumstances, you will have to pay for it. If a transcript is produced it will not include any oral judgment or reasons given at the hearing. The transcript will not be checked, approved or verified by a judge. There is more information in the joint Presidential Practice Direction on the Recording and Transcription of Hearings and accompanying Guidance, which can be found at www.judiciary.uk/guidance-and-resources/employment-rules-and-legislation-practice-directions/