Mr A Pattni v Smart Currency Exchange Ltd: 2200885/2018
EMPLOYMENT TRIBUNALS
Case No 2200885/2018
Between
Mr A PattniClaimantSmart Currency Exchange LtdRespondent
Before
Employment Judge Mr J S BurnsIn person for claimantMs Georgina Leadbetter (instructed by Counsel) for respondentDate 21 October 2018
JUDGMENT
[1]The claim for unauthorised deductions of wages succeeds.[2]The Respondent shall pay the Claimant £1023.31 + £45 interest = £1068.41 within 14 days. 25/9/2018
REASONS
[1]Mr Pattni appears in person assisted by his father Mr Kara. The Claimant and a Respondent’s witness Mr N Lord gave evidence. I am grateful to Ms Leadbetter for the courteous and competent manner in which she presented the Respondent’s rather unattractive arguments in this case, and for her having drawn my attention to and produced copies of the relevant case-law.[2]The claim is for unauthorised deduction from wages in the sum of £1023.31 which is the amount shown as due to the Claimant on his last pay slip from the Respondent dated 29 November 2017 at page 85 of the bundle. The amount due was deducted in its entirety by reference to a fee paid for recruiting the Claimant, the deduction resulting in a net payment of nil pounds to the Claimant for the last month of his work for the Respondent.[3]The Claimant had other claims of race discrimination and for his notice pay which were the subject of a previous deposit orders. He did not pay the deposits so the claims were struck out and are not before me. It is apparent now that had the Claimant paid the relevant deposit his claim for a payment of his notice pay (calculated on the basis that he was dismissed after completing his probation period) would have succeeded before me, but, as he did not appeal the deposit order and then failed to pay the deposit, that is academic.[4]In so far as the claim before me is concerned I find the following facts: - 1 -[5]Mr Pattni fresh out of university started his employment with the Respondent which trades in currency movements between the UK and other countries. He started his employment at the end of July 2017. The work that he was required to do was to try to follow up leads for business opportunities with people who might want to send money abroad. He would engage with these potential or actual customers to try and convert their interest in to sales.[6]He was put on an initial probationary period and he was required to sign a written contract which he had read and seen before the employment had started. Clause 23 reads as follows: ‘If during or on termination of your employment you owe any money to the employer you agree that the employer has the right to deduct this sum from your wages or any other monies it owes to you. By signing this agreement, you expressly consent to any such deductions pursuant to part (ii) of the Employment Rights Act 1996,… examples of deductions which may be made by the employer include but are not limited to the following: … repayment of training or recruitment costs (these costs will be reduced on a monthly pro rata basis over a twelvemonth period from the date they were incurred) …’[7]The Claimant is an honest and hardworking young man and he worked as hard as he could to make a success of his new job. He worked long hours, and also some weekends for which he was not paid any extra. He was aware that he needed training and asked for training on about seventeen different occasions. He was conscious of the fact during his probation period that he needed to learn and gain the experience and techniques that were demanded of him and he made considerable efforts to obtain that training. He was quite successful in his work from his statistical point of view.[8]However, the Respondent company tries to distinguish itself from other competitors in its field by its adoption of a particular type of sales technique in their dealings with potential customers. This “smart way” involves trying to attract customers by saying various things and, equally importantly, refraining from saying various things when talking to them on the telephone. The respondent places a high importance on this and requires its sales team to follow it strictly.[9]Mr Pattni struggled somewhat to acquire and master the “smart way”. Emails (pages 66, 68, 70 and 75 of the bundle) were sent to him on the subject over the period of his probation. He went to two appraisal sessions, and at both he was told to improve in this respect. His Line Manager had genuine concerns about the way Mr Pattni spoke to customers, because he did not follow the “smart way”.[10]Mr Pattni unfortunately had to go off on compassionate leave in the third month of his probation. After he returned to work he was dismissed for the reasons mentioned in the dismissal email of 22 November (bundle 79) namely ‘unsuccessful probation including lack of progress in the smart way of selling, transactional selling through quoting and poor quality of accounts signed up’. - 2 -[11]Mr Pattni had been provided to the Respondent by a recruitment agency in respect of which the Respondent paid a fee to at recruitment agency of £4,000 plus VAT.[12]After dismissing the Claimant, the Respondent deducted from the Claimant’s final salary, first one week’s notice pay (in fact it should have been one month’s notice pay that he was due as his probation period had expired before dismissal) and also a sum which has not been clearly identified in relation to the recruitment costs, these having been partially abated by reference to the fact that since they had been incurred, three months and seventeen days had passed before he was dismissed.[13]The first matter for decision is whether the deduction of the last month’s pay was authorized as contemplated by Section 13 of the Employment Rights Act 1996 which prohibits unauthorized deductions in the following terms: - ‘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 statutory provision or a relevant provision of the worker’s contract or the worker has previously signified in writing his agreement or consent to the making of the deduction[14]The wording in paragraph 23(1) of the contract (quoted above) is conditioned by the word “if” which appears at the beginning. It says that “if during or on termination of the employment you owe monies to the employer you agree …”[15]There is no clause in this contract which actually creates the obligation to repay any monies. The wording is consistent with a reference to a hypothetical situation in which, if the employee is liable, then he agrees to a deduction. What is missing is the creation of the actual liability itself.[16]The clause then goes on to cite examples of deductions which may be made by the employer. In context I find that all those potential subjects for deduction are qualified by the word “if”. It is necessary, for any of these examples to be deducted, that the employee is actually liable to repay them and in order for the employee to be liable to repay them the employee has had to agree unconditionally to such a liability and there is no unqualified clear agreement by the employee to make such a repayment.[17]This can be contrasted with an example from the Lorn Stewart case, (to which I refer below) in which an effective authority given by the employee was as follows: -“I authorize the company to make any deductions from my pay or from any final monies due in the event of termination of employment in respect to the relevant amount as set out above. If any balance remains outstanding after such deductions I undertake to reimburse the company accordingly.”[18]Mr Pattni who is not a lawyer had not picked up this defect in clause 23 of his contract and nor had the previous judge who made the deposit order regarding the notice pay, but these oversights cannot in my view cure the - 3 - defect when I am called apon to decide whether a deduction in fact has been authorized.[19]I apply the contra proferentem principal against the Respondent as it had an opportunity to impose its standard contract on Mr Pattni. Therefore, to the extent that if there is any ambiguity in the meaning and effect of clause 23, I construe it against it.[20]I find that no clear authority was given in writing by Mr Pattni for the Respondent to deduct the costs of his recruitment. For that reason alone, was not entitled to deduct these costs from his his final months’ salary.[21]In case I am wrong about the construction of the contract, I have gone on to consider what the position would be in the context of the provisions of the National Minimum Wage, if the contract had created an effective right in the respondent to deduct the recruitment fees from the Claimant’s pay:[22]The National Minimum Wage provisions require minimum wages to be paid. In the case of the Claimant the minimum hourly wage payable to him at the time was £7.05 per hour. It was not in dispute that he worked 47.5 hours per week and that he worked 13 days during November before being dismissed. Substituting the National Minimum Wage rates in place of the sum of £1,023.31 shown on the final pay slip at page 85 the correct amount would be £904.15.[23]In calculating whether or not the National Minimum Wage has been paid certain deductions made by an employer are not counted and at Regulation 12 of the National Minimum Wage Regulations 2015 appears the following: - ‘Deductions made by an employer in the pay reference period or payments due from the worker to the employer in the pay reference for the employers own use and benefit are treated as deductions except as specified in paragraph 2 and Regulation 14’. Paragraph 2(a) reads: - “The following deductions and payments are not treated as deductions… Deductions or payments in respect of the workers conduct or any other event where the worker, whether together with another worker or not, is contractually liable”.[24]I have been referred by Ms Leadbetter to the judgment of Judge Shanks in the Employment Appeal Tribunal in Revenue and Customs Commissioners v Lorn Stewart Plc 2015 ICR at page 708.[25]Paragraph 8 and 12 in particular suggest that there are two ways in which a deduction can fall within 12(2a); firstly, where the deduction has been made in respect of a worker’s conduct, in which this means misconduct. Secondly, where the second part of (2a) applies which refers to “any other event”, that event should be interpreted as having some relationship to conduct for which the worker is responsible but not necessarily to something which amounts to misconduct by the worker. Thus, a voluntary resignation or damage to property for which the worker is responsible would come within the concept of ‘any other event’ but not a dismissal forced on a worker for redundancy or by - 4 - a request for a referral to Occupational Health, brought on by ill health for which the worker could not be said to be responsible. These examples seem to suggest that 12(2)(a) applies to misconduct and other events where the worker has the ability to consciously affect the outcome but makes a contrary decision eg. resigning or damaging property or doing something else which is within his or her control.[26]Applying these principles to the instant case, I find that there was no misconduct by the Claimant. He tried his best, and worked hard, and to some extent he was successful, but he was simply unable to master a particular sales technique to a sufficiently high standard.[27]I do not find this amounted to ‘some other event’ as contemplated by Regulation 12(2a), either. What happened was not a specific event within the reasonable control of the Claimant, but a process over a period of several months at the end of which the Respondent judged unilaterally that, despite his best endeavors, he did not fit their model, although it also agreed at the time that he was very capable. He did not want to leave his employment, he did not resign, he had not been guilty of doing anything consciously wrong, he tried his best to keep his job, and it was the Respondent decided that he was not suitable for its sales team.[28]In my judgment this is not the type of situation which should be classified as either conduct or ‘an event’ entitling the Respondent to deduct an employee’s final months’ pay and I would regard it as extremely alarming if the contrary was regarded as the correct law.[29]Hence, if I am wrong about my construction of the contract, then I would have found that the operation of the contract by the Respondent in any event breached the National Minimum Wage Regulations and in that event, I would have awarded £904.15 instead of the sum which I do award which is £1,023.31.[30]As this has been due and unpaid since November 2017 I award interest of £45.[31]For these reasons I found that the Respondent should pay the Claimant £1,068.31 within 14 days.