Mr J Anderson v Gareloch Support Services (Plant) Ltd: 4102358/2020
EMPLOYMENT TRIBUNALS (SCOTLAND)
Case No 4102358/2020
Between
Mr John AndersonClaimantGareloch Support Services (Plant)Respondent
Before
Employment Judge Russell BradleyDate 21 October 2022
JUDGMENT
[1]The claimant’s application to amend his statement of claim is allowed under exception of the insertion of the new paragraph 13; the Respondent is allowed 28 days in which to answer it by adjusting its grounds of resistance if so advised.[2]The claim that the Respondent was in breach of contract in respect of the claimant’s entitlement to paid annual leave in the period between 23 January 2019 and 18 December 2019 is refused and dismissed.
REASONS
The issues
[1]On 30 April 2020 the claimant presented an ET1. In the attached statement of claim he makes various alternative bases for a claim for holiday pay. In the statement (paragraph 2) he asserts that throughout his employment he received no payment in respect of annual leave. In its ET3 and the attached grounds of resistance the respondent sets out its answers to the various bases. The agreed dates of employment are between 25 January 2011 and 18 December 2019. The claimant was employed by the respondent as a deckhand.[2]On 18 November 2020, the tribunal made six orders following a telephone case management preliminary hearing on 16 November. The first was that the claim should proceed to a final hearing on the issue only of whether the Respondent was in breach of contract in respect of the claimant’s entitlement to be paid annual leave as that claim was identified in particular paragraphs of the statement of claim. The second was to fix 22 January as the date for that hearing and to hold it by CVP. Due to an administrative error by the tribunal that hearing was not listed. It proceeded on 12 February instead.[3]For this hearing parties had prepared and lodged a joint bundle of 17 documents extending to 102 pages. They had also prepared and lodged(i) an agreed statement of facts and(ii) skeleton submissions.[4]Present with Mr Moore for the Respondent were Mr McGarry and Mr Ferguson, directors of the Respondent. They were present throughout the hearing on the basis that neither would be giving evidence at this or any subsequent hearing. Mr Moore had anticipated calling Anthony Drake as a witness for the Respondent. He was not present for any of the claimant’s evidence. As it transpired, he was not called and was not present for any of the hearing. Amendment to the claim[5]By email on 20 January and at a time when it was not clear if the hearing fixed for 22 January was proceeding, Mr Lawson sought to amend the claim. He did so by attaching to his email two versions of his statement of claim, one with tracked changes and one “clean” version incorporating them. The Respondent opposed the application. I heard parties on it before considering the issue.[6]The claimant’s position from his email and oral submission can be summarised as follows; as it was originally drafted, the statement did not specify the period of claim; the intended effect of the amendment was to clarify that the “contract claim” related to the period from 23 January 2019 to 18 December 2019, when the employment ended; it was only on 13 January 2021 that Mr Lawson became aware of the terms of a written contract of employment between the parties entered into on 28 April 2011 (now pages 36-42 of the bundle); the primary purpose of the amendment was to avoid any argument of res judicata and to answer a time-bar point taken by the Respondent in its skeleton at paragraph 10(c) insofar as that argument was relevant to the 2011 contract; there is no new complaint being added; there is no prejudice to the Respondent, and if the amendment is not allowed the claimant may be left without a remedy (at least in relation to the “contract claim” prior to 23 January 2019). Mr Moore opposed the application. To summarise his opposition; the Respondent had prepared for this hearing on the basis that the contract claim spanned the whole period of the claimant’s employment; that claim in his view had no merit; the effect of allowing the amendment would be to permit the claimant to(i) carve out the contract claim for the period prior to 23 January 2019 and(ii) litigate it in court with additional unnecessary time and expense being incurred by the Respondent; and his recollection was that Mr Lawson was aware of the 2011 contract earlier than 13 January.[7]I allowed the application to amend excepting the proposed changes to paragraph 13 of the tracked version. The effect of the amendment is to limit the claim for this hearing to a period of 47 weeks, being the period from 23rd January 2019 until the end of the claimant’s employment. I took account of the overriding objective and the need to deal with cases fairly and justly. I accepted Mr Lawson’s position that he was not aware of the 2011 contract until relatively recently, 13 January 2021. I took account of the potential prejudice to the Respondent in having to defend court proceedings and the attendant management time and cost of legal representation. I also took account of the respondent’s confidence in its defence of any such proceedings and thus the likely recovery of judicial expenses. If I had refused the amendment the prejudice to the claimant may well have been to lose a part of the claim. In my view that outweighed the prejudice to the respondent in having to answer the claim elsewhere. With the agreement of parties, I excepted the amendment which is the proposed introduction of paragraph 13 on the basis that it is properly an issue which is to do with a statutory basis of the claim, an issue to be determined at a later hearing.[8]I allowed the respondent 28 days in which to answer the amendment, if so advised. The issue for this hearing[9]Parties were agreed that the only issue was whether the respondent was in breach of contract in respect of the claimant’s entitlement to be paid annual leave as that claim was identified in paragraphs 1 to 8 of the statement of claim. After allowing the amendment, the issue narrowed to whether the respondent was in breach of contract in respect of the claimant’s entitlement to be paid annual leave in the period 23 January 2019 to 18 December 2019. Evidence and findings in fact[10]The parties had agreed a statement of facts. The claimant gave evidence and was cross-examined. From those sources I found the following facts agreed, admitted or proved which were relevant to the issue before me.[11]The claimant is John Anderson. The Claimant was employed by the Respondent as a deckhand. His employment commenced on 25 January 2011. The Claimant principally worked on the Respondent's workboat Lesley M. As far as he was aware all of the vessels on which he worked while employed by the respondent were British flagged vessels. From 26 February 2015 until 18 December 2019, he did so exclusively. Lesley M is British/UKregistered as belonging to the port of Glasgow. She is licensed to operate up to 60 nautical miles from a safe haven. The Claimant ordinarily worked a regular roster of equal Time On/Time Off. From the commencement of employment on 25 January 2011 until 23 January 2019 his contract was not specific as to the number of days he was to work per year. The claimant worked equal time on/time off for the majority of that time, on either a 3 weeks on/3 weeks off or a 4 weeks on/4 weeks off cycle. With effect from 23 January 2019, his contractual obligation was to work at least 182.5 days per year. During his last year of employment his working routine was generally 4 week on/4 weeks off. In September 2019 he worked 3 weeks on (5 September to 25 September) followed by 24 days off (26 September to 19 October) then 25 days on (20 October to 13 November) followed by 35 days off (14 November to 18 December). The claimant’s normal change over day was a Wednesday or a Thursday. The variation to his roster towards the end of the time in 2019 was as a result of a surprise holiday which had been planned by the claimant’s wife.[12]With effect from 23 January 2019, the Claimant's terms and conditions of employment were set out in a Seafarer Employment Agreement (the SEA) (pages 43-46). The claimant signed the SEA at his home on 19 January 2019. He had read clause 9. He understood when he signed the SEA that he was getting six months off (on shore) which included his leave. At that time he did not know that he was entitled to any additional payment for that leave. The payments which are shown on the payslips (page 101) reflect elements set out in Schedule A to the SEA (page 46). In relation to “Annual paid leave” on Schedule A, the claimant understood that he did not get a payment, just time off. His salary from 23rd January 2019 was £26,650.[13]Clause 4 of the SEA (page 44) states: “The Seafarer is employed on an Overtime and Weekend Work payment contract. Schedule A details Payment, Hours of Work and Annual Paid Leave, subject always to section 5 below. The form of Schedule A for Fully Consolidated Salary is incorporated into this SEA and forms part of it.”[14]Clause 5 of the SEA (page 44) states: “The terms and conditions of employment which apply to this SEA are Part A and also Part B of the Employer's Standard Terms and Conditions of Employment for Seafarers ('Standard Terms'). The Employer will keep the Standard terms under review and may vary them from time to time as it considers necessary for legal compliance and/or to meet the needs of the business. It is agreed that any variations to the Standard Terms will, on adoption by the Employer, apply to and be incorporated into this SEA. The Seafarer was given personal copy of the current Standard Terms with this SEA prior to its signature.”[15]Schedule A to the SEA (page 46) states: “Annual paid leave - 30 days or in accordance with the flag state legislation governing the ship to which the Seafarer is for the time being attached (if superior).”[16]The Standard Terms as given to the Claimant with the SEA in January 2019 remained unaltered until the termination of his employment. No variations were issued to him. Part A of the Standard Terms (page 47) opens with this explanation: “Part A - applicable to all seafarers - employed and independent contractors In this Part A, when applied to a seafarer who is not stated in his SEA to be an 'independent contractor: 'engagement’ is synonymous with 'employment' unless the context otherwise requires.”[17]Within Part A of the Standard Terms-clause 1- Contract and conditions of engagement - (page 47) provided: “1.1 These Standard Terms and Conditions of Contract are incorporated into and form part of the personal Seafarer Employment Agreement (SEA) on which a Seafarer is engaged to the extent specified in the SEA. clause 7 - Remuneration - (page 50) provided: 7.1 All remuneration is fully consolidated. It covers all time and all the hours of work anticipated whilst the Seafarer is serving on board a vessel; also Annual Leave. There is no additional entitlement to remuneration for any elements which might be said to require some additional compensation, such as overtime payments, weekend and/or public holiday working, watchkeeping bonus, pilotage, storing and cargo lashing, seniority etc. unless explicitly provided for in the Seafarer's SEA. Clause 17 - On-Board Complaint Procedure - (page 53) provided: If the Seafarer has a complaint or grievance concerning the provision of any rights established through the International Labour Organization Maritime Labour Convention 2006, this must be raised through the Company's On-Board Complaints Procedure. It is noncontractual. Any appeal against a determination may be brought in accordance with the On-Board Complaints Procedure.”[18]Within Part B of the Standard Terms Clause 24 - Salary - (pages 54-55) provided: “The Company will pay the Seafarer the annual salary (Salary) appropriate for his/her rank/rating as stated in Appendix A to his/her SEA. Salary will be remitted monthly in arrears in equal monthly instalments to the Seafarer's nominated bank account on the last business day of each month or, where this falls on a weekend or public/bank holiday, the closest banking day. Salary scales are set for equal Time On/Time Off working ...” Clause 25 - Tours of duty Time On and Time Off - (page 55) provided: “For most Company vessels the ratio of time off will be one day off (Time Off}for each day worked on board (Time On). Roster patterns will generally be established on this principle, subject to clauses. The Company may in its discretion adopt different Time On/Time Off ratios from time to time for specific vessels and/or services. The Seafarer will work the roster pattern for the vessel to which s/he is for the time being appointed. The day of joining a vessel and the day of leaving together count as one day of Time On. In appropriate circumstances rosters may be adjusted to meet the trading requirements of the vessel. Every endeavour shall be made to give due notice to the Seafarer of any change.” Clause 26 - Paid Annual Leave (pages 56-57) - provided: “The Leave Year is the calendar year. The Seafarer's entitlement to paid annual leave is as stated in Appendix A to his/her SEA (Annual Leave). Payment for Annual Leave is included in Salary. Annual Leave is taken during Time Off. Accordingly, there is no entitlement to any additional time off and/or pay in respect of Annual Leave. Annual Leave accrues evenly through the Leave Year. Annual Leave is taken automatically during Time Off It is taken as follows On the first available days of Time Off, so that the Seafarer has used his/her full any outstanding balance of entitlement which has accrued due to him/her up until that time. In the final days of Time Off before the Seafarer's next Time On, so that the Seafarer takes in advance his/her entitlement which will accrue during the next rostered Time On; Accordingly, all Annual Leave which has accrued due up to the date of joining, plus all Annual Leave which is anticipated to accrue due during the Seafarer's next Time On will have been taken when the Seafarer joins a vessel for that Time On. On termination of employment, any Annual Leave which has accrued due but not been taken under the preceding provisions of this clause will be compensated in accordance with Flag State legislation. Clause 34 - Grievances (page 59) provided: “34.1. All complaints or grievances which do not relate to rights established through MLC 2006 must be raised using the Company's Grievance Procedure. It is non-contractual. Any appeal against a grievance decision may be brought in accordance with the Grievance Procedure.”[19]The claimant’s payslip dated 30 September 2019 (page 101) shows an entry for pay “over 12 hours.” This entry represents time spent at work over the 12 hours of “Basic” also shown on the payslip. The basic hours were 7 until 7. The “over 12 hours” was overtime. The entries on the payslip for “Saturday” and “Sunday” are based on set weekend working on board and are also overtime payments.[20]On 20 November 2019, whilst on Time Off, the Claimant tendered his resignation. The Claimant e-mailed Mr Tony Drake, Operations manager of the Respondent: “Subject: Notice period Hi Tony, I hope this finds you well. I am planning on submitting my resignation time for a change, something ashore and less hours. What notice period would you be requiring from me?” Mr Drake replied: “Hi John That's really sad news, you will need to provide 4 weeks' notice, please feel free to pop in and discuss as I am in the office in Rosneath today that's if you feel we can do something to persuade you not to leave and worth a chat....” The Claimant replied: “Hi Tony, Please accept this as my resignation. I will give 4 weeks' notice as of today. I have put a lot of thought into this decision and it has not come easily, my time with GSS is some of the happiest and enjoyable times I have experienced and will always be appreciated. I would like to thank you personally for all you have done for me during my time with GSS and hope there are no hard feelings over my decision. But it's time for a change and I need to be spending more time at home and working less hours and have been offered an opportunity that allows that.”[21]The Claimant's last day of work on board ship was 13 November 2019. That was the last day of a 25-day continuous period of Time On. The effective date of termination of the Claimant's employment was 18 December 2019. The Claimant was on Time Off continuously for 35 days and on continuous pay from his last day of work on board ship (13 November 2019) up until the effective date of termination of employment.[22]At no time during his employment with the Respondent did the Claimant request to take paid annual leave during a period of Time On; raise any grievance asserting an entitlement to paid annual leave and more specifically asserting an entitlement to take time off as paid annual leave outside of and/or in addition to Time Off, either under the Onboard Complaints Procedure or under the Respondent's Grievance Procedure; or raise informally with the Respondent's management either orally or in writing the issue of an entitlement to paid annual leave and more specifically an entitlement to take time off as paid annual leave outside of and/or in addition to Time Off. The claimant understood that the rota provided him with 6 months per year off. During his employment he assumed that holiday was taken while on shore. Following the end of his contract, and in a conversation about his future he was asked if he had sorted out with the respondent the question of holiday pay. His understanding had been that he did not get holiday pay. He spoke with his trade union who had explained that there was reason to look into the issue. That discussion had resulted in the bringing of these proceedings.[23]The claimant’s salary was £26,650. The payslips for the months of July to November 2019 inclusive (pages 101 and 102) show that he was paid £2220.83 monthly which is 1/12 of his Salary. Comment on the evidence[24]In very large measure the relevant agreed findings in fact replicated tranches of the contract for the period 23 January 2019 to 18 December 2019. Submissions[25]For the claimant Mr Lawson spoke to his skeleton. His principal submission was that the SEA provided for payment to the claimant for periods of annual leave which payments were “in addition to normal remuneration.” (skeleton, paragraph 1). The theme of entitlement to be paid in addition to an annual salary of £26,650 recurs in paragraphs 3, 4, 5, 11 and 17 of the skeleton. Mr Lawson referred to five principles by which contractual documents are to be construed, summarised by Lord Hoffman in Investors Compensation Scheme Limited v West Bromwich Building Society and Others [1988] 1 All ER 98. In his submission the material which is background knowledge, reasonably available to the parties and which would inform or convey the meaning of the SEA to a reasonable person includes(i) the entitlement to paid annual leave under the Merchant Shipping (Maritime Labour Convention) (Hours of Work) Regulations 2018 and antecedent and associated legislation;(ii) the minimum standards for annual leave with pay for seafarers contained in the Maritime Labour Convention 2006; and(iii) the fact that by virtue of the Charter of Fundamental Rights of the European Union, every worker has the right to an annual period of paid annual leave. He further submitted that on the respondent’s interpretation of the contract, the word “paid” (in the expression “Annual paid leave” on Schedule A) is redundant. His skeleton emphasised the point by reference to the fact that while Schedule A specifies 30 days leave, the claimant’s entitlement (by virtue of the relevant flag state (UK) legislation, the Merchant Shipping (Maritime Labour Convention) (Hours of Work) Regulations 2018) was in fact to 38 days of paid annual leave. He further submitted that in the context of the relevant parts of Clauses 26 and 28 if an employee who was absent due to sickness requested annual leave during a period on Time Off, that employee would receive no payment in respect of that annual leave. On that analysis, he submitted that the Standard Terms (in Parts A and B) contain no mechanism for an employee who is absent due to sickness for a whole leave year to receive any payment in respect of annual leave entitlement. If the respondent’s interpretation of the SEA is accepted, the effect of that would be to deprive those absent from work from any contractual entitlement to paid annual leave. In answer to the respondent’s reference to Clause 7.1 of the Standard Terms, Mr Lawson emphasised the wording “unless explicitly provided for in the Seafarer’s SEA” but made the point that the SEA provides additional entitlement to remuneration for overtime payments, weekend working and also annual leave, and accordingly, the clause has no impact on the claimant’s contractual entitlement. In answer to the respondent’s reference to Clause 26 he made two points. First, Schedule A is the “key component” of the contractual documentation and should take precedence over an “internally inconsistent” provision buried in Clause 26. Second, the contra proferentem rule should apply so that any ambiguity should be read against the respondent who seeks to avoid making payments to the claimant for his entitlement to leave. On the quantification of the claim, Mr Lawson’s submission was that; gross annual salary was £26,650; the annual days of work were 182.5; dividing the former by the latter produces a daily rate of pay of £146.03; the claimant’s annual leave entitlement was 38 days; in the 47 weeks of the claim, he thus was entitled to 47/52 of those 38 days (34.35 days); on the question of pay then, his claim is for 34.35 days x £146.03 per day, equalling £5,016.13. His position in his skeleton was that accrued holiday entitlement at termination was calculated as set out above so as to be 34.35 days. In reply to the respondent’s skeleton, Mr Lawson identified paragraphs 15 to 20 as its substance on the issue. On paragraph 15 his position was that reference to there being “no material alteration” to the position from the 2011 contract was of no relevance to the interpretation of the SEA, and that the subjective intention of clarifying “the interrelationship between paid annual leave and Time Off and to the incidence of paid annual leave within Time Off” was not relevant in the context of the third principle in Investors Compensation Scheme Limited. On paragraph 16, his position was that it was open to find that the claimant did not get paid beyond his annual salary. On the reference to the case of Russell and Others v Transocean International Resources Limited and Others [2011] UKSC 57, Mr Lawson’s position was that it dealt only with the issue of leave as opposed to paid leave, in contrast with the situation here. And on the issue of paid annual leave being consolidated into the claimant’s salary (respondent’s skeleton 19 under reference to Clause 7.1 of the standard terms) the contrast was with for example overtime which was meaningless and was no aid to interpretation of the contract.[26]For the respondent Mr Moore began by referring to paragraphs 11 to 19 of his skeleton submission. To summarise them here; the SEA is a new contract not a variation on the 2011 one; there is agreement as to 38 days of paid annual leave entitlement; the key provisions from the standard terms are Clauses 7 and 26; Part B of the Standard Terms (wherein there is to be found Clause 26) applies only to employees (such as the claimant); a distinguishing feature (in contrast with independent contractors to whom Part B does not apply) is the entitlement of employees to “Paid Annual Leave” within Clause 26, something which ought to have been of considerable interest before signing the SEA where there is added clarity of the interrelationship between paid annual leave and Time Off and to the incidence of paid annual leave within Time Off; from the claimant’s evidence, he now accepted that he received paid annual leave during his employment; and the Maritime and Coastguard Agency guidance (referred to in his paragraph 18) explained the reflection of the statutory position in the SEA and Standard Terms which in turn make plain that paid annual leave is consolidated into salary. He referred to Clause 7.1 (within Part A) and to Clause 26 within Part B. Clause 26 provides for Paid Annual Leave. Clause 26.2 refers to the entitlement in Appendix A of the SEA. And while it is defined as “Annual Leave” there is no distinction between “Annual Leave” and “Paid Annual Leave.” Clause 26.3 provides that payment for Annual Leave is included in Salary, a term contained in Appendix A. Referring to Clause 4 of the SEA, it provides that details including Annual Paid Leave are as contained in Appendix A but “subject always to” section 5 (which is immediately below) and which provided that the terms of employment are as per Parts A and B of the Standard Terms. In his submission, on the issue of salary, Clause 7.1 is clear that “all remuneration is fully consolidated” and it is also clear on “no additional entitlement” “unless explicitly provided for” in the SEA. Looking at the claimant’s Schedule A, one can see what is explicitly provided for (weekday overtime and weekend working) but there is no explicit additional provision for Annual paid leave because it is already consolidated into the annual salary. In reply to points within the claimant’s skeleton, Schedule A distinguished its provisions and expressly provides for Annual paid leave. And the question of no provision for automatic salary variation in the event of different flag state legislation is irrelevant because all of the vessels on which the claimant worked while employed by the respondent were British flagged vessels. On the question of sick pay (and while it was not before the tribunal) Mr Moore made reference to Regulation 50 of the Merchant Shipping (Maritime Labour Convention) (Minimum Requirements for Seafarers etc.) Regulations 2014 which he said made provision for 13 weeks’ actual wages following sickness or injury sustained by seafarer. In addition, it was his submission that it was not typical for contracts to specify what was to happen in the event of a request for annual leave in a period of sickness absence during a period of Time Off. Separately, he made the point that at no time had the claimant ever raised the issue during his employment. Paragraph 20 of the respondent’s skeleton explained that Clause 26.5 operated for the claimant in such a way that he has taken his entitlement to paid annual leave up until 13th November, his last day of work on board ship. And paragraph 21 posited three approaches to the question of entitlement in the 35 day period between 14th November (when the claimant was not on board the vessel) and 18th December, the effective date of termination. On any of the three, submitted the respondent, the claimant has no claim for accrued and untaken paid leave.
Law
[27]Article 3 of the Employment Tribunals Extension of Jurisdiction (Scotland) Order 1994 provides that “Proceedings may be brought before an employment tribunal in respect of a claim of an employee for the recovery of damages or any other sum (other than a claim for damages, or for a sum due, in respect of personal injuries) if—(a) the claim is one to which section 131(2) of the 1978 Act applies and which a court in Scotland would under the law for the time being in force have jurisdiction to hear and determine;(b) the claim is not one to which article 5 applies; and (c) the claim arises or is outstanding on the termination of the employee's employment.” Article 5 does not apply in this case.[28]“The task for the Lord Ordinary when interpreting the lease was to have, as his ultimate aim, the determination of what the parties meant by the language used, doing so by ascertaining what a reasonable person with all the background knowledge available to the parties would have understood the parties to have meant ( Rainy Sky SA v Kookmin Bank Co Ltd , per Lord Clarke of Stone-cum-Ebony, para 14; Arnold v Britton, para 15), where the task was distilled by Lord Neuberger of Abbotsbury as being that: ‘The meaning has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provision of the lease, (iii) the overall purpose of the clause and the lease, (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party's intentions.’” (@Sipp Pension TRS v Insight Travel Services Ltd 2016 S.C. 243, referring to Rainy Sky SA v Kookmin Bank Co Ltd [2011] UKSC 50 and Arnold v Britton [2015] UKSC 36.) Discussion and decision[29]Was the respondent in breach of contract in respect of the claimant’s entitlement to be paid annual leave in the period 23 January 2019 to 18 December 2019? The question involves a consideration of the relevant contractual provisions and the particular allegation said to be in breach of them.[30]The question first turns on an interpretation of the contract between the parties entered into in January 2019. It is made up of(i) the numbered paragraphs 1 to 11 on pages 43 to 45 (the SEA)(ii) Schedule A (page 46) which “is incorporated into this SEA and forms part of it” (paragraph 4 of the SEA) and(iii) the “terms and conditions of employment which apply …….are Part A and also Part B of the Employer’s Standard Terms and Conditions of Employment for Seafarers (‘Standard Terms’).” Those standard are in the tribunal bundle at pages 47 to 59. They are the respondent’s Standard Terms. It is convenient to refer to the three elements as “the SEA”, “Schedule A”, “Part A” and “Part B” as the parties did at the hearing. There is in my view no hierarchy of parts or terms from which it can be said that any is dominant or servient.[31]Clause 4 of the SEA narrates that the claimant is employed on an Overtime and Weekend Work Payment contract. Those two expressions are reflected in two entries on Schedule A. They provide for payments to the claimant for working “Overtime” (in excess of 12 hours on a weekday) and “Weekend Working” for hours worked on a Saturday or a Sunday. Those payments are in addition to the agreed annual salary of £26,650.00. Clause 4 of the SEA refers to Schedule A for details of “Payment, Hours of Work and Annual Paid Leave, subject always to section 5 below.” Schedule A provides details of Payment (of salary, and for Weekday Overtime and Weekend Working). It provides details of hours or work (up to 12 hours per day on weekdays and weekends as required). It also provides details of “Annual Paid Leave”. I note in passing that the heading in Schedule A refers to “Annual Leave.” In my view they mean the same thing. In my view both Clause 4 and Schedule A make clear that they are describing paid leave.[32]Those details are, however, subject to Clause 5 of the SEA. Its heading is “Standard Terms and Conditions of Employment.” Clause 5 narrates that the terms and conditions of employment which apply to the claimant’s SEA are Part A and Part B. Clause 5 also narrates that the claimant was given a personal copy of them prior to signing the SEA.[33]Part A says that it applies to all seafarers – employed and independent contractors. It is made up of clauses 1 to 22. Part B says it applies to employed seafarers – not independent contractors. It contains clauses 23 to 37.[34]For present purposes, the relevant clause from Part A is clause 7, “Remuneration”. The relevant clauses from Part B are Clauses 24 “Salary”, and 26 “Paid Annual Leave”. I pause there to note that there is the potential for confusion where there are two clauses one in each Part both dealing with pay. Clause 4 of the SEA sets out that “the form of Schedule A for Fully Consolidated Pay is incorporated into this SEA and forms part of it.” The expression “fully consolidated” relating to pay appears in Part A, clause 7.1. It provides that “All remuneration is fully consolidated. It covers all time and all the hours of work anticipated whilst [the claimant] is serving on board a vessel; also Annual Leave. There is no additional entitlement to remuneration for any elements which might require additional entitlement to remuneration” then lists some, but subject to those explicitly provided for in the SEA. In my view, the only additional entitlements for which explicit provision was made for the claimant were(i) Weekday Overtime and(ii) Weekend Working. Clause 7.1 makes clear that the claimant’s fully consolidated remuneration includes Annual Leave. Clause24.1 (in Part B) provides that the respondent would pay the claimant Salary as stated in in Appendix A. Clause24.2 provides that Salary will be remitted monthly in arrears in equal instalments to his bank account. Pages 101 and 102 show that in the months July to November 2019 inclusive he was paid instalments (£2220.83) which equal 1/12 of his Salary. Clause 26 (in Part B) makes express provision for Paid Annual Leave. 26.2 expressly provides that entitlement to “paid annual leave” is as stated in Appendix A of the SEA. It in turn provides for 30 days or in accordance with the flag state legislation. It was agreed that in this case the flag state provided 38 days. Clause 26.3 provides that “payment for Annual Leave is included in Salary.” It is therefore clear, in my view, that Annual Leave, when it is taken is paid, and payment is included in the monthly instalments of salary.[35]On how Annual Leave is taken, Clause 26.4 provides that it accrues evenly through the Leave Year. Clause 26.5 then provides that “Annual Leave is taken automatically during Time Off.” The Clause then provides (26.5.1 and 26.5.2) a mechanism whereby it ensures that “all Annual Leave which as accrued ……plus all Annual Leave which is anticipated to accrue ………….will have been taken when the claimant joins a vessel.” In my view this mechanism is designed to avoid the accrual of Annual Leave as the Leave Year progresses.[36]Mr Lawson’s principal submission was that the SEA provided for payment in addition to normal remuneration. I do not agree. There is no doubt (from the terms of the contract) that Annual Leave accrues and is taken as the Leave Year progresses. There is also no doubt, in my view, that the claimant is paid for that Leave as part of his Salary, which is paid equally throughout the year. Indeed, it is inherent in Mr Lawson’s submission and the claim for payment “in addition to” normal remuneration that “normal remuneration” is in fact paid. Mr Moore did not take issue with the principles relied on from the case of Investors Compensation Scheme Limited. There is in my view no material difference in its approach from that set out in the later cases referred to, including the Inner House decision in @Sipp Pension TRS v Insight Travel Services Ltd. But in my view the material referred to by Mr Lawson does not advance matters. They provide for minimum standards of paid leave, which in my view are met by the contract between the parties. Further, I do not agree that the respondent’s interpretation of the contract means that the word “paid” is redundant. In my view, reading the relevant provisions together, it is clear how the entitlement to Annual Leave accrues and is taken, and that it is paid. The claimant’s entitlement increased from 30 to 38 days by virtue of the flag state legislation. I accept that this resulted in a reduction in pay per day of Annual Leave. But that is irrelevant to the question of whether he was entitled to paid leave. I did not accept the submission that Schedule A is a “key component” of the contract or that it took precedence over other provisions. In my view there is no inconsistency in Clause 26. Nor is “buried”. I did not accept that there was any ambiguity in the provisions of the contract and thus the contra proferentem rule was not engaged. On the contrary, and while it was necessary to refer to three sources to understand the matrix of contractual provisions, there was in my view no ambiguity on the question of whether the claimant was entitled to paid leave. On Transocean, which I accept was dealing with a dispute under the Working Time Regulations 1998, Lord Hope said (paragraph 38 of the report), “the Respondents are entitled to insist that the appellants must take their paid annual leave during periods when they are onshore on field break.” I noted that in his skeleton (paragraph 19) Mr Lawson said, “The claimant’s period of employment in the relevant leave year was 47 weeks. The claimant’s accrued holiday entitlement at termination was (38/52*47) 34.35 days. The claimant seeks an award of damages in the sum of (34.35*146.03) £5,016.13 in respect of the respondent’s breach of contract.” The premise behind the sum sought and the method by which it is arrived at is that the claimant took no leave in the 47 weeks of his employment in 2019. When I asked Mr Lawson about the use of the word “accrued” he accepted that the claimant had not accrued them untaken in the course of the year. Instead, as I understood it, the claimant was seeking damages representing an accumulation of underpayments. For each day of annual leave to which he was entitled (and took) in 2019 (34.35 days), he had been underpaid by the rate calculated by Mr Lawson. On my analysis, there was no underpayment. On Mr Lawson’s case, the claimant’s annual Salary would have increased by £5,549.14 (38 days x £146.03 per day) to £32,199.14. In my view that cannot have been agreed between the parties. Put shortly, Salary included payment for leave. Accordingly, in my view the respondent was not in breach of contract in respect of the claimant’s entitlement to be paid annual leave in the period 23 January 2019 to 18 December 2019. The claimant’s claim was for damages as detailed in his skeleton. As I have decided that the respondent was not in breach of contract, I do not require to form a view on the respondent’s various approaches to annual leave in the period from 14 November to 18 December 2019. The claim for damages for breach of contract is refused and dismissed.[37]The claimant’s claim under the various alternative bases should proceed.
Relevant Law
[38]Mr Moore contends that the contract entered 23 January 2019 is an SEA, meeting the legislative requirements. Regulation 10 of the aforementioned 2014 Regulations prescribes requirements as to the content of an SEA. Regulation 10 (1) provides that an SEA must include provision about the matters in Part 1 and 2 of Schedule 1. Part 2 specifies among other matters that provision should be included for ‘the paid leave (either the amount or the formula to be used in determining it)’.[39]Mr Moore maintains that the agreement entered on 23 January 2019 meets all requirements, including this one. Mr Lawson asserts that it fails to do so. It is not possible, he says, to identify from the agreement what payment should be made for annual leave taken. Either the amount or the formula for calculating the pay should, in his submission, be specified in the agreement. Mr Lawson was invited to confirm if he relied upon any other asserted deficiencies in relation to the prescribed content in Part 2 of the Schedule. He did not identify any aspects which were challenged as deficient at the hearing.[40]Mr Moore argues that the requirement in the Schedule is indeed met. He referred to the Maritime and Coastguard Agency Guidance MGN 477 (M) which deals with Seafarers’ employment agreements and links to a suggested model format. The clause dealing with annual leave within the model format Paid Leave You are entitled to take ………….(insert number) (see Note 6) working days as paid leave in each year of employment. [You will be paid your normal basic wages during such leave.] If your employment commenced or terminates part way through the holiday year, your entitlement to paid annual leave will be assessed on a pro rata basis. Deductions from final salary due to you on termination of employment will be made in respect of any paid annual leave taken in excess of your entitlement. You will be entitled to payment in lieu of paid leave accrued but not taken at the date of termination of employment.[41]The contract was produced to the Tribunal. It is the respondent’s position that the terms contained in Schedule A and those in Part B of the Standard Terms and Conditions of Contract for Seafarers (para 26) relating to paid annual leave suffice to meet the requirements stipulated in Regulation 10 and Part 2 of the Schedule to the 2014 Regs. Paragraph 26.2 of the contract provides that entitlement to “paid annual leave” is as stated in Appendix A of the agreement. As a matter of detail, there is not strictly an ‘Appendix A’ but there is a Schedule A to the agreement. It includes the following clause: Annual Paid leave 30 days or in accordance with the flag state legislation governing the ship to which the Seafarer is for the time being attached (if superior)[42]The entitlement under flag state legislation (i.e. the 2018 Regulations) is indeed superior. Regulation 15 confers an entitlement to 2.5 days for each month of employment (po rata for incomplete months) and an additional eight days each leave year (pro rata), totaling, therefore, 38 days per annum.[43]The requirement in Reg 10(1) of the 2014 Regulations is that the SEA must contain “provision about the matters in Part 1 and Part 2 of Schedule 1”.[44]Further and separately, Mr Lawson argues that Regulation 26 of the 2018 offers an unsatisfactory remedy. Requiring a seafarer to bring a claim in respect of accrued annual leave within the period of three months of the date of accrual of the leave offends, in his submission, against the principle of equivalence. This EU derived principle requires that a limitation period in respect of an action on a claim arising out of European law must not be less favourable than for similar actions based on domestic law. The limitation period in section 23 of ERA was he said, more advantageous than the limitation in Regulation 26 of the 2018 Regulations. According to Mr Lawson, the Tribunal should give a purposive interpretation to ERA, including section 199(1), as permitting the claimant to bring a claim under Part II for a series of unauthorised deductions in relation to annual leave as can be done for rights deriving from the WTR.[45]Mr Lawson’s suggestion that Regulation 10(1) and the Schedule Part 2 of the 2014 Regulations require an agreement to specify the amount of payment for leave or the formula for calculating payment was not considered particularly persuasive. What is required is “provision about the paid leave”. It appears reasonably clear that the requirement for an “amount or formula” refers to quantifying the leave, not the pay. That would seem to accord with the view taken by the Maritime and Coastguard Agency’s in the model format where comment on the approach to payment is square bracketed, giving the impression it is intended to be optional.[46]There appears, however, to be greater force in the argument that the agreement does not adequately specify the amount of leave (or the formula for its calculation) by merely signposting legislation which itself is not specifically named. The contractual terms do not refer expressly to the 2018 Regulations by name. The contract instead refers to the “flag state legislation governing the ship… (if superior”).” Regulation 10(2) of the 2014 Regulations provides that provision may be achieved by way of reference to another document which includes provision about those matters. However, the Tribunal accepts there is a stateable argument that Schedule A does not refer with sufficient precision to another document where the amount of the leave entitlement is quantified in referring to “the flag state legislation governing the ship..”[47]The Tribunal is not, therefore, satisfied that the claimant has little or no reasonable prospect of persuading a Tribunal that the terms of the 23 January 2019 agreement do not satisfy the requirements for an SEA set out in Regulation 10 and Part 2 of the 2014 Regulations in the approach to the contractual provision on paid leave. Para 13 of the Statement of Claim (Time Bar Argument)[48]Mr Moore argues that paragraph 13 of the claimant’s Statement of Claim Esto the respondent discharged its obligations in terms of the Regulations to provide full paid annual leave by virtue of the 2011 Contract and the SEA, throughout the period from 17 March 2014 to 23 January 2019 the claimant had a statutory entitlement to 38 days of paid annual leave. During that period, the claimant’s contract of employment provided for only 28 days of paid annual leave. Accordingly, the respondent failed to comply with its statutory obligations during that period. Submissions on Paragraph 13 (Time Bar Argument)[49]Mr Moore asserts this claim is time barred. The claim is specifically brought in respect of the period ending 22 January 2019. ACAS was not notified until 17 March 2020 when it should have been notified by 21 April 2019.[50]Mr Lawson says there was a continuing series of deductions which continued beyond January 2019, and that the claim was brought within three months of the last of these.[51]The paragraph 13 claim is framed as an esto claim, proceeding on the premise that the respondent’s statutory obligations on annual leave have been found to have been discharged by virtue of the contractual terms for the period from and after 23 January 2019.[52]Mr Lawson’s submissions on the paragraph 12 time bar argument did not appear to the Tribunal to readily carry over insofar as those submissions were based on the premise that legitimate statutory claims are competent to be litigated in respect of the period from 23 January 2019 to the EDT. The paragraph 13 claim is premised on an acceptance that statutory obligations in the latter period have been discharged.[53]The Tribunal considered, however, that there was potential support for the position taken by Mr Lawson in the EAT decision in Ekwelem v Excel Passenger Service Ltd UKEAT/0438/12/GE, unreported. The case was not cited during the hearing. It is not concerned with holiday pay. It concerns an unauthorized deduction from wages claim where it was said that deductions during a period when the employee was suspended were unlawful. Judge Hand accepted the employee’s barrister’s submission that where the complaint was made in respect of a series of deductions or payments, even if the later deductions were held to have been lawful, that could not disqualify the claimant from relying on the earlier payments which should have been found to be unlawful. Judge Hand agreed (see paragraphs 20 and 31).[54]There will be arguments for another day about the applicability of Ekwelem to the circumstances here and its effect. For present purposes, the Tribunal was not satisfied the claimant falls below the low bar of having little or no reasonable prospects in arguing that the pre-January 2019 period knits together with the post 2019 period to form a series timeously complained of, even in the scenario that the latter alleged deductions are found by a Tribunal to have been lawful on statutory as well as contractual arguments.[55]Separately, there remains the concern that the claimant has not articulated his position on whether he says it was not reasonably practicable to bring the complaint within the normal time limit and, if not, why not. At the hearing, Mr Lawson undertook to do so but later expressed a preference that all case management issues be dealt with at a future preliminary hearing on case management. Given the potential significance of the matter, it is considered preferable that the position is set out at an early stage. This is addressed in a separate case management order. Paragraph 13 (Argument re Regulation 26 of the 2018 Regulations)[56]Further, in relation to paragraph 13, Mr Moore made submissions which were not foreshadowed in his written Grounds of Application based on the wording of Regulation 26 of the 2018 Regulations. Regulation 26 provides that an employed seafarer may present a complaint to a Tribunal that his employer(a) has refused to permit the exercise of any right … under Regulation 15 (1)(a) or (b) (entitlement to annual leave, etc.); or(b) has failed to pay the seafarer the whole or any part of any amount due to the seafarer under Reg 15 (1)(a) or (b). Submissions on Para 13 (Regulation 26 Argument)[57]Mr Moore argues that there is no averment that the claimant at any point requested and was refused the opportunity to take leave nor that he asserted at the time (or within 3 months of 22 January 2019) that he was not paid or underpaid for leave taken. He says there is no reasonable prospect of the claim under the ‘old contract’ succeeding. He acknowledged that the WTR have been given a purposive interpretation where an individual is sick and precluded from taking leave or debarred from taking leave during the leave year, but, he says, neither of these scenarios applies here.[58]Mr Lawson accepts as a matter of fact that the claimant did not ask to take the leave or ask for payment for it at the material time. He submits that this would is not an impediment under the 2018 Regulations.[59]As Mr Moore acknowledged, Regulation 30(1) of the WTR is in similar terms to Regulation 26(1) of the 2018 Regulations. It too envisages complaints based on employer’s refusal to permit the exercise of the rights in Regulation 13(1) (entitlement to leave). As he also acknowledged, Regulation 30(1) of WTR has been interpreted with a degree of flexibility including, for example in relation to employees who are on long term sick leave.[60]The claimant had not had prior notice of this particular ground of strike out. The caselaw of the ECJ on the interpretation of the equivalent provision in the WTR was not cited and the Tribunal did not hear detailed argument about its applicability and effect beyond Mr Moore’s denial of its relevance to the facts here. The Tribunal did not consider, based on the material and submissions before it, that it was able to determine that the claimant has little or no prospects of arguing successfully that Regulation 26 should be interpreted as permitting his complaints in circumstances where Mr Lawson had not had an opportunity of considering in any detail the body of ECJ jurisprudence on the equivalent WTR provision. Paragraph 14 of the Statement of Claim –reliance on Reg 16 of the 2018 Regs if Reg 15 is inapplicable[61]Mr Moore argues that paragraph 14 of the claimant’s Statement of Claim Esto the respondent did not breach Regulation 15 of the 2018 Regulations, it breached Regulation 16 of those Regulations by failing to ensure that the claimant was given paid annual leave in accordance with Regulation 2.4 of the Maritime Labour Convention. Submission on Para 14 (Regulation 16’s applicability)[62]Mr Moore says Regulation 16 has no application. By virtue of Regulation 3(2)(e) of the 2018 Regulations, Regulation 16 only applies to MLC ships which the Lesley M is not. MLC ships are defined in Regulation 2 as follows: A sea-going ship which is not a United Kingdom ship if –(a) The Maritime Labour Convention has come into force for the State whose flag the ship is entitled to fly; and(b) The ship carried – (i) a maritime Labour Certificate to which a Declaration of Maritime Labour Compliance is attached; or (ii) an interim Maritime Labour Certificate.[63]Mr Lawson explained that the claimant’s primary case is that Regulation 15 applies rather than Regulation 16. Regulation 16 is pleaded only as an alternative position if for some unforeseen reason it is found that Regulation 15 is inapplicable. He observed that the respondent had not confirmed in their statement of grounds whether the conditions observed in subparagraphs (a) and (b) of the definition apply.[64]In the respondent’s (re-amended) Grounds of Resistance, it is expressly acknowledged that the claimant’s entitlement to annual leave is governed by the 2018 regulations, though regulation 15’s application is not expressly accepted.[65]It has been found as a fact by Employment Judge Bradley that the Lesley M is registered in the UK, and the claimant is not understood to dispute this.[66]The Tribunal considers that the definition leaves little scope for argument that an MLC ship can in any circumstances be a United Kingdom ship. It appears that limbs (a) and (b) will determine whether a ship which is not a United Kingdom ship meets the requirements upon them to be caught by the definition and by Regulation 16. This is not a matter in relation to which there is a core conflict on the facts. Though the Tribunal does not exclude any reasonable prospect that a future Tribunal could find otherwise, the Tribunal considers there is little reasonable prospect that it will do so.[67]In the circumstances, the Tribunal has discretion to order the claimant to pay a deposit as a condition of continuing to advance the argument in paragraph 14. A deposit order has been issued of even date. Paragraph 15 of the Statement of Claim – Reliance on the WTR if the 2018 Regs don’t engage[68]Mr Moore argues that paragraph 14 of the claimant’s Statement of Claim Esto the 2018 Regulations do not engage, the claimant relies upon the Working Time Regulations 1998 Submissions on para 14 (applicability of the WTR)[69]Mr Moore says the WTR do not apply. Regulation 18(1) of the WTR excludes workers to whom the 2018 Regulations apply. Regulation 3(1) of the 2018 Regulations applies Regulation 15 (on annual leave entitlement) to a ‘seagoing United Kingdom ship wherever it may be’. Lesley M has been found to be a UK registered ship. Mr Moore advised it was sea going, being licensed to operate up to 60 nautical miles from a safe haven (i.e. outside category A, B, C and D waters as specified in the Merchant Shipping Notice 1837 (M)).[70]Mr Moore referred the Tribunal to certain evidential material including the MLC 2006 Small Vessel Document of Compliance for the Lesley M dated 26 June 2018 and the MSN 1837 (M) Amendment 2 Categorisation of Waters dated July 2017. It is not understood that the claimant disputes the evidence or indeed the application of the 2018 Regulations. The Respondent expressly accepts the application of the 2018 Regulations in the Grounds of Resistance.[71]It is fair to acknowledge that the evidence to support the proposition that the Lesley M is(a) a United Kingdom ship; and(b) that it is seagoing for the purposes of the Maritime and Coastguard Agency’s Merchant Shipping Notice on the categorisation of waters is and has been substantially in the domain of the respondent. At the time of drafting the Statement of Claim and indeed the amendment thereof, Mr Lawson may not have been privy to some or all the evidential material to which the Tribunal was referred at the preliminary hearing.[72]Based on a summary assessment of the material put forward by Mr Moore, the Tribunal was not satisfied that it could exclude any reasonable prospect of a Tribunal finding at a full hearing that the Lesley M met the relevant definitions at all material times. It is a complex and densely regulated area. The Tribunal is satisfied, however, on the material before it that there is little reasonable prospect that it will be found at a final hearing that the Lesley M was not a sea-going ship as defined.[73]In the circumstances, the Tribunal has discretion to determine whether to order the claimant to pay a deposit as a condition of continuing to advance the argument in paragraph 15. A deposit order has been issued of even date. Paragraph 16 - entitlement to 30 days’ leave based on ‘normal / average earnings’[74]Mr Moore argues that paragraph 16 of the claimant’s Statement of Claim Further and separately, clause 16 of the European Council Directive 1996/63/EC of 21 June 1999 concerning the Agreement on the organization of working time for seafarers states: “Every seafarer shall be entitled to paid annual leave of at least 4 weeks, or a proportion thereof for periods of employment of less than one year, in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and or practice. The minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated”. The provision largely replicates the provisions of the Working Time Directive. It is averred that the claimant was entitled to be paid for four weeks of his annual leave entitlement on the basis of his normal / average earnings. During periods of working time the claimant normally received additional payments in respect of overtime and weekend work. The claimant did not receive a payment for four weeks of his annual leave entitlement which had regard to these additional payments. The claimant has sustained a series of unlawful deductions from wages in terms of section 13 of the Employment Rights Act 1996.[75]The claimant was permitted to amend this paragraph during the preliminary hearing to replace the reference to “four weeks” in the last two appearances of that phrase in paragraph 16 with the words “thirty days”. Submissions on Para 16 (30 days at ‘normal / average earnings’)[76]Mr Moore’s first ground of objection to this paragraph by Mr Moore is that Directive 1999/63/EC is not directly enforceable by the claimant. Mr Lawson clarified that the claimant does not assert he can directly enforce the Directive against the respondent. Instead, he argues that the Tribunal requires to interpret the 2018 Regulations in a way that renders it compatible with the Directive. He says the principles of the ECJ in Robinson Steele and other caselaw interpreting the WTD and WTR are applicable.[77]With regard to the jurisdiction under Part II of ERA (dealing with wages and unauthorised deductions), Mr Moore relied upon his earlier submissions in relation to the effect of section 199(1) (a) of ERA, considered above. He also relied upon earlier arguments that the claims are precluded by the doctrine of res judicata and / or Regulation 18. He similarly took the time bar point also advanced in relation to paragraph 12, predicated on the finding contended for that the statutory claim for the period from and after 23 January 2020 is incompetent.[78]Further and separately, Mr Moore argues that insofar as a claim for the period from 23 January 2021 to the EDT is concerned, that claim too is out of time. This was premised on the assertion that any leave entitlement under the Directive (i.e. to the first 30 days) would be taken before any ‘additional’ entitlement which did not derive from the Directive but from UK ‘gold-plating’. According to Mr Moore, the Directive entitlement accrued in the first 269 calendar days of the leave year. On that basis, given the claimant’s particular pattern of Time Off and Time On, any relevant deduction would have been made in the claimant’s pay on 31 October 2019. The three-month limitation period runs from that date, in his submission.[79]Mr Lawson observed that Mr Moore had offered no authority for the assertion that the EU derived ‘basic’ leave entitlement accrues first in the leave year. He submits no binding authority exists for this proposition.[80]It was acknowledged by parties that the issue has arisen in the context of the WTR and WTD and that the position is not settled. Bear Scotland v Fulton [2015] IRLR 15 Langstaff LJ gave obiter comments relevant to the issue, but the issue has not been the subject of a definitive ruling at this time.[81]Mr Lawson in any event relied upon a point of contrast between the 2018 Regulations and the WTR. Whereas the WTD refers to paid annual leave of “at least four weeks”, Council Directive 2009/13/EC refers to a “minimum of 2.5 calendar days per month of employment”. This phrasing, in his submission, militates against Mr Moore’s proposition that the ‘basic 30 days’ leave accrues first, before the additional 8 days’ ‘gold plated’ leave.[82]The respondent’s strike out grounds based on the effect of Regulation / res judicata and time bar on the premise that the statutory claim from and after 23 January is incompetent have been considered. So too has the argument based on section 199(1) of ERA. It has been found that the claimant does not have little or no prospect of succeeding in his contrary arguments on these issues.[83]In relation to the time bar argument based on the asserted ‘basic leave first’ model, the Tribunal is not satisfied that the claimant has little or no reasonable prospect of persuading a Tribunal at a final hearing that the approach is flawed for the reasons given by Mr Lawson in his submissions. The matter has not been definitively determined in the working time context and there are material differences in the phrasing of the source Directives. . 15 25 20 10 Gareloch Support Services (Plant) Limited The Judgement of the Tribunal is that:- Mr J Anderson Final Hearing Held by CVP on Monday and Tuesday 8 and 9 November 4. The claim relying on the other bases does not succeed and is dismissed. 3. The claim for "additional 2. The claim under the Working Time Regulations 1998 is struck out by reason 1 . The claim under Regulation 1 6 of the Merchant Shipping (Maritime Labour succeeds. of the claimant’s failure to pay the deposit ordered on 15 September 2021 . claimant’s failure to pay the deposit ordered on 1 5 September 2021 . Convention) (Hours of Work) Regulations 201 8 is struck out by reason of the
conclusions
[85]84. 10 15 20 25 5 30 complaints Act 1996 on the grounds Work) Regulations 26(2)(b) of the Merchant Issue 10 - If so, should the Tribunal exercise its discretion under Regulation86. March 2019. of time off after 23 January. That period (page 151) was 21 February to 19 employment was governed by the SEA. That leave was used in the first period a right to paid leave in this period, it “rolled" into the period in which his was off in the period 1 to 22 January. In my view even if the claimant accrued note from page 151 (the record of work and leave for 2019) that the claimant is not time barred based on the respondent’s “evenly through the Leave Year.” In my view, any claim for this 22 day period based entitlement. The claimant’s right to paid leave is based on accruing it (see Grounds of Resistance page 34). In my view, paid leave is a service- accrues evenly through the year and is taken automatically any service-based service; “Service from 25/01/2011 January. Separately, clause 3 of the SEA makes express reference does not show any payment in respect of accrued and untaken holidays to 22 but it did not do so (see payslip for January 2019 page 159). That payslip says that the 2.3 days should have been paid in lieu with January 201 9 salary which brought the 201 1 contract to an end. On its own case, the respondent the Seafarer and the Employer'’, there was no dismissal by the respondent contract. It replaces all previous contractual arrangements 10 of the SEA “This SEA is a new contract, not a variation of an existing I do not accept the respondent’s primary submission. While it relies on clause conciliation began in time and thus the claim is not time barred. answer to issue have been unlawful deductions they form part of a series (irrespective of the claim is time-barred are not clear” But he goes on to argue that if there to have been brought within the relevant period. (V) 2018 and under section 23(4) of the Employment 13) which entitlements” On the respondent’s Shipping (Maritime that it was not reasonably series continued under previous contracts counts towards Labour Convention) primary argument. However, I to a point whereby practicable case annual (if any) between during Time Off for the Rights to prior leave of the early claimant can no longer rely on Part II of the 1996 Act, and in particular its reference (in section 23(3 )(a)) to “a series of deductions" ; any claim in this the tribunal must not consider such a complaint unless it is presented “before provision); in a claim for a failure to pay a seafarer the whole or any part of as that concept is discussed in Smith v Pimlico Plumbers Limited applies only when leave is not taken (as entitlement to been made to the claimant in accordance with any statutory obligation on the reference was made to In Ekwelem the claim (under Part II of the 1996 Act) related to a series of In my view, it does not assist the claimant here. The claim in this period is governed only by A summary of the respondent’s position is; after the SEA was entered into the should have been made opposed to leave taken where the claimant is unpaid or paid less than their my earlier judgment contained no finding that payment for annual leave had respondent; there was a failure to pay holiday pay in terms of the 2002 and were found to have been lawful, that could not “disqualify the claimant from that “The “complaint period” is the period of three months beginning with the date on which it is alleged that the exercise of the right should have been leave Issue 11 - Is any claim in respect of the period 23 January 2019 to 18 December tribunal for this period is brought under regulation 26 of the 2018 Regulations; extension is the period of three months paid annual leave applies irrespective of any agreement between the parties; deductions, running up to a dismissal. It decided that even if later deductions the 2018 Regulations. It seems to me that Regulation 26(6) is key. It provides Standing my view on question 9, I do not require to exercise discretion. permitted (or in the case of a period of annual leave or additional the end of the complaint period' (or relying on the discretionary Ekwelem v Excel Passenger Service Ltd UKEAT/0438/12/GE. entitlement); the claimant argued that; the statutory/regulatory of earlier deductions. 2018 Regulations and the Seafarers Directive; and with the date on which the payment (regulation 26(6) read short); “reinterpretation" period’ relying upon the alleged unlawfulness any amount due, the "complaint 2019 time-barred? beginning87.88.89. 5 10 15 25 3090. complaints Act 1996 on the grounds Work) Regulations 26(2)(b) of the Merchant Issue 12; If so, should the Tribunal exercise its discretion under Regulation a claim for holiday pay until after his contract ended. The difficulty is that on the claimant believed that he did not get holiday pay and he was not aware of ignorance of his right to claim for holiday pay was reasonable. On my findings, the question was brought when it was is clear and understandable. reasonable. complaint regarded as impediments ignorance of, or mistaken belief with regard to, essential matters can only be decision of the Court of Appeal in Wall's Meat Co Ltd v Khan [1979] ICR 52 mistake or ignorance was reasonable. As he recognised by reference to the tribunal within the relevant primary period and (ii) feasible for the litigant to have presented the complaint to the employment the evidence about the claimant’s ignorance In summary he argues that the relevant questions are (i) whether, in light of to the period. The claimant relies on what is said as his answer to issue 10. I agree with the respondent that section 23(4) of the 1 996 Act does not apply in the timeframe covered by this issue they are out of time. in time (as per early conciliation). paid his normal remuneration, paid for that period on 31 December 2019. Insofar as the claimant was not might be due to reflect "normal remuneration" (see issue 6) the claimant was complaint period. The last of them ended on 18 December 2019. Bar what each period onshore made." On my analysis of leave accruing, then being used as 2019 passed, permitted to begin) or, as the case may be, the payment should have been extending over more than one day, the date on which it should have been to have been brought within the relevant period. (V) within He goes on to say that his own explanation as to why the claim is whether 2018 and under section 23(4) of the Employment the Shipping (Maritime period was a period of leave and a distinct and discrete that it was not reasonably that explanation making it not reasonably practicable the claim for that single distinct period is made of three For all earlier discrete “complaint periods" months, Labour Convention) supports or mistake, was it reasonably if they a conclusion whether the litigant's That may be so, but practicable are themselves to present a that his for the Rights paragraph 26) all annual leave taken by the claimant was taken during periods when he was not rostered to be on a in advance (see for example his requests for holidays in March and April 2018 pages 1 12 incorrect. In my view the claimant’s belief that he did not get holiday pay is not that on his own case the claimant took leave when not on board, he knew by reference to the various payslips for those periods that he had been paid. He for him to believe that he did not get holiday pay at all and thus it was reasonable for him to be unaware of the right of claim until after December 2019. If as I have found he knew that he one. I do not exercise my discretion so as to extend time because in my view given my conclusion on issue 6, the claim succeeds (subject to a question of 23 January 2019) it is necessary to contracts. The vessel. On his own case, he thus took annual leave. Further, his evidence to 114). His payslips for that period show that he got paid while on holiday. his employment he received no payment in respect of annual leave is patently a reasonable one. It is clear that in periods when he was on holiday, he knew he had been paid. Looking specifically at the period in question and noting on the various issues. On my analysis, bases 1 to 5 do not succeed. However, time bar) in that the claimant was not paid his full pay reflecting the additional basis (which respondent accepts that section 23(3) of the 1996 Act is relevant in relation to pay paid up to and including the January 2019 salary payment (31 January His averment (statement of claim paragraph 2, on page 29) that throughout had been paid for periods of leave (holiday) then his belief is not a reasonable It is necessary to consider briefly the bases of claim in light of my conclusions (paragraph was that he took various holidays having notified the respondent submission Applying my conclusion on issue 12 to the “additional payment' two by the 2019, see page 159). I agree with the respondent’s the claimant has not discharged the burden on him. covered offers to prove that it was reasonable the claimant’s own case (submission extends back to the time before the periods between Summary and conclusion distinguish payments. 91 . 92. 5 10 15 25 50 25 20 15 10 remedy hearing. management In stood on 8 November 2021 . The judgment reflects my conclusions on the issues and on the claims as they December 2019. payments” In my view, the same approach up to 31 January 2019 to have been brought in time. not reasonably practicable for a claim for additional payments for the period have reflected those additional elements. There is no basis to say that it was reasonable for him to be unaware that any pay for his leave periods ought to slips said at the time. I have no evidence to support a conclusion that it was payment of each for "On leave”. The claimant was aware of what those wage As I found, The wage slips dated 3 and 10 August 2018 (page 165) shows a state of knowledge about any “additional pay' that may have been due to him. was on holiday, he knew he had been paid. There was no evidence any holiday pay is not a reasonable evidence. As I have decided above, the claimant’s belief that he did not get conscious been brought within the relevant period? In my view the answer is “no”. grounds that it was not reasonably practicable for those complaints question then becomes; should the Tribunal exercise its discretion are now out of time. This includes claims for any additional payment 4d) that any claims for underpayments the circumstances in the remaining that the particular question was not addressed in the claimant’s Preliminary 18 March 202208 March 2022 R Bradley a short Hearing period in 2019 up to but excluding should be fixed to discuss issues for a (1 is relevant one. It is clear that in periods when he hour) whilst the 201 1 contract was in force telephone to any claim for “additional conference that for to have on his on the case I am The
Introduction
[1]This case concerns a claim for holiday pay brought by a seafarer (a deckhand) employed by the respondent on the vessel/workboat the Lesley M. The claim was for an entitlement to holiday pay spanning the period of his employment, almost nine years. It was first made after his contract of employment ended on 18 December 2019.[2]On 8 and 9 November 2021 a final hearing took place to consider the extant bases on which the claim was made. By judgement and reasons dated 8 March 2022, I decided that in one respect the claim succeeded. In those reasons, I directed that a case management preliminary hearing should be fixed. It duly took place on 19 May 2022.[3]On 23 May, EJ Doherty sent her Note from that hearing to the parties. It recorded that: i. The aspect of the claim in respect of which remedy required to be determined was confined to the claimant’s entitlement to additional payment for “the month of December 2019” ii. Both parties agreed that; the issues for this hearing would be identified by the exchange of a schedule of loss and a counter schedule; and that no further documents beyond those lodged for the November 2021 hearing were required iii. The claimant was to produce his schedule by 9 June; the counter by 30 June iv. The schedule was to specify; how much was claimed; how it was calculated; and the specification was “to include the pay period which had been taken into account to calculate the additional payments said to be due, and why that period had been taken into account” v. The counter was to indicate the respondent’s basis on which it did not accept the claimant’s calculations.[4]On 5 July the claimant’s schedule was produced. On 27 July the counter was lodged (called Response).[5]For this hearing a separate claimant’s bundle (of 60 pages) was produced. It reproduced; the judgment and reasons from March 2022; EJ Doherty’s Note from 19 May; the agreed facts from the hearing in November 2021; the schedule of loss (page 48); and theResponse (pages 49-53). It included an exchange of emails between the solicitors in August 2022; and a Table showing earnings from payslips (page 60).[6]On 23 August Mr Lawson lodged a written submission. The issue for this hearing[7]The schedule and its response did not clearly identify the issues for this hearing. In his written submission, Mr Lawson proposed the following questions. Mr Moore did not suggest that they were not relevant to the issue for me. The questions are:- i. What was the claimant’s paid annual leave entitlement as at December 2019 and when was this annual leave entitlement exercised by the claimant, if at all? ii. What was ‘normal remuneration’ for the claimant in respect of that annual leave entitlement? iii. If the claimant received less than his normal remuneration for this annual leave, what award, if any, should be made to the claimant?
Evidence
[8]There was no oral evidence. The claimant’s bundle included previously agreed facts (pages 42 to 47). It also included a table (page 60) which was said to summarise the claimant’s earnings information, that information (wage slips) having been included in the bundle for the November 2021 hearing (pages 154-159 in that bundle). I say more about this information later. The findings below are limited so as to be relevant to the issues. Some are repeated from the judgment and reasons of 8 March. Findings in fact[9]In the period between 31 January and 31 December 2019 the claimant was paid a total gross basic pay of £25,743.31. Over the same period he was paid (gross); £2,299.50 for Saturdays; £2,320.50 for Sundays; £546.00 for “Over 12 hours”; £451.50 for “owed from last pay”; £756.00 “owed Saturday”; and £756.00 “owed Sunday” (all shown on page 60). The first payment for an “owed Saturday” (£126.00, paid on 31 January 2019) was “owed” from the previous month and thus the previous calendar year (December 2018). The first payment for an “owed Sunday” (also £126.00, and also paid on 31 January 2019) was, again, due from December 2018.[10]The “additional payments” received by the claimant in the period between 31 January and 31 December 2019 therefore totalled £6,877.50 and not £7129.50 as shown on page 60.[11]On 20 November 2019, whilst on Time Off, the Claimant tendered his resignation. The Claimant was on Time Off continuously for 35 days and on continuous pay from his last day of work on board ship (13 November 2019) up until the effective date of termination of employment (see Reasons, March 2022, paragraphs 51 and 53, pages 16 and 17). The only reason why the claimant did not re-join his ship on 11 December was because the respondent decided it was not worth him joining for just a week, with the associated travel cost, administrative inconvenience, etc. It was simpler to leave him at home on full pay until his notice expired. The respondent therefore waived its contractual entitlement to require the claimant to provide his labour for that week in return for his salary.[12]On 17 March 2020 ACAS received notification of early conciliation. That date is three months (less one day) from the claimant’s effective date of termination. The certificate was issued on 1 April 2020. Comment on the evidence[13]The information within page 60 was agreed but subject to what is set out at paragraphs 9 and 10 above. Mr Moore explained the position with which Mr Lawson agreed. Submissions[14]Mr Lawson spoke to and supplemented his written submission. Mr Moore spoke to his Response and also supplemented it orally. I mean no disservice to either party by recording a brief summary of their respective arguments here. I say more about each below.[15]For the claimant it was said that; his entitlement to paid annual leave was in total 38 days, which accrued evenly throughout the leave year; for the period between 13 November and 18 December 2019 the claimant’s total paid annual leave entitlement which accrued to him was 3.64 days; he should have been paid (in lieu) of those days in his December 2019 pay; which is the answer to question 1; under reference to the total additional payments shown on page 60 (£7129.50) the average pay per week in the period shown on it (and thus the appropriate amount per week for this calculation) is £167.01; assuming a 5 day working week his claim per day is thus £33.40. For those 3.64 days the sum claimed is (3.64 X £33.40) = £121.58. In addition, and under reference to the claimant’s basic pay of £2220.83 per month calculated thus (£2220.83 X 12 (months) / 365 (days)) a daily loss of £73.01 is sought. For the same 3.64 days (3.64 X £73.01) the loss claimed is £265.76. The schedule of loss thus specifies the award claimed is the total of those two sums, £387.34. I note that these are gross sums.[16]The respondent’s written position was that; in the first place, no sum is due because(i) the contract does not specifically address the scenario(ii) the claimant’s construction results in an “absurd and unconscionable” outcome the answer to which is the introduction of an implied term (Southern Foundries (1926) Ltd v Shirlaw, noted below); alternatively the principle of the claimant’s methodology is fundamentally wrong; alternatively yet still even if that methodology is correct his formula is wrong; and finally even if by any method a sum would otherwise be due, the claimant has been overpaid in 2019 by a sum greater than any sum due to him, and is thus not due any further sum. In his oral submission, Mr Moore suggested an argument on time bar. I have set out my views on it at paragraph 24 below.
Law
[17]In its Response the respondent referred to the decision of the Court of Appeal in Southern Foundries (1926) Ltd v Shirlaw [1939] 2 K.B. 206.[18]In its written submission, the claimant referred to Deeley v British Rail Engineering [1980] IRLR 147 (also in the Court of Appeal); the decision of the ECJ in British Airways v Williams [2011] IRLR 948; Dudley Metropolitan Borough Council v Willetts [2017] IRLR 870, [2018] ICR 31 in the EAT; Yarrow v Edwards Chartered Accountants EAT 0116/07; and Leisure Leagues UK Ltd v Maconnachie 2002 IRLR 600 (EAT). To the extent necessary I say something about them below. Discussion and decision[19]In my view, it is important to recall that on the facts, the key issue is whether (in circumstances where the claimant gave notice while on Time Off and was then not required to return to work in his notice period) he accrued an entitlement to paid leave in respect of which he was neither(i) able to take it nor(ii) be paid in lieu of it.[20]It is convenient to begin by considering the respondent’s primary argument, that contractually the claimant had taken all paid leave due to him and was therefore due nothing further. The respondent says “the contract did not specifically address this scenario” and thus a term should be implied, under reference to Shirlaw. Two points occur. First, and as Mr Lawson pointed out, clause 26.6 of the contract’s standard terms provides, “On termination of employment, any Annual Leave which has accrued due but not been taken under the preceding provisions of this clause will be compensated in accordance with Flag State.” In principle, therefore, it appears that the contract expressly provides for this particular situation. That being so, there is no need to imply another term. Second, on the respondent’s case had the claimant “rejoined on 11 December, then under clause 26.5.2 of his SEA he would immediately prior to joining have taken in advance all the annual leave which would accrue due to him up to the EDT”. It was therefore within the respondent’s control as to whether the claimant would have taken all accruing annual leave. In my view their decision to “leave him at home on full pay until his notice expired” does not produce an absurd and unconscionable result. In short, it is a result which the respondent could have avoided if it had chosen to do so. Accordingly, in my view the answer to question 1 is “yes.”[21]It is agreed that the claimant’s entitlement to paid annual leave in each year is 38 days. In both his schedule of loss and his written submission, the claimant sets out his rationale for concluding that his entitlement for the period in question is 3.64 days. The respondent appears to agree that if I did not accept its primary argument, 3.64 days is the relevant period for the claim (paragraph 2 of the Response, page 50). But Mr Moore argued that there is a fundamental error in the claimant’s approach thereafter. The error, he says, is in using the period of the Leave Year to arrive at an average for the additional payments. He says the error occurs for two reasons. First, it does not fairly and effectively recognise “further payments”. Second it is inordinately complex. I deal with each reason in turn. On the question of fairness and effectiveness, the respondent says(i) further payments which arise early in the Leave Year will repeatedly feature in the calculation and hence an employee such as the claimant would be over-compensated and(ii) further payments which arise later in the Leave Year may not feature and be compensated for at all and provides an illustration. In my view it is important to focus on the particular facts in this case. Of relevance are the following; during a period of Time Off the claimant gave notice to end the contract; and the respondent chose not to have him “work his notice”. The possibility that in other hypothetical circumstances the result may not be fair or effective is not in itself a reason to decline to use the claimant’s approach. Indeed the illustration provided was of an employee whose employment was continuing. It is thus not a relevant comparison. Separately, I do not accept that on the facts in this case the calculation is complex. The claimant has provided a relatively simple method taking account of earnings in a discrete period. Further, I accept (as argued by the claimant under reference to the case of Williams) that the assessment to determine “normal remuneration” must “be carried out on the basis of an average over a reference period which is judged to be representative”. In my view the period used here is representative.[22]Separately the respondent says that it is wrong to assume that the claimant worked a 5 day week. Mr Moore says “a seafarer’s paid annual leave entitlement is calculated on a seven day week”. That assertion was not supported by a reference to the contract. In any event, the question here is about the claimant’s entitlement to be paid in lieu of accrued but untaken holiday at the end of the contract. The claimant’s answer (under reference to Yarrow and Maconnachie) is to say that daily pay must be computed by reference to the working year rather than the calendar year and his rationale for the use of five days is that it is the number of working days in a normal working week for a full-time employee. In Maconnachie the claimant was employed on the basis of an annual salary. Following the termination of his employment, he applied to an employment tribunal claiming arrears of holiday pay. The tribunal found that he was owed eight days' holiday and was therefore entitled to eight days' pay in lieu. It calculated the appropriate daily rate of pay by dividing the annual salary by the number of working days in the year, in his case 233. The employers appealed, arguing that the daily rate of pay should be calculated on the basis of the number of calendar days in the year, not working days. The EAT had a preliminary hearing to determine whether the appeal raised an arguable point of law. It held that; the employment tribunal had correctly calculated the daily rate by dividing his annual salary by the number of working days in the year rather than calendar days; and for the purposes of calculating payment for accrued holiday entitlement, the concept of day-to-day accrual must be by reference to the number of working days in the year and not the number of calendar days in the year. There does not appear to be a dispute between the parties in this case that the correct method of calculating the daily rate is by dividing annual salary by the number of working days. The issue is, however, what is the correct number of working days? I prefer the claimant’s position. I note that the contract expressly provides (page 118 of the earlier bundle) that the claimant’s “annual days of work” are said to be “182.5 days per year.” Were that number of days to be used as the denominator, the daily rate would increase. I note that the total of additional payments beyond basic pay in that period is not £7129.50 but is instead £6877.50 when the January 2019 additional payments (which total £252.00) are left out of account.[23]Further, the respondent says, even if by any method a sum would otherwise be due to the claimant, he has been overpaid in 2019 by a sum greater than that sum and is thus not due any further sum. The premise on which this argument rests is that “the issue for the Employment Tribunal is whether the Claimant was underpaid in December 2019” (see paragraph 3 of the Response, page 53). I do not agree that this is an accurate reflection of the issue for me. The respondent’s contention rests on there being a requirement to carry out a reckoning exercise taking account of payments made to the claimant throughout that calendar year. I do not agree. The focus of the issue is on what was accrued and untaken at the end of the contract. The claimant addressed the issue in paragraph 47 of his submission by reference to Regulation 26 of the Merchant Shipping (Maritime Labour Convention) (Hours of Work) Regulations 2018. Regulation 26(5) provides, “Where on complaint under paragraph (1)(b) an employment tribunal finds that an employer has failed to pay a seafarer in accordance with regulation 15(1)(a) or (b), it must order the employer to pay the seafarer the amount which it finds to be due to the seafarer.” Regulation 26(1)(b) provides, “An employed seafarer may present a complaint to an employment tribunal that the seafarer's employer has failed to pay the seafarer the whole or any part of any amount due to the seafarer under regulation 15(1)(a) or (b).” Regulation 15(1) provides for an entitlement to paid annual leave which totals 38 days per year. Regulation 15(2)(b) provides that leave “may not be replaced by payment in lieu, except where the seafarer's employment is terminated.” In my view the regulations provide a separate negative reply to the respondent’s argument.[24]Finally, the respondent made an oral argument on time bar. As I understood it, it proceeded this way; the claimant’s case based on the separate “additional payments” is that on each occasion he received such a payment there should be a supplementary payment alongside it to represent leave; but there was no additional payment in December (as per page 60, and as shown on the corresponding wage slip, page 154 of the November 2021 bundle); there was thus no “trigger” (my word) in December for the supplementary payment; and therefore given that early conciliation began on 17 March 2020, the claim for this separate element is out of time. For the claimant, Mr Lawson referred to Williams and posed the question, “does a zero payment in December reflect “normal payment” compared to every other month?” and suggests that the answer is “no”. In my view it is important to recall that; the claim in this case is for a sum to represent accrued and untaken holiday derived from the period 13 November to 18 December 2019; during that period the claimant gave notice to end the contract; and the respondent decided that it did not require him to work in the notice period. In Williams at paragraph 22 it was said that; “workers must receive their normal remuneration” and quoting from earlier decisions, “… it is for the national court to assess the intrinsic link between the various components which make up the total remuneration of the worker and the performance of the tasks which he is required to carry out under his contract of employment. That assessment must be carried out on the basis of an average over a reference period which is judged to be representative and in the light of the principle established by the case law cited above, according to which [the Working Time Directive] treats entitlement to annual leave and to a payment on that account as being two aspects of a single right.'' I have accepted that the period between 31 January and 31 December 2019 is a representative reference period. It is representative so as to compensate the claimant for a loss which he sustained at the end of December 2019 when he was entitled to be paid in full for the loss of leave days. The claim is not out of time.[25]In answer to question 2, in my view the normal remuneration for the claimant in respect of his annual leave entitlement in December 2019 was £383.04 made up of £117.28 representing additional payments and £265.76 representing basic pay. I note that in its Response, the respondent does not dispute (all other things being equal) that £265.76 is a relevant claim for this element.[26]On question 3, the claimant received less than his normal remuneration for the period of annual leave in question. The award is set out below, and in the judgment.
Summary
[27]In my view the gross sum due is £383.04, being the addition of £117.28 (not £121.58) + £265.76. The judgement reflects that the net version of this should be paid by the respondent.
Summary
[1]The claimant’s application for expenses dated 18 November 2022 is refused.[2]The respondent’s application for expenses dated 23 November 2022 is refused.
Introduction
[1]This case concerned a claim for holiday pay brought by a seafarer employed by the respondent on the vessel/workboat the Lesley M. The claim was for an entitlement to holiday pay spanning the period of his employment, almost nine years. It was first made after his contract of employment ended on 18 December 2019.[2]On 30 April 2020 the ET1 was presented. In the attached statement the claimant made various alternative bases for the claim. In a judgment and reasons copied to parties on 18 March 2022 the claimant succeeded in one basis of claim, for “December 2019”. Following a remedy hearing on 23 August 2022 the judgment of the tribunal was to order payment of the net version of £383.04. The claimant’s schedule of loss sought £387.34. Between March and August 2022 the claims were the subject of various management orders. In that period, the respondent sought to strike out (which failing deposit orders) all of the extant claims. I summarised those claims in the reasons of 18 March 2022.[3]In a 6 page document dated 18 November 2022 the claimant sought an order for payment of expenses in the sum of £2250 plus VAT or alternatively taxed by the auditor of the sheriff court (in terms of Rule 78(1)(b)). The document was accompanied by emails between the parties’ solicitors in the period 16 to 22 August. By email dated 23 November the application was opposed.[4]By email dated 21 November 2022 the respondent sought an order for payment of expenses (either) a specified part of the expenses relating to such parts of the claim as the tribunal found had no reasonable prospect of success and/or as it was unreasonable to pursue with the amount paid to be determined be detailed assessment in accordance with Rule 78(1)(b); (or) for the specified amount of £20,000 of such lesser sum as the tribunal considered appropriate. On 25 November, the claimant set out his basis for opposing the application.[5]I directed that if either party wished an oral hearing on their claims they should make written application. Neither did. I decided the issues on the basis of the paper submissions. The issues The issues for me were:-[1]Was the respondent’s rejection of a settlement offer of £250 unreasonable conduct?[2]Did the respondent’s resistance at the stage of the remedy hearing have no reasonable prospect of success?[3]In either event is it appropriate to make an award of expenses in favour of the claimant?[4]If so, should that award be as sought by the claimant?[5]Did the claimant’s claim of breach of contract have no reasonable prospect of success?
The issues
[6]Alternatively, were its prospects of success so slim that it was unreasonable for the Claimant to pursue it?[7]Separately, was the claimant’s failure to(a) review each and every other extant claim on its merits;(b) on each of them individually take an objective view of its chances of success; and(c) then withdraw all or any of them unreasonable? Claimant’s application 7. The claimant set out his application under 6 headings. I mean no disservice in recording a brief summary of the bases on which the application is made.[8]His first basis was that the respondent’s rejection of a settlement proposal of £250 which was in an email from Mr Lawson dated 16 August (therefore a week before the remedy hearing) was unreasonable. He referred to the decision of the EAT in the case of Kopel v Safeway Stores plc [2003] IRLR 753. He said that; the sum awarded was 98% of what was sought in his schedule; it was 50% higher than the sum he was prepared to settle for; he was willing to consider an offer lower than £250; and he had set out in emails between 16 and 19 August in detail an argument that the respondent’s position was not well-founded.[9]His second basis was that the response had no reasonable prospect of success and did so relying on what he had said in his two August emails noted above. Put shortly, he said that unless the tribunal accepted one particular argument at the remedy hearing an award was inevitable.[10]He then set out various arguments as to the appropriateness of the order. He sought an order for the period from 16 to 23 August.[11]In reply the respondent enumerated 12 points. I have considered them and to the extent relevant have taken them into account. Those of particular relevance are noted below. Respondent’s application[12]The email of 21 November made two distinct arguments. Each focussed on different bases of claim. The claimant provided a 3 page opposition.
Law
[14]The parties referred to Rules 76, 77 and 78 of the Employment Tribunal Rules of Procedure 2013. The relevant abbreviated version of Rule 76(1) for present purposes is:- “(1) A Tribunal may make a costs order …… and shall consider whether to do so, where it considers that—(a) a party (or that party's representative) has acted ….. 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.”[15]To the extent relevant I have taken account of and referred to below the authorities cited on both sides. Discussion and decision; the claimant’s application[16]The claimant relies on Kopel as authority for the proposition that where a party makes an offer to settle a case, which is refused by the other side, expenses can be awarded if the tribunal considers that the party refusing the offer has thereby acted unreasonably. The respondent does not appear to take issue with either the proposition or that Kopel vouches it. In my view that is not a controversial point. The relevant proposition which can be taken from Kopel is that it does not follow that a failure by one party to “beat” a settlement offer should, by itself, lead to an order for costs being made. A tribunal must first conclude that the conduct of the other party in rejecting the offer was unreasonable before the rejection becomes a relevant factor in the exercise of its discretion (paragraph 18). I agree in large measure with what is said by the respondent at paragraph 9 of its opposition which I summarise thus; it cannot be correct that a respondent acts unreasonably if it declines a settlement proposal when it believes that no further payment is legally due, but the potential cost of arguing the issue before the Tribunal is more than the sum in dispute. The only caveat I have is that the claimant in this case argues that the respondent’s belief was obviously (my word) ill-founded. Having reconsidered my rationale at paragraphs19 to 25 of the remedy reasons, I do not agree that the respondent’s various arguments were obviously ill-founded. There appeared to me then (and now) that they were at least triable issues. In my view therefore the respondent’s rejection of the settlement offer in this case was not unreasonable.[17]Separately I do not accept the claimant’s contention that the various arguments noted at paragraphs 19 to 25 of my reasons had no reasonable prospect of success. The claimant argued that unless one particular argument relied on by the respondent was successful “there would of necessity be a financial award made to the claimant.” I agree insofar as that argument goes. But a purpose behind the remedy hearing was to determine the amount of that award. Logically, the hearing was necessary at least for that purpose. The vast majority (95%) of what was sought by the claimant as expenses related to preparation for and attendance at the remedy hearing. That expense was necessary for the remedy hearing in any event. Discussion and decision; the respondent’s application[18]It is convenient to decide the respondent’s application by considering the two discrete bases in turn. Each focussed on different elements or grounds on which the claimant maintained his claim.[19]First, so says the respondent, the claim relying on the discrete question of an alleged breach of contract decided in my judgment and reasons issued on 30 March 2021 “never had any reasonable prospect of success. Alternatively, if it is not considered so hopeless as to have no reasonable prospect of success, its prospects of success were so slim that it was unreasonable for the Claimant to pursue it.” There are (obviously) two grounds relied on for expenses. First, I do not agree that the “breach of contract” claim “never” had any reasonable prospect of success. I have re-considered paragraphs 29 to 38 of my reasons in the March 2021 judgment. While the issue to be decided was concise, “whether the respondent was in breach of contract in respect of the claimant’s entitlement to be paid annual leave in the period 23 January 2019 to 18 December 2019”, taking account of the arguments and my record of the decision in March 2021 it cannot be said that this claim never had a reasonable prospect of success. There was reference to a number of authorities from the higher courts, including on the question of the interpretation of contracts. I noted (at paragraph 36) that “it was necessary to refer to three sources to understand the matrix of contractual provisions.” These factors (at least) meant in my view that there was a triable issue. Nor do I agree that its prospects were so slim that it was unreasonable to have pursued it. I rely again on paragraphs 29 to 38 of the March 2021 reasons.[20]The second claim “relates to all the other elements of the Claimant’s claims, other than those for ‘additional payments’ for pay due for December 2019.” In a judgment with reasons copied to parties on 17 September 2021 EJ Murphy refused to strike out “all extant claims.” She made deposit orders in respect of two bases of claim. When the case came back before me at the hearing in November 2021 those two bases were struck out as the deposit orders had not been paid. I recorded then that there remained 6 bases of claim. It will be obvious that the claimant succeeded in only one of them. The respondent’s second claim thus relates to the other 5. It says that after March 2021 the claimant has acted unreasonably in the way that that part of the proceedings was conducted. The respondent’s primary contention is that the claimant’s failure to(a) review each and every other extant claim on its merits;(b) on each of them individually take an objective view of its chances of success; and(c) then withdraw it was unreasonable. The respondent does not say that any of these bases had “no reasonable prospect of success.” In my view a relevant factor in deciding this question is that in September 2021 EJ Murphy decided that 6 bases of claim should not be struck out as having no reasonable prospect of success, nor should deposit orders be made for them. That being so, it is difficult to see how the claimant failed at all in the way relied on by the respondent. The inference is that the “reasonable” step to have taken at (c) was to withdraw all (eight) bases sometime after March 2021 and certainly by the time the strike out applications were made (9 July 2021). The suggestion seems to be that at least by July the claimant should have concluded that none of the eight claims had reasonable prospects of success. But faced with that very question in September, the tribunal did not agree on six of them. In my view the claimant did not “fail” as alleged. Thus his conduct was not unreasonable. The subsidiary argument is that “Should the conclusion of the Tribunal however be that there was unreasonableness in respect of some (but not all) of such contentions advanced, then it is submitted that costs should be awarded in respect of such contentions as were unreasonably advanced.” Two short points occur. First, my conclusion is that there was no “unreasonableness” in respect of any of the claimant’s contentions. Rule 76(1)(a) is thus not met. Strictly, that is an end of the matter. But as an aside, this argument appears to suggest that if I decided that, say two of the claimant’s contentions were “unreasonably advanced”, I should award expenses limited to them. That appears to me to be an artificial and complicated (if not impossible) dissection exercise for which the respondent provided no assistance.