Mr I McCaffery v LJS Food Chelmsford Ltd: 3207290/2021
EMPLOYMENT TRIBUNALS
Case No 3207290/2021
Between
Mr I McCafferyClaimantLJS Food Chelmsford LtdRespondent
Before
Employment Judge Muir WilsonIn person for claimantDate 14 August 2023
JUDGMENT
[1]The Claimant’s claim for unauthorised deduction from wages is well founded and succeeds.[2]The Respondent is ordered to pay to the Claimant the sum of £1,661.11 (gross).[3]The Respondent shall be responsible for deducting any deductions at source in relation to employees’ national insurance contributions and income tax and for accounting to HMRC for such sums as required by law.
REASONS
A request for written reasons having been made in accordance with Rule 62(3) of the Employment Tribunal Rules of Procedure 2013 at the hearing where reasons for the above judgment were given orally, the Tribunal provides the following.
Introduction
[1]The Claimant was employed by the Respondent as a “Team Leader Chelmsford” from 23 August 2021. The Respondent being a business supplying food directly to the public. The Claimant accepted the role at the “El Mexicana” store in Chelmsford. The Claimant’s employment terminated on 26 September 2021.[2]The Claimant claims an unlawful deduction of wages under section 13 Employment Rights Act 1996. He commenced ACAS early conciliation on 11 October 2021 and the certificate was issued on 28 October 2021. An ET1 claim form was received by the Tribunal on 19 November 2021. This claim form was presented on behalf of multiple claimants.[3]The Tribunal issued a Notice of claim to the details of the Respondent provided on the claim form on 17 January 2022.[4]On 26 and 31 January 2022 the Respondent contacted the Tribunal. This correspondence disputed the name provided for the Respondent, requesting the relevant papers were addressed to the correct employer’s name, no alternative name was provided. The Respondent acknowledged the Claimant ’s name was known to it.[5]On 9 February 2022 the Respondent provided a response in respect of this Claimant’s claim. It identified that no details of claim had been provided by the Claimant. The Respondent identified the error in the name and address provided for the Respondent. On 19 May 2022 the Respondent contacted the Tribunal to provide the name and address to be used for the Respondent in respect of this claim.[6]It was realised in May 2022 that the Acknowledgement of claim and the Notice of Hearing communications had not been sent to the Claimant as they ought to have been.[7]On 24 May 2022 Employment Judge Massarella ordered that LJS Food Chelmsford Limited was substituted and used for the Respondent in this claim. This having been agreed by all parties as being the Claimant’s employer and the Tribunal being satisfied this party was aware of these proceedings from the outset and no prejudice being caused by the amendment. No application to vary, suspend or set aside was made. This was confirmed by parties on 6 October 2022.[8]On 27 June 2022 the Tribunal wrote to all parties asking for confirmation by 11 July 2022 that they were ready to proceed with the hearing having complied with the orders set out in previous correspondence. No response was received by the Tribunal.[9]On 8 August 2022 the claim was listed for a final hearing. The Respondent did not attend. Matters in respect of another Claimant’s claim that had been joined to this claim were dealt with.[10]This claim was found to have been submitted on the same claim form in error as the claims were not founded on the same facts. Employment Judge Moor allowed that error to be waived under Rules 9 and 6 of the Employment Tribunal Rules 2013.[11]The Final Hearing in respect of this claim was not effective on 8 August 2022 because there were insufficient details of the Claimant’s claim.[12]Employment Judge Moor allowed the Claimant to amend his claim to include the following particulars: “I worked for the Respondent at a salary of £23,000 per annum gross. I worked from 23 August until 29 September 2021. I was paid for the first week, but I was not paid for the work I did from 1 September 2021 until 29 September 2021. I am owed those wages”.[13]The final hearing of this claim was postponed to enable the Respondent to respond.[14]The following case management orders were made: i. By 5 September 2022 the Claimant was to send to the Tribunal and Respondent by email all documents he has relevant to his pay claim. ii. By 19 September 2022 the Respondent:• Had leave to amend its response to deal with the claim, and,• must send to the Tribunal and Respondent by email all documents it has relevant to his pay claim.[15]The second order to the Respondent contained a typing error as it is clear it was intended the Respondent must sent material to the Tribunal and[16]A copy of the Hearing Notice of 8 August 2022 containing the case management summary and orders, in additions to warnings in respect of non-compliance was sent to the parties.[17]On 10 August 2022 the Respondent sent an email attaching the following to the Tribunal and the Claimant:• A continuation of the statement of the Director (Mr Stagg) from the initial information contained in the original Response form.• A copy of the Claimant’s payslip said to have been sent to him on 10 October 2022.• A copy of an undated letter said to have been sent to the Claimant by email “at the time explaining the deductions made in accordance with the contract of employment he signed at the time”.[18]In the early hours of 6 September 2022 the Claimant served a quantity of material on the Tribunal. This was not sent to the Respondent. The Final Hearing[19]The final hearing was heard on 6 October 2022 by way of a remote video hearing.[20]The Respondent had not received all the documents provided by the Claimant in advance. The Respondent indicated that it was comfortable to proceed once the documents were provided. The Respondent was given sufficient time to read the documents and confirmed no further time was required.[21]The issues for the Tribunal to consider were discussed and agreed at the outset of the hearing.[22]The Tribunal heard oral evidence from the Claimant and Respondent, who adopted their written evidence in addition to submissions.[23]When giving evidence, Mr Stagg for the Respondent sought to introduce and rely on material said to have been provided to Mr Stagg by the Respondent’s financial controller. This material was said to consist of a detailed breakdown and account of the costs used by the Respondent to make the deductions. This material had not been provided to the Claimant or the Tribunal and there was no statement from the person said to have provided this information. The Respondent was asked why this material was being produced so late and I was told there was no reason, Mr Stagg had not expected a detailed breakdown and it was an error.[24]I declined to allow the Respondent to rely on this material by way of Rule 41 of the Employment Tribunal rules and in furtherance of the overriding objective (Rule 2). The material was not produced by the person who had created the information and Mr Stagg was not someone who was otherwise able to give evidence on the purported costs and how the figures had been calculated. This was not material that had ever been provided to the Claimant and there was no persuasive reason to explain why this material could not have been served in line with the case management orders previously made. The Claimant was not in a position to be able to challenge any purported costs with the only witness of the Respondent, even if time was allowed for the Claimant to consider the material. I concluded it was not fair to allow the Respondent to rely on the information.[25]I provided oral judgment on the claim. The claim succeeded. Having given oral reasons, the Respondent asked for written reasons. Claims and issues[26]The Claimant brought a claim for an unlawful deduction from wages for the period 1 September 2021 until 26 September 2021. These dates having been agreed by the parties at the final hearing.[27]The issues for the Tribunal were identified as follows:• Did the Respondent make a deduction from wages by its withholding of the Claimant’s salary for the agreed period.• Was any deduction required or authorised by statute or by a written term of relevant provision of the contract of employment or did the Claimant agree in writing to the deduction before it was made.• If the deduction was authorised, was the deduction made justified or was the Claimant paid less then the wages properly payable.• If the Respondent made an unauthorised deduction, how much is the Claimant owed? Documents and Evidence[28]There was a small bundle of documents provided by the Claimant. This included a letter setting out the background to the claim, a copy of the terms of employment, a copy of the employment contract and various other material including pay and employment information, and screen shots of messages said to be between himself and the Respondent and in respect of his employment. The Respondent had provided in particular a copy of the final payslip of the Claimant and a communication from the Respondent to the Claimant (undated and said to have been sent by email).[29]Both the Claimant and Mr Stagg for the Respondent adopted their written statements and gave oral evidence.
Findings of fact
[30]I decided all the findings referred to below on the balance of probability, where they were not agreed by the parties, having considered all of the evidence given during the hearing, together with documents referred to. Any failure to mention any specific part of the evidence should not be taken as an indication that I failed to consider it. I have only made those findings of fact necessary for me to determine the preliminary issues. It has not been necessary to determine every fact in dispute where it is not relevant to the issues between the parties.[31]There was no dispute the Claimant satisfied the condition of being a worker in order to bring a claim of unauthorised deductions from wages. The Claimant was engaged under a contract of employment by the Respondent.[32]It was not in dispute the Claimant was employed by the Respondent as a Team Leader at the Chelmsford branch. His annual salary was £23,000. The copy of the contract and terms of employment supplied by the Claimant were agreed accurate by the Respondent.[33]The Claimant signed his contract on 17 August 2021. At paragraph 3 of the contract it said the Claimant’s primary place of work was Chelmsford and that he “may be required to work at other restaurants as and when required, but with your prior agreement”.[34]The Claimant’s contract set out at paragraph 13 that the first three months of employment were to be regarded as a probationary period. It went on to say that “if you leave or are dismissed during this probationary period, the company reserve the right to make a deduction from your salary to compensate for the cost involved in recruiting and training you”.[35]Paragraph 13 continued in bold “You must return any staff uniform in a clean and laundered state within 7 days of leaving our employment. If you do not the company will make a deduction of £50 from your salary to compensate for the loss, or if returned in an unsatisfactory condition to compensate for the cost of cleaning”.[36]In the response to claim and throughout his evidence and in submissions Mr Stagg confirmed that the Respondent relied on this paragraph in making deductions from the Claimant’s final salary which meant that no final payment was made to the Claimant.[37]When the Claimant started working for the Respondent he was required to go to Swindon as what was said to be part of his training. He stayed in a hotel in Swindon and travelled there by train. These costs were either paid for or reimbursed by the Respondent to the Claimant. The Claimant said the train fare had been £82.90 and he had been reimbursed for this and the hotel had cost £423.18. It did not appear the Claimant had been required to pay for the hotel. He said he was aware of the cost due to information he had seen at the time. The Claimant agreed with the Respondent he was not owed any money in respect of any expenses.[38]The gross sum of wages otherwise due without any deduction was agreed between the parties to be £1,661.11.[39]I did not find there to be consistent or reliable evidence on how the Respondent had reached or considered the sum of costs to be deducted.[40]The final payslip of the Claimant set out that there had been a deduction from his wages in respect of training of £676.15 and a deduction from his wages in respect of expenses of £962.41. Due to the deductions applied to the Claimant’s final pay, he had not received any wages in his final pay slip. Adding these sums together made a total of £1,638.56.[41]The additional statement of the Respondent’s witness Mr Stagg set out what he said the detail of the deductions were, amounting to £1,690.95 in total.•£432.80 Hotel costs•£95.40 Train fares whilst training (Romford)•£50 Failing to return a staff uniform•£700 Central staff costs of time personally training the Claimant•£412.75 Central costs of administration and payroll setting up the[42]Having heard oral evidence from the Claimant about how and when his uniform was returned to the Respondent, the Respondent accepted and agreed the uniform had been returned and that no deduction ought to have been made by the Respondent in respect of the uniform. The Respondent said this did not change its position on the deductions as the costs to be deducted had exceeded any wages due.[43]The Claimant’s evidence was that he was told he needed to attend Swindon to be trained. He was not given a choice about this and was a mandatory condition to his starting employment. This was not challenged by the Respondent..[44]The Claimant described his training in Swindon as being the usual work involved for a Team member and not a Team Leader. He said he had been required to go to the Swindon branch of the restaurant chain and told by other team members what to do for the first ten minutes. He said that no one had formally shown him what to do. The Claimant said that after four days in Swindon he was then sent to work in the Romford branch for one week. During this time he said he worked normally and was not under any direction or training.[45]The Claimant agreed with the Respondent that no other team leaders or managers were being trained at Swindon or Romford when he was at those branches.[46]The Claimant disagreed with the Respondent that a named third party had attended as a trainer just for him.[47]The Claimant said he was never told how much might be deducted if he left his employment at any stage, and nothing was said about this possibility to him until he left, when other employees told him there might be issues with his final wages given the experience of others.[48]The Claimant agreed with the Respondent what was contained at paragraph 13 of his contract of employment, but said that this was irrelevant in his opinion as he had not been told the details of what this meant and he had not agreed to any deductions.[49]The Claimant did not agree with the Respondent’s suggestion that the Claimant had completed a two-week training programme.[50]The Respondent’s evidence was that it did not discuss the potential deductions with new employees but solely relied on the signed contract. There would be different costs involved for every new trainee.[51]The Respondent suggested there had been costs of around £700 involved in the Claimant’s training at Swindon and Romford as this was about the cost of two weeks work in a store for someone in the role.[52]The Respondent said the Claimant would not have been overseen all of the time during these two weeks and this was usual when it came to management training. However the Respondent said the Claimant would never have been left alone in a store.[53]The Claimant said that when he was in Romford he had worked with a team member who was working their first day for several occasions. The Respondent did not dispute this and did not consider this unusual, but suggested the Romford manager had some involvement in supervising albeit the Respondent did not specify when this was said to have been and how this took place.[54]The Respondent suggested there was an additional cost to be deducted of around £412 for the administration cost involved in setting up the Claimant on the payroll system.[55]The Claimant suggested to the Respondent that to propose over £400 was deducted for administration costs was not fair or proportionate since the Respondent’s administration and payroll had failed to correctly input his name and National Insurance number three times.[56]The Respondent continued to submit that even with the removal of the uniform taken off the deductions applied to the Claimant, the cost of recruitment and training of the Claimant had exceeded the wages earned for the period 1 to 26 September 2021 which had not been paid.[57]The Respondent confirmed it did not dispute the Claimant’s payslip information or the terms and length of employment as put by the Claimant. It said the costs it had sought to recover as a deduction were:• Significant to the Respondent.• Covered by paragraph 13 of the employment contract where the possibility of the deduction of training costs was set out for the circumstances of an employee leaving within the first three months of employment.• The deduction represented the costs of the two weeks of new manager training.• The deduction was not intended to be punitive and if it had been it would not have been structured in the way it was.[58]The Respondent did not challenge the manner in which the Claimant set out in his statement that he had been told to leave the employment on 26 September 2021.[59]I had no doubt that the Claimant gave honest evidence.[60]On the evidence before me I did not find the Claimant had been solely involved in training when he worked in the Swindon and Romford branches, nor that this period had been for a full two weeks.[61]I did not find there was sufficient evidence before me to lead me to conclude the Respondent had deducted the correct amount for the training of this[62]The Respondent’s evidence on the sum said to be due as a deduction was not consistently put by the Respondent. I considered the sum lacked certainty and this tended to undermine the credibility and reliability of the evidence of the Respondent, particularly when it came to persuading me that paragraph 13 ought to be found to be a binding contractual term upon the Claimant such as to allow the deductions made or to accept the Claimant had authorized the deduction.[63]The paragraph did not specify that a deduction would always be made. The paragraph addressing potential deductions to be made for an employee leaving in their first three months of employment could not be relied upon by the Respondent when making the deduction. The term was not sufficiently clear and there was a failure to provide sufficient information on the potential level of deduction that might be applied, or for example any staging of any deduction over the three months. There could not be said to have been unambiguous understanding and acceptance of what was intended by the Respondent when agreeing to the terms of employment by the Claimant. Such that it would be unfair to conclude the deductions made were authorized in this way.[64]It was not suggested by the Respondent that the Claimant had been told in advance of the deduction being applied, nor that the Claimant had been told prior to the deduction being made what the deduction would be.[65]In the circumstances of the case before me I found paragraph 13 ought properly to be considered to have been intended to act as a penalty clause. In other words it is a provision in the Claimant’s contract which provides for the imposition of a sanction, and that sanction was not a genuine preestimate of loss suffered by the Respondent. There was no pre-estimate or detail. There was nothing to enable the contracting party (the Claimant) to understand how paragraph 13 might be interpreted or applied, nothing to suggest how it might be calculated or adjusted to represent a length of service. As such I did not consider paragraph 13 to be enforceable against the Claimant.[66]I did not find the clause to be proportionate or to have been fairly applied. It suggested the possibility of an obligation to repay unquantified costs said to represent training. I found this to have the effect of discouraging an employee to leave, amounting to a restraint on the Claimant, with a punitive impact and representing an unfair imbalance in the position of the contracting parties.[67]In contrast the detail on how a deduction in respect of a failure to return a uniform at all or in a reasonable condition, set out information on how a deduction would become due and the approximate sum that would be applied. This demonstrated the insufficiency of the paragraph in respect of training costs, as reflected in the wholly unsatisfactory, unreliable and inconsistent evidence provided by the Respondent on what sum of deduction had fallen due.[68]In addition I found the detail on deductions that might be made during the period of the first three months of employment, in the circumstances of this claim, to amount to a penalty clause, such that it fell not to be enforceable in all of the circumstances.[69]The Respondent provided a copy of a communication it said had been sent to the Claimant shortly after he left his employment. It appeared me to me this might have been to suggest an element of knowledge or authority of the Claimant in respect of the deductions. However the Respondent did not pursue this in questions to the Claimant. There was no suggestion the Claimant had acted in any way to agree or accept a deduction, nor did the Respondent suggest the Claimant had been told directly of what deductions would be made and how they were being calculated. I consider this is accurate. The Claimant did not authorize the deductions and did not know any were going to be applied.[70]The Respondent made a deduction from the Claimant’s wages by its withholding of the Claimant’s salary for the period of 1 to 26 September 2021 (albeit part of the deduction was referred to as an expense in the final pay slip). This was not in dispute. The Respondent contended it made the deduction to cover the Claimant’s training costs as it was entitled to do under the signed employment contract with the Claimant.[71]The Respondent relied on the deductions being authorised by paragraph 13 of the Claimant’s employment contract. For this to be a binding provision of the contract I needed to be satisfied this term was agreed and either sufficiently included as a written term given to the worker prior to the deduction or formed by way of an implied term the effect of which was notified to the worker prior to the deduction.[72]I didn’t find there was a meaningful agreement reached with the Claimant regarding any deduction.[73]I was not persuaded there was sufficient certainty to conclude the deduction was authorized. Even if I were wrong about this, I did not consider the actual deduction was justified. I found the Respondent had failed to discharge the burden of proof that the deduction was authorised and to the use of the term being justified. And in the event of ambiguity in the drafting of such a paragraph I reminded myself, the interpretation will be against the party relying on it.[74]There were a number of different versions of the sum the Respondent said had been applied and / or ought to have been applied. I was not persuaded the Respondent knew what sum had been deducted or that the Respondent had any real knowledge of what the sums deducted were said to represent. This insufficiency is highlighted in the Claimant’s last pay slip from the Respondent which only set out a limited sum as having been a deduction with the remainder described as an expense. I did not find the sum deducted had been adequately explained such as to make it enforceable in the circumstances of this case. There was insufficient detail.[75]The parties agreed the original period of service had erroneously referred to a leaving date of 29 September 2021 when it ought to have been 26 September 2021. The Respondent did not dispute the Claimant’s evidence he had been told to leave on 26 September 2021 and that he did not return to work thereafter. Neither party sought to advance any claim or submission on notice.[76]The Claimant did not suggest he wanted to return to work. It was not clear to me why the employment finished, but on the evidence before me, I concluded this was mutually accepted.[77]The Respondent did not address any minimum wage implications in respect of the making of the deduction.
The Law
[78]Under section 13 of the Employment Rights Act provides a worker has the right not to suffer unauthorised deductions from wages unless 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 the worker has previously signified in writing his agreement or consent to the making of the deduction.[79]Subsection (3) of section 13 states: “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”.[80]In deciding whether wages are properly payable the Tribunal has jurisdiction to resolve any issue necessary to do so including the meaning of the contract, Delaney v Staples (t/as De Montfort Recruitment) 1991 ICR 331, CA and in the combined appeals of Agarwal v Cardiff University and Tyne & Wear Passenger Transport Executive v Anderson [2018] EWCA Civ 2084, [2019] IRLR 657 the Court of Appeal affirmed that the employment tribunal can, if necessary, construe and interpret the Claimant’s contract of employment including identifying any applicable implied terms in determining whether there had been an unlawful deduction from wages.[81]The right to complain to an Employment Tribunal of an unlawful deduction for wages is made pursuant to section 23 of the ERA 1996.[82]Where a Tribunal makes a declaration that there had been an unauthorised deduction from wages, it may order the employer to pay the worker the amount deducted, and such amount as the Tribunal considers appropriate in all the circumstances to compensate the worker for any financial loss sustained by him which is attributable to the unlawful deduction (section 24(2) ERA 1996).
Conclusions
[83]I found there was a deduction made in the Claimant’s final pay which ought not to have been made.[84]I am conscious that when considering repayment terms, such as it was suggested by the Respondent, their paragraph 13 amounted to, I must apply a considerable degree of scrutiny to their application because of the disparity of economic power between employer and employee (Yorkshire Maintenance Company Limited v Farr EAT 0084/09). I took this into account when reaching my findings. I found there was significant disparity here.[85]I did not find the Claimant had agreed to any deduction. Even if I had found the Claimant had agreed the possibility of deductions being made dealing with training costs, upon examination of the contract and taking account of the applicable law, I found the relevant paragraph too wide to be properly enforceable the circumstances here. Even were I wrong on this finding, I did not find the application of the deduction was justified.[86]I found that the wages paid were less than the wages properly payable and the deduction was unauthorised.[87]The sum deducted was not fair or reasonable and did not apparently take account of the value the Respondent gained from the Claimant when he was working for the Respondent for what was nearly the first two weeks of employment during which it was said he was trained.[88]Commissioners for HMRC v Ant Marketing UK EAT/0051/19/00 highlights that when calculating whether the national minimum wages has been paid, if training costs are deducted taking an employee below the national minimum wages, this takes the employer in breach. As with here, the fact the training was mandatory it is more likely the expenditure of training is to be treated as a reduction. Given my findings in respect of paragraph 13 I did not need to consider this to any further extent.[89]I found the Claimant was entitled to be paid the sum claimed. This being the sum parties agreed that would have otherwise been due. That being the sum of £1,661.11.[90]Although the Tribunal may make an award for compensation in respect of financial loss which is attributable to unlawful deductions from wages, there was no evidence before the Tribunal to support any such award for compensation.