The Judgment of the Employment Tribunal is that the claimant did not suffer an unlawful deduction from wages and therefore his claim fails, and is dismissed.
REASONS
[1]The claimant presented a claim to the Employment Tribunal on 4 October 2018 in which he complained that the respondent had unlawfully deprived him of wages.[2]The respondent submitted an ET3 resisting the claimant’s claim.[3]A hearing was fixed to take place on 20 and 21 March 2019 in order to determine the merits of the case. The claimant appeared on his own behalf, and Mr Gorasaea appeared for the respondent.[4]The parties presented a joint bundle of documents, upon which reliance was placed during the hearing, and additional documents were proferred by both parties and accepted by the Tribunal without objection. ETZ4(WR)[5]The claimant gave evidence on his own behalf.[6]The respondent called Jason Mark Anderson, Managing Director, and Martin Andrew Clarke, Area Manager, as witnesses.[7]Based on the evidence led and the information presented the Tribunal was able to find the following facts admitted or proved. Findings in Fact[8]The claimant, whose date of birth is 1 August 1980, commenced employment with the respondent on 1 March 2009, and remained in employment with them as at the date of the hearing.[9]He worked initially as a sales assistant and then moved to the position of store supervisor, in the respondent’s store in the Waverley Mall Shopping Centre, Princes Street, Edinburgh[10]No copy of the claimant’s personal contract of employment was available, but a copy of the respondent’s standard contract was produced (23). Under “Review”, it was provided that “Salaries are normally reviewed annually in April and are subject to a satisfactory performance review.”[11]On 26 July 2018, the claimant submitted a grievance to his employer (26), in which he said: “I am a supervisor at Gleneagles of Scotland in Edinburgh, shop 478. Supervisors throughout the company have an hourly pay rate of 20p per hour over minimum wage, and this has been the norm for a few years now. However, following the latest increase in minimum wage, which was in April 2018, the company paid its supervisors minimum wage without even informing area and line managers prior to pay-day at the end of the month. When line managers and supervisors asked area managers what had happened, we were told that no decision had been made regarding the supervisor rate. Once a decision had finally been made, we were informed that: 1) the supervisor rate would only take effect at the start of June, two whole months after the increase in minimum wage 2) our April and may rates would most likely not be backdated. When we got paid at the end of June, we were finally receiving our supervisor rate but, as was expected, April and May had not been backdated. The supervisors throughout the company have been paid a supervisor rate for long enough for it to have become a common working practice. The fact that the rate was withdrawn without informing the supervisors and managers prior to the decision or asking them for their consent, amounts to an unauthorised deduction of wages. The fact that no clear decision had been made and that supervisors were left to find out on our June payslip that our rates had not been backdated means that, while still performing our duties of supervisors, we were under a certain level of stress due to not knowing with certainty what our pay was going to be… I understand that you might have other ideas about this but I have thought about the following possible solution to the problem, which is for the company to backdate the supervisor rate that we were not paid in April and June, by paying us the difference.”[12]The claimant’s rate of pay, for the year to 31 March 2018, was an hourly rate based upon the minimum wage plus a sum in respect of the supervisory duties he carried out. In the year to March 2017, that rate was £7.40 per hour, which included a premium of 20p per hour over the minimum wage rate. For the year to March 2018, the rate he was paid was £7.70 per hour, again including a premium of 20p per hour over the minimum wage rate.[13]As at the start of April 2018, the claimant’s rate of pay increased to that of the minimum wage, of £7.83 per hour. However, the reason for his grievance was that the premium previously payable was not added to his rate of pay, and therefore while he received an increase in the sum he was paid from April 2018 onwards, he did not receive the same rate as that to which he had become accustomed.[14]With effect from June 2018, the claimant’s rate of pay was increased to £8.03 per hour, representing the minimum wage rate with the addition of 20p per hour.[15]The claimant’s grievance, and by extension his claim before this Tribunal, was that the pay rate of minimum wage plus 20p per hour was contractual, and that the failure of the respondent to pay that rate for the months of April and May 2018 amounted to an unlawful deduction from wages. The claimant considers that that unlawful deduction ended when the pay was increased with effect from June 2018.[16]The respondent invited the claimant to attend a grievance hearing on 7 August 2018 (28) which was to be chaired by Catriona Simpson, Area Manager.[17]The claimant attended, accompanied by Matthew Deans, a colleague, and explained the issue which was concerning him. He was unhappy as he felt that he was regularly interrupted for questioning by Ms Simpson, but was able to answer the questions.[18]Notes of the hearing were prepared by Jennifer Young (33). The copies produced to the Tribunal were partially illegible owing to the quality of the photocopying.[19]Following the hearing, Ms Simpson wrote to the claimant to confirm her decision (31).[20]Ms Simpson summarised the grievance, and noted that: “You raised a concern that the pay differential for Supervisors should have been effective from April, not June. You stated that between April and June you were still carrying out the Supervisor role along with the responsibilities that brings.”[21]She responded by saying: “Please note that all colleagues who received an increase in pay effective April due to the National Minimum Wage were paid the increase at the appropriate time. You were aware of this fact upon payment. In terms of a notification of a change in pay, you were notified in May of increases becoming effective 1 June 2018. There was no contractual obligation on the Company to increase your pay between April and 1 June 2018, save to ensure that the rate of pay was compliant with the National Minimum Wage which it was. Regarding the differential in rates, the National Minimum Wage legislation has led to very significant increases in pay for thousands of employees across the company in recent years. This has inevitably resulted in severe cost pressures across the business. You will be aware of the ongoing challenge to High Street retailers from the economic conditions and many well-known retailers have collapsed into administration in recent years… The company has increased rates of pay for all levels of store staff, but as stated, in effecting any increases in rates of pay, it is vital that the company does not overstretch itself.”[22]The claimant’s grievance was not upheld, and he was notified of his right to appeal against the decision within 5 working days of receipt of the outcome letter.[23]The claimant decided not to appeal. He took advice from the Citizens’ Advice Bureau, and concluded that it would probably “take forever” to proceed to appeal. He was aware that he required to present a claim to the Tribunal within three months and did not want to hold matters up.[24]The claimant accepted that the respondent had informed staff of the pay rise to be provided to supervisors. An email was sent by James Bailey, Head of Retail Operations, which was received by the claimant’s line manager on 10 May 2018 (178). The email stated: “Pay Review As you are all aware the Government increased the Minimum Wage in April 2018. The Board is aware of the impact this has had or (sic) eliminating the pay differential between this and some of the other store roles. We are delighted to be able to confirm that having completed a review the Board has now agreed the pay of those affected roles in line with the increase in the Minimum Wage. This will be effective from your June Pay. Based on the current pay rates for EWM, the new pay rates will be: Supervisor £8.03 Your Area Manager will advise individually for Assistant Store and Store Managers affected by this Review. Store Managers above this level will not receive any increment. Thank you for your continued hard work and support. James Bailey Head of Retail Operations EWM”[25]The respondent presented to the Tribunal a copy of a different standard contract, which the claimant accepted as being the form of contract which he signed on promotion to supervisor (181).[26]In that standard contract, under “Review”, it was provided that “Rates of pay are normally reviewed in October and are subject to a satisfactory performance review. There is no contractual right to any increase following a review.”[27]The claimant presented his claim to the Employment Tribunal on 4 October 2018, the ACAS Early Conciliation Certificate having been issued on 1 October 2018.[28]The pay rate for the claimant is the same as that applied to supervisors on his grade throughout the company. The claimant is the only supervisor known to have submitted a grievance about this matter, or to have raised Employment Tribunal proceedings relating to this alleged unlawful deduction from wages.[29]In the year to March 2015, the claimant was paid minimum wage plus 26p per hour, but thereafter for three years was paid minimum wage plus 20p per hour until April 2018. The claimant did not challenge the reduction of payment from 26p to 20p per hour.[30]In 2010, the then Chief Executive Philip Day issued a letter to the staff in the business (150) to advise that due to the “tough economic climate”, and significant ongoing pressure on product costs, the company had decided to award a 2% increase only to staff earning below a certain wage threshold, but nothing to those above the threshold. Submissions[31]For the respondent, Mr Gorasaea submitted that this case is all about the claimant’s legal entitlement to pay. He referred to an extract from Harvey on Industrial Relations and Employment Law, Division B1, [4.09]ff, in which it was stated that in the absence of any express contractual provision there is no general implied right to an annual pay rise at common law.[32]He argued that none of the supervisors received a pay rise in April 2018. The claimant was not singled out. He seeks, in effect, the re-writing of the express terms of his contract. It is not reasonable, he said, to suggest that there should be a mandatory increase in his salary.[33]In order for a term to be implied into a contract, he said that it had to be reasonable, notorious and certain. In this case, no other supervisor has raised a grievance nor a Tribunal claim, and therefore this is not notorious. The claimant appears to be seeking some form of differential in pay between himself and his store assistant colleagues.[34]In order to establish a custom or practice which allows an implied term to be introduced into a contract, the test set out in Albion Automotive Ltd v Walker [2002] EWCA Civ 946, in which a list of factors are identified for examination by the Tribunal. In this case, he submitted, no such tests have been satisfied by the claimant on the evidence.[35]Essentially, pay each year was set by a review by the respondent, and therefore there was no term which could be implied which would not be inconsistent with that review.[36]He invited the Tribunal to dismiss the claim.[37]The claimant submitted that this case is not about an increase in pay, but about maintaining the status quo, that is, to ensure that the claimant and his supervisor colleagues continued to receive the sum of minimum wage plus 20p per hour.[38]The claimant submitted that the fact that no other supervisor raised this as a grievance or an Employment Tribunal claim is irrelevant to this claim. He submitted that the term entitling him and his colleagues to the minimum wage plus 20p per hour should be implied into this contract, and that his claim should therefore succeed. Discussion and Decision[39]This case centres on the claimant’s allegation that the respondent has failed to pay him the correct salary for April and May 2018. He claims that the respondent should have paid him, and all supervisors, the sum of £8.03, which represents the sum set as the National Minimum Wage (£7.83 per hour, from April 2018) with the addition of 20p per hour.[40]It is a slightly curious feature of the case that the respondent, shortly after the start of May, confirmed that they had decided to award supervisors the sum of £8.03 per hour, and accordingly on the face of it the claimant has received what he wanted. However, his claim is concerned with pursuing the respondent for payment of the 20p per hour he says he should have received for April and May 2018, but did not.[41]The Tribunal heard a certain amount of evidence about the respondent’s rationale for not having awarded the pay rise immediately as the claimant had hoped, citing the general economic downturn and the effect on the overall wage bill of the increases brought about by the annual rise in the National Minimum Wage rate.[42]However, this is fundamentally a claim about unlawful deductions from wages. Put simply, the claimant argues that by custom and practice the respondent had committed itself contractually to pay him the sum of the National Minimum Wage rate plus 20p per hour; and the respondent denies that that was what the contract said or meant at all.[43]The Tribunal had regard to the contract of employment understood to apply to the claimant as at the start of April 2018, which is represented by 181ff. That contract essentially says two things: firstly, that rates of pay are normally reviewed in October – in other words, annually – and secondly, that there is no contractual right to any increase following a review.[44]The express terms of the contract – and this contract was agreed by the claimant to represent the terms of the agreement between the parties – therefore provide that the claimant is entitled to have his pay reviewed each year, and that there is no right to an increase in pay following review.[45]What the claimant says, however, is that he was not looking for an increase in pay, but simply the maintenance of his pay according to the formula which had been used to calculate it for the previous two, or possibly three, years, namely by taking the rate applicable under Regulation by the National Minimum Wage, and adding 20p an hour to it, as had happened in those years.[46]He maintains, therefore, that the contractual position, not based on the express terms but on a term implied by custom and practice, was that he was due to receive the increase in the National Minimum Wage at the start of April when it was legally required of employers, with the addition of 20p per hour.[47]It is quite correct to say, as Mr Gorasaea has, that if one considers the express terms of the contract, and the common law position, the claimant has no basis upon which to argue that his contract entitles him to such a pay rate.[48]The question the Tribunal must address is whether the term which the claimant wishes to rely upon is reasonable, notorious and certain. Reference was made to the case of Park Cakes Ltd v Shumba [2013] IRLR 800, in which a number of questions were put as the basis for considering this matter.[49]Firstly, on how many occasions, and over how long a period, have the benefits in question been paid? In one sense, the answer to this is that the claimant has received the National Minimum Wage rate plus 20p per hour for the previous 3 years. On the other hand, it is clear that each raise in pay granted to staff is subject to the process of contractual review, and therefore the respondent’s argument, that the pay rise is not guaranteed but only arrives following a decision of the employer, is borne out by the way in which that figure was reached on each occasion.[50]Secondly, whether the benefits are always the same. This is where the claimant’s position became slightly unclear. He confirmed that up to 2015 he had received National Minimum Wage plus 26p, and had not contested the respondent’s decision when they reduced that premium to 20p; and then in evidence his position seemed to alter, quite fundamentally, when he said that he would have been content with a smaller figure, indeed anything down to 1p per hour above the National Minimum Wage rate, as that would have allowed him to feel rewarded for the additional responsibility he bore as a supervisor. In other words, his concern was that there was, for the two months in question, no differential in pay between him and his staff. On that basis, the benefits were not always the same, and what the claimant was seeking from the Tribunal was by no means certain, since anything between 1p and 20p would appear to satisfy his wish for a difference in pay.[51]Thirdly, the extent to which the enhanced benefits are publicised generally. All supervisors received the same rate of pay, so again that must have been known throughout the relevant constituency of supervisory staff. However, although no evidence was presented from other supervisors, the fact that none of them raised a grievance about this suggests that they did not regard it as a guaranteed entitlement to receive the increase sought by the claimant.[52]Fourthly, how the terms are described. The claimant simply asserted that the entitlement was to an increase in pay which maintained his rate of pay 20p per hour above the National Minimum Wage rate.[53]Fifthly, what was said in the express contract. The express contract not only provides only for a review – and I take a “review” to mean that the employer will consider each year whether or not to grant an increase in pay, without guaranteeing to staff that they will receive one – but also expressly states that a raise in pay is not guaranteed.[54]Sixthly, equivocalness. The burden of proving that a practice has become contractual is on the employee, and he will not be able to discharge it if the employer’s practice is, viewed objectively, equally explicable on the basis that it is pursued as a matter of discretion rather than legal obligation. In this case, the claimant has not discharged that burden. The evidence makes it plain that the respondent will determine whether or not staff should receive a percentage pay rise (which is discretionary) as opposed to the necessary increase in the National Minimum Wage, which is obligatory under statute. Here the respondent demonstrated the difference quite starkly: they increased the claimant’s pay by the amount required under the National Minimum Wage to £7.83; that amounted to an increase in the claimant’s weekly earnings, in real terms (up from £7.70 per hour); and they exercised their discretion not to add the 20p per hour to that pay until June 2018.[55]On this basis, it is clear to me that the claimant has failed to prove that there was, or should be implied, a contractual term that he would continue to receive the National Minimum Wage plus 20p per hour from April 2018. The respondent clearly had discretion as to whether or not to increase his pay; his contract expressly stated that there was no guarantee that his pay would increase; and they met their legal obligations by ensuring that he would receive the National Minimum Wage rate.[56]It is clear that this claim has been raised by the claimant because he feels very strongly that he has been treated unfairly by the respondent in not receiving that additional 20p per hour for two months; and in particular because that meant that he was being paid at the same rate as his colleagues, who did not bear the same responsibility. That may be an understandable, and possibly even justifiable, feeling, but the question for the Tribunal is not fundamentally one of fairness, nor of pay equality, but of contract: is it established by the facts that the claimant’s contract entitled him to be paid at 20p over the National Minimum Wage rate for April and May 2018. In my judgment, it is not established that that was the contractual right given to the claimant. His right was to have his pay reviewed each year, with no guarantee of an increase in pay. He did not receive an increase in pay in April 2018. The reasons why he did not are not relevant to my determination; the fact that his contract provided for this eventuality means that he has no contractual nor legal entitlement to be paid for those months at the higher rate he seeks.[57]As a result, the claimant’s claim must fail, and be dismissed.