Walton v The Independent Living Organisation [2003] EWCA Civ 199

Case No A1/2002/1061Neutral Citation Number: EWCA [2003] Civ 199
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM EMPLOYMENT APPEAL TRIBUNAL
Venue Royal Courts of JusticeDate Wednesday 26th February 2003
Strand,
London, WC2A 2LL
Before
LORD JUSTICE ALDOUSLADY JUSTICE ARDENMR JUSTICE JACOB
Between
JULIE MEGAN WALTONAppellantTHE INDEPENDENT LIVING ORGANISATIONRespondent
(Transcript of the Handed Down Judgment ofSmith Bernal Wordwave Limited, 190 Fleet StreetLondon EC4A 2AGTel No: 020 7421 4040, Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Robin Allen QC and Paul Epstein (instructed by Leo Abse & Cohen) for AppellantAndrew Hillier QC and Andrew Blake (instructed by Eversheds) for Respondent
JudgmentAs Approved by the CourtCrown Copyright ©
[1]This is an appeal with permission of this Court against a decision of the Employment Appeal Tribunal of 25th April 2002 which dismissed an appeal by Miss Julie Walton against a decision of an Employment Tribunal of 30th April 2001. In essence those Tribunals dismissed Miss Walton’s claim that she had been paid less than the national minimum wage.[2]The respondent, the Independent Living Organisation Ltd, provides carers for people who because of their age or disability need assistance to maintain their independence and remain in their own homes rather than being placed in a residential home. Miss Walton was a carer employed by the respondent. She was allocated to a Miss E. Jones who suffered from epilepsy and had fits on a regular basis. She was a relatively easy client needing a minimum of supervision. She could attend to her own needs i.e. she could feed herself, tidy her room, attend to her personal hygiene. The appellant was responsible for her washing, ironing, shopping, preparation of meals and medication. Miss Jones spent most of her time watching television and doing jigsaws. She usually retired to bed between 9.30 and 10 and slept through the night. Thus Miss Walton was very rarely disturbed during the night.[3]Miss Walton worked three days on, four days off. For this she was paid £31.40 per day. Miss Walton had free accommodation and meals, but she still had the expense of maintaining her own home. When not providing a service to Miss Jones she could please herself as to what she would do, but she was required to be on the premises in case Miss Jones required assistance which occasionally she did, sometimes during sleeping hours. Miss Jones kept a detailed record of epileptic fits.[4]The appellant’s statement of terms and conditions stated:
“4. Wages Your rate of pay will vary according to the assignment you are undertaking. This may be at an hourly, daily or weekly rate. Your manager will advise you of your rate of pay prior to each assignment. Wages are payable by direct credit transfer to your bank account each Tuesday for the week ending the previous Friday before last. 5. Hours of Work Your hours of work will vary according to the assignment you are allocated. Because of the nature of the services offered by the company, there is no guarantee of continued work each week. You will only be offered work when in the opinion of the company there is a suitable assignment available for you. Likewise, there is no obligation for you to provide a minimum number of hours in any day or week. However once engaged on an assignment you are required to complete it and devote your full attention and abilities to the needs of the client to ensure the satisfactory provision of such services. Because of the nature of assignments, you will normally only be offered an assignment on an alternate week basis. It should also be understood that if a client requests that you cease servicing them or in the opinion of the company you are no longer suitable for a particular assignment, the company reserves the right to remove you from that assignment without any liability to you.”
[5]In July 1999 the respondents were notified by the National Minimum Wage Team at the Inland Revenue that a complaint had been received by them in connection with an employee. Prior to a visit from that team, the respondents prepared an assessment form for each client. A Miss Butler visited Miss Walton on 5th August 1999 and went through the form with her. Together they assessed the time she required for each of the tasks that she carried out for Miss Jones. At the end of the exercise the appellant signed the form. It records that on average it took 6 hours 50 minutes to carry out the tasks that were listed including the personal care and bathing supervision of Miss Jones.[6]The Tribunal rejected the submission that Miss Walton was “supervising” when not carrying out tasks because she was not required to give Miss Jones her exclusive or principal attention. She could carry on about her own activities without let or hindrance. The purpose of her being there was to offer assistance if it became apparent that Miss Jones needed it, principally if she had a fit.[7]In the Full Reasons the Tribunal recorded that Miss Butler had said “that each case was looked at on its own merits”. Miss Walton’s pay was assessed according to the difficulty and duration of specific tasks which she had to perform.[8]It was, as I have said, not in dispute that the appellant was paid £31.40 per day. Thus if the relevant working hours were 24, her hourly rate of pay was £1.31 which was a figure substantially below the national minimum single hourly wage rate which was at the time £3.60. If however the relevant working hours were 6 hours 50 minutes, then her wage exceeded the national minimum.[9]Before this Court it was submitted that the relevant regulations required the national minimum rate to be ascertained by dividing her pay of £31.40 by 24. Thus the appellant had not received the national minimum rate that was required.[10]Both the Employment Tribunal and the Employment Appeal Tribunal rejected that submission. They concluded that the regulations required that the daily average rate should be ascertained using the daily average agreement which came to 6 hours 50 minutes. Thus her wages per hour were £31.40 divided by 6.83 hours giving a wage per hour of £4.60.[11]The National Minimum Wage Act 1998 received the Royal Assent on 31st July of that year. It is a framework Act which provides for the detailed provision of its operation in regulations. Thus section 1 requires workers to be paid at least the national minimum wage and section 2 requires the Secretary of State to make provision in regulations for how the hourly rate deemed to be worked is arrived at. Section 5 required the Secretary of State to refer certain matters to the Low Pay Commission before making regulations. Those matters included such things as the single hourly rate to be prescribed and the method required for calculating the remuneration of workers. The Secretary of State had to report to Parliament if he decided not to implement the Commission’s recommendations.[12]Mr Robin Allen QC who appeared for Miss Walton, referred us to paragraphs 11 and 12 of the Recommendations of the Commission. “11. The actual working time definition should define what constitutes working time for the purposes of the National Minimum Wage. The National Minimum Wage should also apply to all working time when a worker is required by the employer to be at the place of work and available for work, even if no work is available for certain periods. (para. 4.33) 12. For hours when workers are paid to sleep on the work premises, workers and employers should agree their allowance, as they do now. But workers should be entitled to the National Minimum Wage for all times when they are awake and required to be available for work. (para. 4.34) … 4.33 We recommend that the actual working time definition should define what constitutes working time for the purposes of the National Minimum Wage. The National Minimum Wage should also apply to all working time when a worker is required by the employer to be at the place of work and available for work, even if no work is available for certain periods. This definition has the advantage of covering agreed ‘downtime’ hours when workers are on-site but unable to work (e.g. because of machine breakdowns or lack of materials). It includes all agreed overtime hours, including call-out hours for emergencies, but it does not include standby or on-call periods away from the employer’s workplace or agreed rest periods. 4.34 Certain workers, such as those who are required to be on-call and sleep on their employer’s premises (e.g. in residential homes or youth hostels), need special treatment. For hours when workers are paid to sleep on the premises, we recommend that workers and employers should agree their allowance, as they do now. But workers should be entitled to the National Minimum Wage for all times when they are awake and required to be available for work.”[13]The report to Parliament of the Secretary of State stated that the regulations implemented the recommendations, but I can find nothing in that report nor in the Recommendations which solves the issues raised in this appeal.[14]For the purposes of this appeal, the relevant regulations are the National Minimum Wage Regulations 1999. Regulations 3 to 6 define the types of work that the regulation cover in this way:
“3. In these Regulations "time work" means -(a) work that is paid for under a worker's contract by reference to the time for which a worker works and is not salaried hours work;(b) work that is paid for under a worker's contract by reference to a measure of the output of the worker per hour or other period of time during the whole of which the worker is required to work, and is not salaried hours work; and(c) work that would fall within paragraph (b) but for the fact that the worker is paid by reference to the length of the period of time alone when his output does not exceed a particular level. Reg 4 The meaning of salaried hours work(1) In these Regulations "salaried hours work" means work-(a) that is done under a contract to do salaried hours work; and(b) that falls within paragraph (6) below. … Reg 5 The meaning of output workIn these Regulations "output work" means work that is paid for under a worker's contract that is not time work and, but for the effect of the Act and these Regulations or anything done pursuant to these Regulations, would be paid for under that contract wholly by reference to the number of pieces made or processed by the worker, or wholly by reference to some other measure of output such as the number or value of sales made or transactions completed by the worker or as a result of his work. Reg 6 The meaning of unmeasured work In these Regulations "unmeasured work" means any other work that is not time work, salaried hours work or output work including, in particular, work in respect of which there are no specified hours and the worker is required to work when needed or when work is available.”

Reg 6 The meaning of unmeasured work

[15]Part III of the Regulations contains provisions for arriving at the working time for the 4 types of work defined in regulations 3 to 6. Regulation 15 relates to time work, before amendment, and, before amendment, was in these terms:
“Provisions in relation to time work15. - (1) In addition to time when a worker is working, time work includes time when a worker is available at or near a place of work, other than his home, for the purpose of doing time work and is required to be available for such work except that, in relation to a worker who by arrangement sleeps at or near a place of work, time during the hours he is permitted to sleep shall only be treated as being time work when the worker is awake for the purpose of working.(2) Time when a worker is travelling for the purpose of duties carried out by him in the course of time work shall be treated as being time work except where- (a) the travelling is incidental to the duties, to the extent that the time is time when the worker would not otherwise be working; or(b) the travel is between the worker's home and his place of work or between an address where he is temporarily residing, other than for the purposes of performing work, and his place of work. … (7) Where a worker is entitled to a rest break in the course of time work, the period of the break shall be treated as time when the worker is absent from work; but a worker shall not be treated as being entitled to any rest breaks during time which is required to be treated as time work by paragraph (2).”
[16]Regulations 27 and 28 are concerned with unmeasured work as defined in regulation 6. “Reg 27 Unmeasured workUnless the condition in regulation 28(1) is satisfied, the unmeasured work worked by a worker in a pay reference period shall be the total of the number of hours spent by him during the pay reference period in carrying out the contractual duties required of him under his contract to do such work. Reg 28 "Daily average" agreements for unmeasured work(1) The condition referred to in regulation 27 is that there is an agreement in writing between the worker and his employer, made at any time before the beginning of the pay reference period, determining the average daily number of hours the worker is likely to spend in carrying out the duties required of him under his contract to do unmeasured work on days when he is available to carry out those duties for the full amount of time contemplated by the contract.(2) The condition in paragraph (1) is not satisfied if the employer cannot show that the average daily number of hours determined is a realistic average.(3) Unless otherwise agreed the agreement referred to in paragraph (1) has effect solely for the purpose of determining the amount of unmeasured work the worker is to be treated as having worked for the purpose of these Regulations and does not vary the worker's contract.”[17]Regulation 14 states the hourly rate paid to a worker is determined by dividing the total calculated in accordance with regulation 14(2) by the number of hours specified in paragraph 3 of that regulation. Paragraph (3) says that the relevant hours “are the total number hours of time work, salaried work, output work and unmeasured work worked by the worker …”.[18]The parties agree that Miss Walton did not carry out salaried work or output work. For Miss Walton Mr Robin Allen submitted that she carried out “time work”. For the respondent Mr Andrew Hillier submitted that Miss Walton carried out “unmeasured work”. Thus the crux of the appeal is to decide whether Miss Walton did time work. If she did not, then it is accepted that she did unmeasured work.[19]Mr Allen submitted that both the Tribunal and the Employment Tribunal had gone wrong in that they had confused “work” in the sense of physically doing something with what was “work” for the purposes of legislation. Whilst Miss Walton was not at times physically working she was under contract to be mentally alert to the needs of Miss Jones. She was as much carrying out work during the time she was at Miss Jones’s home as a night watchman would be when relaxing or a nurse when having a cup of tea off-ward.[20]That submission had in mind the judgment of the Court of Appeal in British Nursing Association v Inland Revenue [2002] EWCA Civ. 494. In that case the employers provided “bank nurses” for nursing homes and other institutions on an emergency basis. Part of that work involved a telephone booking service which was provided 24 hours a day. At night the work was transferred to employees working from home. The booking process involved the “duty nurse” answering a diverted phone call and then responding to the requests for nursing staff by identifying and contacting the person to do the work. The relevant employee was paid an amount per shift. The Inland Revenue National Minimum Wage Compliance Team took the view that those employed on the night shift were entitled to be paid the minimum hourly rate for all the hours they were on duty. That the employers disputed on the ground that the employees were not actually working throughout the shift. The parties agreed that those employed on the night shift did “time work” and the Employment Tribunal held that they were engaged in “time work” both when they were awake and awaiting calls at home. The employees were “working” for the whole of their shift answering the clients’ telephone calls. According to the Tribunal there was no difference between the day workers and the night workers except that the night workers worked from home.[21]The Employment Appeal Tribunal dismissed the appeal, as did the Court of Appeal. Buxton LJ gave the first judgment. He concluded that it was open to the Employment Tribunal and the Employment Appeal Tribunal to find that the workers were working throughout their shift. He went on to state that as an issue of ordinary use of language it seemed to him self evident on the facts as found that they were indeed working throughout the night. He said:
“12. …. No one would say that an employee sitting at the employer's premises during the day waiting for phone calls was only working, in the sense of only being entitled to be remunerated, during the periods when he or she was actually on the phone. Exactly the same consideration seems to me to apply if the employer chooses to operate the very same service during the night-time, not by bringing the employees into his office (which would no doubt impose substantial overhead costs on the employer and lead to significant difficulties of recruitment), but by diverting calls from the central switchboard to employees sitting waiting at home. It was indeed as a continuation of the day-time service that the employer presented the night-time service to his employees and recruited them for that purpose. That is illustrated by the job description document that was shown to us …”
[22]As the parties agreed that the relevant workers carried out time work, the British Nursing Association case does not contain any guidance on the crucial issue in the present case. In that case it was agreed that the workers were paid by reference to the time for which they worked and the only issue was whether they worked during the whole period of the night shift.[23]Mr Allen also had in mind the decision of the Court of Session in Scottbridge Construction Ltd v Wright [2003] IRLR 21. In that case Mr Wright was employed as a night watchman. He was required to be on the employer’s premises 7 nights a week between 5pm and 7am. Although he had certain minor tasks to perform, his principal purpose in being on the premises was to be available to respond if an alarm was set off by an intruder. When not performing a specific task, he was permitted to sleep, watch television, read or do whatever else he wished to do. The Court of Session held that the fact that the respondent had little or nothing to do during certain hours when he was permitted to sleep did not obstruct the fact that he was throughout in attendance as a night watchman and was required at any time to answer the telephone or to deal with alarms. They held that the Employment Tribunal had confused their estimate of the hours during which the respondent was generally active with an overall consideration of what was required of him as a night watchman. They held that the whole period fell to be regarded as time work for the purposes of the regulation. They concluded that the British Nursing Association case was an interesting parallel.[24]In the Scottbridge case, the parties agreed that Mr Wright was paid by reference to the time for which he worked. He therefore did time work. For that reason there is nothing in the judgment that gives guidance on the crucial issue in this case.[25]I will come to the difference between the parties as to what was the length of time worked by Miss Walton, but first consider the crucial issue. For the purposes of that consideration I will assume that Miss Walton was working during the time she was at Miss Jones’s home. Mr Hillier submitted that she was not carrying out time work as she was not paid “by reference to the time for which a worker works”. He submitted that the question as to whether she was paid by reference to the time for which she worked or by reference to something else was a question of fact. In the present case the Tribunal had decided that fact in favour of the respondent. As the Tribunal said in paragraph 8 of its decision:
“We know that her pay was assessed according to the difficulty and duration of the specific tasks which she had to perform at times which could not be exactly stipulated. Meal times would follow a pattern, but other matters would depend on personal choice. She was not paid an hourly rate or anything of that sort. It was a broad assessment based on difficulty and duration. No question arose of measuring output.”
[26]Mr Allen countered that submission by referring to the employment of Miss Walton. He drew attention to the fact that Miss Walton began to work for the respondents in 1998 and from that date was paid £31.40 per day. He referred us to paragraph 4 of the statement of her terms and conditions (see paragraph 4 above) which provided that her rate of pay would vary according to the assignment that she was undertaking. He also reminded us that after investigation by the Inland Revenue and completion of the estimate, the rate of pay continued at £31.40. He submitted that from the first time that she became employed her rate of pay did not alter depending upon either the number of hours spent actively working or the difficulty of the work actually performed. He submitted that her pay was assessed exclusively according to the number of days that she worked or by reference to the time for which she worked.[27]The statement of terms and conditions was not found by the Tribunal to be determinative. That was right as points can be used to support both parties’ submissions. For example, Mr Hillier referred to phrases such as – “Your rate of pay will vary according to the assignment you are undertaking”, and “You will only be offered work when in the opinion of the company there is a suitable assignment available for you” – to support the submission that Miss Walton was not paid by reference to the time for which she worked.[28]Mr Allen also submitted that the wording of regulation 3 did not require payment to be calculated exclusively based upon time work, instead it merely required that time should be taken into account. Thus if the rate of pay is stated to be for say a day, the worker was carrying out time work. That being so it was clear that upon the findings of the Tribunal Miss Walton did time work.[29]I cannot accept that last submission of Mr Allen. The wording of regulation 3(a) states that time work is work that is paid for under a worker’s contract by reference to the time the worker works. It therefore contemplates that a worker can be paid by reference to something other than time even though the payment may be made per day or per month. If so, it is not within regulation 3(a). That is emphasised by paragraph (b) which specifically includes within the term “time work”, work that is paid for by reference to a measure of output per hour or other period of time during the whole of which the worker is required to work. It would therefore seem that absent paragraph (b), payment by reference to output per period of time would not be time work and would not fall within paragraph (a). If paragraph (a) had encompassed all payments made when time had to be taken into account then there would have been no need for paragraph (b).[30]Mr Allen accepted that if his submission as to the width of regulation 3(a) was correct, there was no need for regulation 3(b). He submitted that the reason for regulation 3(b) was to explain in clear terms what was within the term “time work” so that the regulations could be applied by persons who were not lawyers. That submission is hopeless. The regulations define rights and duties. They must be construed in the way any other regulation is to be construed. That requires the courts to consider the words and to ascertain the intention of Parliament.[31]Regulation 3(a) is concerned with work that is paid for. In this case it is the work carried out by Miss Walton caring for Miss Jones. Upon the assumption that I am making it takes place over a period of 24 hours. Is the payment made to her by reference to the time that she works or is it by reference to other matters? The answer must depend upon the facts. There appears to me to be sense in the attitude of the Employment Appeal Tribunal in the British Nursing Association case that analogies and illustrations are not necessarily useful. The correct approach is to look at all the facts including the type of work that is involved and then to ascertain whether the worker is paid by reference to the time for which the worker works or by reference to something else. That is a decision which is for the Tribunal to make. They see the witnesses and decide the facts.[32]In the present case, the Tribunal decided that Miss Walton was not paid by reference to the time for which she worked. There was an evidential basis for that decision and it would not be right for this Court to reject that finding. In any case I have no inclination to do so. It follows that Miss Walton carried out unmeasured work within regulation 6 and the applicable National Minimum Wage must be calculated in accordance with regulations 27 and 28.[33]Mr Allen submitted that regulation 28 did not apply. Thus regulation 27 applied was determinative as to the way the wage should be calculated. That being so, Miss Walton spent 24 hours a day “in carrying out” her contractual duties required under her contract of service. Thus the National Minimum Wage had to be calculated by dividing £31.40 by 24. His reason for disapplying regulation 28 was that the word “duties” meant the same as work legally required and in context should be interpreted in the same way as the British Nursing Association case.[34]I reject that submission. Regulation 28 is concerned with unmeasured work. Thus the work is not paid by reference to the time worked. In this case Miss Walton was paid by reference to the tasks required. Regulation 28 is concerned with that sort of employment and the necessity of ascertaining the number of hours to be used in calculating the National Minimum Wage. It does that by ascertaining from a written agreement the hours that the worker works to carry out the tasks, referred to as duties. In my view the Tribunal was entitled to conclude that there was a written agreement, that 6 hours 50 minutes was a realistic assessment of the time taken to carry out the duties and that regulation 28 applied. That being so, the Tribunal was entitled to conclude that Miss Walton’s claim failed. The British Nursing Association and Scottbridge cases are not analogous. Miss Watson stayed at Miss Jones’s home for 3 days. I do not believe that she “worked” a continuous period of 72 hours.[35]For the reasons I have given, I would dismiss the appeal.[36]In making his submissions Mr Robin Allen QC recalled the well-known line from Milton: “They also serve who only stand and wait” (Milton, When I consider how my light is spent), thus reminding us that a person can and often does perform a service simply by making himself or herself available for work. The Low Pay Commission recommended that the National Minimum Wage should apply to “all working time when a worker is required by the employer to be at the place of work and available for work” (Recommendation 4.33) and that “certain workers, such as those required to be on call and sleep on their employer’s premises … should be entitled to the National Minimum Wage for all times when they are awake and required to be available for work.” (Recommendation 4.34). These are undeniably important recommendations for those who serve but only stand and wait, and they were implemented, in the case of time work, by regulations 3 and 15 of the National Minimum Wage Regulations 1999.[37]As I see it, the appellants’ approach in this case confuses time as a convenient unit for the quantification of a payment of remuneration with time as the yardstick by reference to which the rate of pay is determined. There is a distinction between paying remuneration by reference to time periods where time is used as the unit of account and paying remuneration at a rate determined by the amount of time spent on the work (or deemed work, where regulation 15 applies). It is in the latter sense that the word “time” is being used in regulation 3(a). Moreover, paragraphs (b) and (c) of regulation 3 in the 1999 Regulations make it clear that the phrase “by reference to time for which a worker works” in regulation 3(a) applies where work is paid for by reference to time in that sense and nothing else. Regulation 3(b) thus applies where the rate of pay is determined not exclusively by time but by reference to the worker’s output ascertained by reference to the time period of one hour or some other unit of time. Regulation 3(c) applies in a situation potentially falling outside the earlier paragraphs of regulation 3, that is, where regulation 3(b) would apply but for the fact that the worker’s output does not reach a minimum level, so that he is paid by reference to “the length of the period of time alone”. In that situation, time again becomes the sole yardstick by reference to which the rate of pay is determined. In the present case, however, the rate for the work was on the Tribunal’s findings not established solely by reference to the time for which the worker worked but by reference to the difficulty, as well as the duration, of the work. Thus regulation 3(a) does not apply to Miss Walton. The only applicable definition is that for “unmeasured work”.[38]This case is distinguishable on its facts from the British Nursing Association v IRC [2002] IRLR 480 and Scottbridge Construction Ltd v Wright [2003] IRLR 21. In those cases, the rate of pay was determined by applying the agreed hourly rate only to the number of hours worked. Remuneration was paid solely by reference to time.[39]In the definition of “unmeasured work” (regulation 6), the 1999 Regulations contemplate that the number of hours may not be specified. Regulation 27 enables the number of hours to be ascertained for minimum wage purposes. But this regulation is subject to regulation 28, which permits arrangements to be made to pre-determine the “average daily number of hours the worker is likely to spend in carrying out the duties required of him under his contract”.[40]There is, as I see it, a clear distinction in the 1999 Regulations between “working” and being “available for work”: see, for example, regulations 3 and 15. However, that antithesis is not drawn in the context of unmeasured work.[41]The Tribunal’s finding was that, when not performing her specified tasks, Miss Walton was not required to give Miss Jones her full attention (Tribunal’s extended reasons, paragraph 12). In view of this finding, in my judgment it cannot be said that Miss Walton was continuously performing her contractual duties for 24 hours each day for the purpose of regulation 28. Not every worker who “only stands and waits” carries out contractual duties: it is a question of fact.[42]Had it been intended that regulation 28 should apply to hours for which a worker doing unmeasured work is required to be available for work, but not actually carrying out her contractual duties, it would have been necessary to have some equivalent of regulation 15 and, if Recommendation 4.34 were being followed in the case of unmeasured work, to exclude time spent asleep.[43]For these reasons, and those given by Aldous LJ which I gratefully adopt, I would also dismiss this appeal.[44]I agree with both judgments.

Order

Appeal dismissed; order as per agreed draft; permission to appeal to the House of lords refused. (Order does not form part of the approved judgment)

Cited in 15 later judgments

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