M De Jong v Dine Murrayfield Ltd: 4103849/2023
JUDGMENT
The Judgment of the Tribunal is that the respondent unlawfully withheld wages from the claimant in the sum of £1,783.65. The respondent shall pay the claimant the sum of £1,783.65. ETZ4(WR)REASONS
[1]The claimant submitted a claim to the Tribunal in which he claimed that wages had been unlawfully deducted from his final pay following the termination of his employment with the respondent. He claimed that 1.5 weeks pay together with 1.15 weeks accrued holiday pay had been deducted and that the deduction was unlawful. The respondent submitted a response in which they denied the claim. They accepted that they had deducted the sum of 2.65 weeks pay from the claimant’s final pay but it was their position that they were entitled to do so since this represented an overpayment of pay which he had received. It was their position that in terms of the claimant’s Contract the claimant was required to work 50 hours per week. It was their position that a running total of his hours was kept and showed that as at the date of termination of his Contract he had worked 142 hours less than he should have and therefore “owed” the respondent 142 hours which equated to 2.85 weeks pay. They had deducted this sum from his final pay and written off the .2 weeks pay which they claimed they were still were owed. The matter proceeded to a Hearing. At the Hearing the claimant gave evidence on his own behalf. Evidence was led on behalf of the respondents from Mr Muir and Mr Brennan, their Directors. A joint bundle of productions was lodged. I refer to these below by page number. On the basis of the evidence and the productions I found the following essential factual matters relevant to the claim to be proved or agreed. Findings in Fact[2]The respondents operate a number of hospitality venues. In total they have around 80 employees. One of the venues they operated was known as Dine Murrayfield. The claimant commenced employment with the respondents as Head Chef at Dine Murrayfield. He reported to an Executive Chef and to the respondents’ Directors Mr Muir and Mr Brennan. The claimant met Mr Muir prior to his employment and was told that he would be employed on a salary of £32,00 per annum rising to £35,000 after three months. Following his initial interview the claimant was sent a formal offer of employment. This document was lodged (page 48). The offer of employment was dated 8th July and the claimant commenced work on or about 13th July 2022. It noted the claimant’s agreed starting salary was £32,000 per annum for a probationary period of 3 months and that after the probationary period his annual salary would increase to £35,000 at which time his permanent Contract of Employment would be issued. Clause IV states: “For your salary, you are required to work a 50 hour week which will be paid pro rata in the event of requested days off or being unavailable to work your normal shift pattern due to personal commitments. Any hours worked above the minimum requirement of 50 will be paid at £12.50 per hour”.[3]There were no other provisions in the letter pertaining to pay or hours. In particular there was no clause saying that if the claimant worked less than fifty hours in any week he would “owe” the company these hours and require to make them up.[4]The claimant duly commenced work. All of the respondents’ employees are required to clock in and clock out using a biometric time recording system which uses their fingerprint. In general terms the claimant was responsible for the running of the kitchen and for organising the rotas for himself and the other kitchen workers. Some of the other workers were paid on an hourly basis rather than being salaried. The claimant was aware of this. Their hours were recorded using the same biometric clocking in and clocking out system as the claimant used.[5]On occasions Mr Muir would speak to the claimant once he had produced his rota and say to him that he should give less hours to some of the hourly paid staff.[6]The claimant also had conversations with Mr Brennan about gross profit margins. Generally Mr Brennan was impressed with the claimant’s stock control and control of GP margins. During one of these conversations which took place in or about October 2022 the claimant discussed his hours with Mr Brennan. Mr Brennan told him that the expectation was that he work 45 to 50 hours. Mr Brennan did not indicate to the claimant that there was any issue with his hours up to that point.[7]In actual fact, although this was not known by the claimant at that time the respondents used the biometric clocking in and clocking off data to keep track of the hours worked by salaried staff as well as by their hourly paid staff. What would happen is that the information from the biometric system would be uploaded to the company’s Payroll Department once a fortnight. It would be uploaded on a Sunday night and the payslips would be issued in time for staff to be paid on the Friday morning. Staff were paid fortnightly. All salaried staff would receive a set sum each fortnight by way of salary together with their share of tips. Hourly paid employees would be paid based on the hours they had worked during the previous pay period. In addition to that, however, the respondents’ Payroll Manager kept a note of the running total of hours worked by each salaried employee. An example of this calculation produced after the claimant left was lodged at page 71. During each pay period the Payroll Manager would calculate whether an employee had worked their minimum hours for that week. In the case of the claimant this sum was calculated on the basis that he was required to work 50 hours. If the employee had worked less than 50 hours then he would owe the company the balance. If the employee worked more than 50 hours then any excess would first of all be used in paying back any hours which he owed the company. If he did not owe the company any hours then the employee was entitled to be paid for the additional hours worked at the rate set out in their Contract which in the claimant’s case was initially £12.50 per hour but was later increased to £13.50 per hour. Although management had access to this weekly calculation and the calculation was used by Payroll it was not at any time shared with the claimant or indeed other members of staff.[8]The position of the respondents’ management was that they were usually fairly relaxed about salaried employees who owed hours to the company on the basis that their business had a lot of seasonal peaks and troughs. In the case of the restaurant where the claimant worked there would be periods at Christmas, during the Edinburgh Festival and when large concerts were on at Murrayfield where the restaurant would be extremely busy and open for long hours where it would be very easy for staff to work back any hours owed over a fairly short period of time.[9]On or about 21st December 2022 the claimant was given his permanent Contract of Employment together with a job description. These documents were lodged (pages 49 to 53). He was also given his job description at the same time. (page 54). Section 5 of the contract states: “Your agreed salary is £35,000 per year plus a share of gratuities received from the patrons. For your salary you are required to work a 50 hour week which will be paid pro rata in the event of requested days off or being unavailable to work your normal shift pattern due to personal commitments. Any hours worked above the minimum requirement of 50 will be paid at £12.50 per hour. … 5(b) Time Attendance All salary and hourly paid staff must clock in at the beginning of each shift and clock out at the end of each shift. Any employee working a double shift must also clock in/out for any breaks. Failure to do this may result in an incorrect payment of wages. The company uses biometric technology to record employee timekeeping. The company does not retain an image of your fingerprint instead the biometric matching software extracts and stores a binary algorithm from the scanned fingerprint consisting of a series of zeros and ones. Data stored on the terminal is securely held and encrypted. All data will be deleted when an employee leaves the employment ….. 6 Salaried employees are required to work a minimum of 45-50 hours per week or as required by the company. Hourly paid employees are required to work in accordance to the demands and needs of the business as per rota.”[10]As part of his Contract the claimant signed an opt out of the 48 hour week (page 52). The claimant’s job description (page 54) confirmed that one of the claimant’s responsibilities was to “create and publish staff rotas 2 weeks in advance, manage and record staff holidays.”[11]The claimant’s clocking in and clocking off records for the entire period during which he worked for the respondent were lodged. (Pages 73-96). It was not disputed that these were accurate. The claimant’s payslips for the entire period of his employment were also lodged (pages 101-125). For each fortnightly period apart from the last he was paid a fixed sum equal to one twenty sixth of his annual salary (either £32,000 or £35,000).[12]On or about 17th May 2023 the claimant advised the respondent that he was resigning and would work his notice. His notice period ended on 18th June 2023. At some point in early June the claimant was working doing service in the restaurant when Mr Muir and the respondent’s Executive Chef arrived. Mr Muir said he wanted a word with the claimant and he advised the claimant that he owed the company around 100 hours and that they would have to do something about it. Mr Muir did not make any suggestions and matters were simply left hanging there. The claimant returned to his work. He expected that he would be contacted by the respondent and advised what was happening. The claimant heard nothing further until he received his final payslip. This was lodged (page 125) and showed that the claimant received zero pay for his last 1½ weeks work nor did he receive any sum in respect of holiday pay.[13]With regard to holidays it was common ground between the parties that the holiday year ran from 6th April to 5th April. This was set out in the claimant’s Contract of Employment signed by him. During the period from 14th July 2022 until 5th April 2023 the claimant only took 2 weeks holiday. During this period he approached the Executive Chef on several occasions asking him how many days holiday he had left and asking him when it would be convenient for him to take holidays. The claimant felt unable to arrange holiday himself since he was aware that he would have to fit in with others and was waiting for the Executive Chef to give him dates. As it happened the Executive Chef never gave him dates and the claimant ended up losing part of his holiday entitlement for the year to 5th April. The claimant’s understanding was that a number of other individuals working in the kitchen were also unable to take their full holiday entitlement. The claimant was advised that no-one would be allowed to carry over holidays. The claimant did not make a specific request to do so however and during the course of the Hearing he made it clear that he was not claiming in respect of his holiday entitlement for the period for the period up to 5th April 2023. It was however common ground that the claimant had taken no annual leave in the period from 6th April onwards and that he was due 1.15 weeks pay in respect of this.[14]Following receipt of his final payslip the claimant contacted the respondents who advised him that they considered that he owed them 142 hours. The calculation of this was set out in the document lodged at page 71. They indicated that they owed him 2.65 weeks pay (1.5 weeks worked plus 1.15 weeks accrued holiday). It was their position that they were making a deduction from this in respect of the sum of 2.85 weeks pay which they considered he owed them. They indicated they were writing off the .2 weeks. Matters arising from the Evidence[15]I found the claimant to be an eminently truthful witness. He did not seek to exaggerate or overstate his position. I considered him to be a credible and reliable witness.[16]At the end of the day there was little difference in evidence between the evidence given by the claimant and the evidence of the 2 Directors. There were a couple of minor differences relating to their recollection of conversations. Mr Brennan stated in evidence that he had mentioned in passing to the claimant in or about October that the claimant was due the company at that time around 20 hours. It was put to him that the claimant had not recalled this conversation. Mr Brennan said that he had not made any kind of issue out of it and that he was extremely relaxed about things. He said that his main concern was to talk to the claimant about gross profit margins and that so far as he was concerned the issue of hours was not an issue. Mr. Breennan denied that at that time he had told the claimant that he should be working 45-50 hours per week. I considered that he probably had said that as I believed the claimant’s evidence on that point but at the end of the day not much turns on this. Mr Brennan also stated however that he understood that his partner Mr Muir had discussed the issue with the claimant when they met in June 2023 and that Mr Muir had told the claimant that sums would be deducted from his final pay. In his evidence Mr Muir confirmed that he had spoken to the claimant but did not say at any point that he had advised the claimant that monies would be deducted from his final pay. His evidence was that he mentioned it to the claimant who simply shrugged and went back to work. I also found that curiously Mr Muir was quite adamant that at this meeting (which took place around 2 weeks prior to the claimant’s final day at work) he told the claimant that the claimant was due 142.5 hours. In my view it was impossible for him to have done so since this sum had not been calculated at that stage and could not be calculated until the number of hours worked by the claimant in his final 2 weeks were known. Despite this being pointed out to him Mr Muir was quite adamant that this was the figure he had told the claimant.[17]Both Mr Brennan and Mr Muir indicated that in general terms the pay arrangement which they suggested was somehow well known within their company and within the hospitality business. Mr Brennan accepted that at no time were employees sent a copy of the weekly calculation, an example of which was provided at page 71. He also accepted that he had never discussed the matter with the claimant other than suggesting that he may have mentioned the matter in passing when they met in October 2022 to discuss gross profit margins. He said that it was not at all unusual for employees to build up a deficit and then pay it back during busy periods. I asked him where in the Contract the company was permitted to recover sums in respect of hours owed from final salary payments and I did not consider he gave a satisfactory answer. I asked Mr Muir if he had ever known a situation where an employee in the circumstances of the claimant had had monies for hours owed deducted from their final pay. He confirmed that he had never come across this in the past because he said the situation had never arisen. Mr. Brennan explained that the reason that clause 6 of the contract referred to salaried employees being expected to work 45-50 hours per week was that this was a generic contract and that some employees would not have signed a 48 hour waiver clause in terms of the working time regulations. Discussion and Decision[18]The claimant’s position was that he had suffered an unlawful deduction of wages. The respondents’ position was that whilst they accepted they had made a deduction equivalent to 2.65 weeks pay they were entitled to do so on the basis that this was a deduction in respect of an overpayment of wages and was allowed in terms of section 14(1)(a) of the 1996 Act.[19]The respondents’ representative made a fairly full submission. The claimant’s submission was more limited in that he simply stated that he wished to receive payment of the monies owed to him. Rather than repeat submissions at length I shall deal with these in the discussion below.[20]I considered that the starting point in this case was to determine what payments the claimant was contractually entitled to. The claimant’s position was quite simple. He was entitled to a salary of £35,000 per annum. He professed to be unaware of the process described by the respondents of keeping track of his hours so that there was a running total of hours owed to and from the respondents. I accepted this evidence and indeed neither of the respondents’ witnesses indicated that they had raised the issue with him prior to him giving notice of resignation.[21]Looking at the offer of employment dated 8th July 2022 it is quite clear to me that this simply states that the claimant is entitled to a salary of £32,000 per annum rising to £35,000 per annum on completion of his 3 month probation. Clause IV notes that in exchange for this there is an expectation he works 50 hours per week. In my view this simply expresses the conventional understanding of a salary in that one is paid a certain amount per year to carry out the duties of a particular post. It is not unusual for contracts to specify that there is an expectation that a certain number of hours will be worked. There is absolutely nothing in this document to suggest that the arrangement is as was contended by the respondents. There is absolutely no mention of keeping track of hours and there is no mention of an individual not being entitled to be paid for hours worked over the 50 hours in the event that hours were owed to the company.[22]The written Contract of Employment entered into by the parties in December 2022 provides even less scope for the interpretation contended for by the respondents. Whilst Clause 5 repeats the requirement that there is a requirement to work a fifty hour week Clause 6 directly contradicts this by stating that salaried employees are required to work a minimum of 45-50 hours per week or as required by the company. I accepted the claimant’s evidence that in fact this was also what he was told in or about December by Mr Brennan.[23]It appears to me that the arrangement which the respondents suggest would mean that the claimant was not in fact being paid on a salaried basis at all. The arrangement which they appear to suggest is one where the claimant was in fact hourly paid but that as a matter of convenience he would be paid an average amount each fortnight.[24]I did consider whether it could be argues that the arrangements suggested by the respondent had been imported into the contract by custom and practice but I decided that that could not be the case. It cannot be custom and practice if the claimant was entirely unaware of it. Even if there was some sort of custom and practice that salaried employees were expected to give back to the company any hours not worked in a particular week by working additional hours in busy periods for no extra pay – perhaps a more formal version of the “swings and roundabouts” arrangement most salaried employees are familiar with, there was absolutely no custom and practice that the employer was entitled to deduct a sum in respect of hours not worked from final salary. Mr Muir’s evidence was that it never happened.[25]The respondent’s position appeared to be that because the claimant had been paid on the basis of an expectation he would work 50 hours then he had been overpaid because in some weeks he had worked less than this. I considered that this was entirely incorrect. In terms of the contract the claimant was due to be paid a salary and this was what had been paid. There was no overpayment. It therefore appears clear to me that on the basis of the Contract the claimant did not receive any overpayment of wages whatsoever. Accordingly it appears clear to me that the respondents’ contention that they were entitled to recover the sums of 2.65 weeks pay under section 14(1)(a) was entirely incorrect.[26]I also considered that the respondents could not rely on any other Clause within the Contract given that nowhere within the Contract does it state that employees are required to pay back the company if they leave whilst still in deficit with their hours. Even if I were to accept the respondent’s evidence that somehow the concept of hours being tracked and individuals being either in credit or deficit with their hours was something which employees were aware of and which formed an unwritten part of their Contract (which I did not accept) , then in my view there would require to be some express term of the Contract authorising any sums due to the company for hours in deficit to be deducted from pay. There is no such term in the Contract.[27]As I have stated above in the case of the claimant there was absolutely no suggestion that he was aware of the practice of hours being counted and him therefore being in deficit until such time as he was told this by Mr Muir after he had resigned. It could not be a term of his Contract as implied by custom and practice since he had not been told about it and was unaware of it. In my view he was entitled to believe that he was working on the basis of an annual salary and that his salary would be paid in the usual way without deduction.[28]The parties were agreed that the sum involved amounted to 2.65 weeks pay. The claimant’s annual salary was £35,000 per annum. 2.65 weeks pay amounts to £1,783.65 gross. I shall award the amount gross since I have no information before me as to the claimant’s current tax position. The respondents shall however be entitled to deduct from this sum any PAYE Income Tax or National Insurance contributions which they are required to make as a matter of law but that only provided(1) they advise the claimant of the amount of those deductions at the time of payment;(2) they immediately pay any sums deducted to HMRC to the claimant’s account;(3) if requested they produce proof to the claimant that they have paid the appropriate amounts to HMRC.[29]In all the circumstances I am happy to make a declaration to the effect that the claimant has suffered an unlawful deduction of wages in the sum of £1,783.65 and the respondent is ordered to pay that sum to the claimant.