Sunderland Polytechnic v Evans [1993] UKEAT 334_92_1102

EAT
Sunderland Polytechnic v Evans
[1993] UKEAT 334_92_1102 · 1993-02-11
MR JUSTICE WOOD (PRESIDENT) This appeal raises a short but difficult point of law namely the proper construction of S.1(5)(e) of the Wages Act 1986. It will also require us to consider our reasoning in Home Office v. Ayres [1992] ICR 175 . Since the decision in that case the House of Lords has given guidance on the approach which can be utilised in seeking to discover the true intent of Parliament in passing a particular statutory provision. see Pepper v. Hart [1993] IRLR 33 . We have had our attention drawn to passages in Hansard which indicate that some of the reasoning in Ayres is no longer correct.The Applicant, Mrs Ann Evans, is a Barrister and a Principal Lecturer in law in the School of Business Studies at the Sunderland Polytechnic. She was employed on a full time basis. She teaches a maximum of 10 sessions per week and undertakes many other responsible duties. She is a member of the National Association of Teachers in Further and Higher Education (NATFHE). On 28th October 1990 that Trade Union told the Polytechnic that its members intended to take part in a series of one-day strikes.By a letter of 2nd November the Director wrote to all members of staff pointing out that participation in the industrial action, whether for a day or less a period, would constitute a serious breach of the contract of employment and that the Polytechnic was not prepared to pay the contractual salary to a member of staff who participated. Participation for less than a day would constitute partial performance which was not acceptable and in those circumstances a full day's salary would be deducted. Any work done for part of a strike day would be regarded as undertaken on a purely gratuitous basis and would not merit pay.On 6th November NATFHE called a half-day stoppage. Prior to that stoppage Dr Wilson, the Applicant's supervisor, had written to her and to others asking whether or not she proposed to join in the stoppage. She did not reply.On that 6th November the Applicant spent from 8.45 a.m. to approximately noon on the picket line distributing leaflets. After that she resumed her duties on a self-managed basis and finished work at 5 p.m.On 7th November she informed Dr Wilson of her activities. There is no issue but that she was taking part in industrial action.Approximately 152 other members of staff had taken similar action. At first two of them had not suffered any deduction, but this mistake was subsequently rectified. Nothing turns on this.£63.99 was deducted from the Applicant's salary, being 1/365th of her annual salary. She claimed that only 1/730th, ie, half a day, should have been deducted. She initiated the grievance procedure, but for some reason, which is not apparent, this was not dealt with appropriately.The Applicant, who appeared on her own behalf, submitted that the Polytechnic was wrong in looking at the working day as indivisible and asked for a declaration to that effect. Alternatively, she submitted that the "proper" deduction would have been half a day's salary ie £31.99.Before the Industrial Tribunal, counsel for the Polytechnic argued that the only remedy open to the Applicant was to sue in the County Court as by S.1(5)(e) of the Wages Act 1986, the provisions of section 1 of that Act did not apply.An Industrial Tribunal sitting at Newcastle-upon-Tyne on 12th December 1991 under the Chairmanship of Mr Tavroges heard this matter and gave its unanimous decision that:
"the complaint of the applicant that the respondents had made a deduction from her wages in contravention of section 1(1) of the Wages Act 1986 is to be further examined to determine whether or not the deduction was lawful and if so whether or not the amount of the deduction was incorrect."
After the hearing the Industrial Tribunal became aware of the case of Home Office v. Ayres (supra) , which had only been decided on 11th October. The reasoning of the Tribunal at the end of its judgment is as follows:
"5 After the hearing the Tribunal became aware of the decision of Employment Appeal Tribunal in Home Office v. Ayres on 11 October 1991 and briefly reported in the Law Society's Gazette Number 42 on Wednesday 20 November 1991 at page 31. In the light of that decision the Tribunal has decided that it has a duty to examine the lawfulness of the deduction in the instant case. The Tribunal considered that the judgment of Employment Appeal Tribunal, that the true intention of Parliament was best achieved by reading section 1(5)(a) of Wages Act as if the word "lawful" were inserted in the opening phrase "to any deduction" and before the word "reimbursement", applies equally to section 1(5)(e) of Wages Act and that, as the respondents in the instant case have relied on section 1(5)(e) of Wages Act by way of a defence to the applicant's claim under section 1(1) of Wages Act, the applicant must be able to raise her argument that the deduction was in whole or in part contrary to the general law."
The Polytechnic appeal.The relevant provisions of the Wages Act 1986 are as follows:

"1. General restrictions on deductions made, or payments received, by employers

(1) An employer shall not make any deduction from any wages of any worker employed by him unless the deduction satisfies one of the following conditions, namely -(a)it is required or authorised to be made by virtue of any statutory provision or any relevant provision of the worker's contract; or (b)the worker has previously signified in writing his agreement or consent to the making of it.(3) - (4) ...

(5) Nothing in this section applies -

(a)to any deduction from a worker's wages made by his employer, or any payment received from a worker by his employer, where the purpose of the deduction or payment is the reimbursement of the employer in respect of - (i) any overpayment of wages, or(ii) any overpayment in respect of expenses incurred by the worker in carrying out his employment,made (for any reason) by the employer to the worker;(b)to any deduction from a worker's wages made by his employer, or any payment received from a worker by his employer, in consequence of any disciplinary proceedings if those proceedings were held by virtue of any statutory provision; (c)to any deduction from a worker's wages made by his employer in pursuance of any requirement imposed on the employer by any statutory provision to deduct and pay over to a public authority amounts determined by that authority as being due to it from the worker, if the deduction is made in accordance with the relevant determination of that authority; (d)to any deduction from a worker's wages made by his employer in pursuance of any arrangements which have been established - (i) in accordance with any relevant provision of his contract to whose inclusion in the contract the worker has signified his agreement or consent in writing or,(ii) otherwise with the prior agreement or consent of the worker signified in writing,and under which the employer is to deduct and pay over to a third person amounts notified to the employer by that person as being due to him from the worker, if the deduction is made in accordance with the relevant notification by that person;(e)to any deduction from a worker's wages made by his employer, or any payment received from a worker by his employer, where the worker has taken part in a strike or other industrial action and the deduction is made, or the payment has been required, by the employer on account of the worker's having taken part in that strike or other action; or (f)to any deduction from a worker's wages made by his employer with his prior agreement or consent signified in writing, or any payment received from a worker by his employer, where the purpose of the deduction or payment is the satisfaction (whether wholly or in part) of an order of a court or tribunal requiring the payment of any amount by the worker to the employer.

(6) ..."

There is also a provision whereby any deductions illegally and wrongfully made are irrecoverable:
"S.5(7) Where a tribunal has under subsection 4(a) or (b) ordered an employer to pay or repay to a worker any amount in respect of a particular deduction or payment falling within subsection 1(a) to (d) ("the relevant amount") the amount which the employer shall be entitled to recover (by whatever means) in respect of the matter in respect of which the deduction or payment was originally made or received shall be treated as reduced by the relevant amount."
It is common ground that S.1(5) must be read as a whole. In Ayres we decided that the word "lawful" should be read into sub sub-section (a) before the word "deduction". If the reasoning in that case is to stand then "lawful" must be read into each of the sub sub-sections (a) - (f) inclusive.In each of those sub sub-sections (a) - (f) the structure of the clause is a reference first to "any deduction from a worker's wages": secondly, to some connecting words for instance "where the purpose of" or, "in consequence of" or "on account of" and then thirdly, what has been termed during submissions as the "trigger" or the operative words.Mr Anthony White for the Respondent, Mrs Evans, submits that an Industrial Tribunal must be allowed to make some enquiry or test to satisfy itself that the deduction is linked to the "trigger", and that in the present case it could look to see whether the deduction of a whole day's pay was linked to the industrial action. The calculation of the amount is not in issue nor that participation in industrial action took place. It would follow that if £31.99 only was deductible then the remainder of the sum making up the total of £63.99 was illegally deducted.Mr Elias for the Polytechnic Appellants, submits - first, that sub paragraphs (b), (c), (d) and (f) all deal with third party issues and the amount in each case will be known. Thus, if an Industrial Tribunal were allowed to investigate the issue of the lawfulness of the amount, it might decide that there had been an error in the third party - for instance an incorrect coding by the Inland Revenue. In that case, under S.5(7) of the Act, the additional sum would be irrecoverable by the employer from the employee. Thus for instance if under (d) an employer had deducted certain dues by way of "check off", which were subsequently found to have been excessive, the employer would be unable to recover that amount either from the employee or from the Trade Union. He submitted therefore that the word "lawful" could not properly be read into any of those clauses.Secondly, he submits that although once the Act "bites", an Industrial Tribunal can in its investigation apply common law principles - Fairfield Ltd v. Skinner [1992] ICR 836 , this case is to be distinguished in that the issue is whether the Act bites at all and not what an Industrial Tribunal is entitled to do after the proceedings before it are within the Act.In carrying out the various tests within S.1(5) the purpose is not to question the amount of the deduction but the cause of the deduction. It may be that once the Act "bites" the mischief is to ensure that the deduction is lawful, but S.1(5) is dealing with exceptions and the issue is does the Industrial Tribunal have any jurisdiction in this case?Thirdly, he submits that if Parliament had intended to give Industrial Tribunals jurisdiction to investigate the issue involved, the word "lawful" could have been inserted and it was not.Mr Elias submitted that as we were construing an exception it should be construed strictly and that we should not look for a purposive construction. He drew our attention to a passage in the speech of Lord Diplock in Jones v. Wrotham Park Estates [1980] A.C. 74, 105E :
"My Lords, I am not reluctant to adopt a purposive construction where to apply the literal meaning of the legislative language used would lead to results which would clearly defeat the purposes of the Act. But in doing so the task on which a court of justice is engaged remains one of construction; even where this involves reading into the Act words which are not expressly included in it. Kammins Ballrooms Co Ltd v. Zenith Investments (Torquay) Ltd [1971] A.C. 850 provides an instant of this; but in that case the three conditions that must be fulfilled in order to justify this course were satisfied. First, it was possible to determine from a consideration of the provisions of the Act read as a whole precisely what the mischief was that it was the purpose of the Act to remedy; secondly, it was apparent that the draftsman and Parliament had by inadvertence overlooked, and so omitted to deal with, an eventuality that required to be dealt with if the purpose of the Act was to be achieved; and thirdly, it was possible to state with certainty what were the additional words that would have been inserted by the draftsman and approved by Parliament had their attention been drawn to the omission before the Bill was passed into law. Unless this third condition is fulfilled any attempt by a court of justice to repair the omission in the Act cannot be justified as an exercise of its jurisdiction to determine what is the meaning of a written law which Parliament has passed. Such an attempt crosses the boundary between construction and legislation. it becomes an usurpation of a function which under the constitution of this country is vested in the legislature to the exclusion of the courts."
One of the problems, in cases such as the present, is for an applicant who may well be acting in person, to know in which jurisdiction to bring a claim, whether in the County Court or before an Industrial Tribunal. We have long since suggested that the jurisdiction should be co-ordinated and it may be that this is soon to take place as a result of amendments in the Trade Union Reform and Employment Rights Bill now before Parliament. However, until that Bill becomes an Act we must take the law as it exists. Our decision in Ayres was perhaps affected by an enthusiasm to save multiple litigation.Lastly, he submits that if the wording of S.1(5) is thought to be not sufficiently clear on its face, and he submits that it is, then he relies upon Pepper v. Hart (supra) and he placed before us excerpts from Hansard, which in his submission put the intention of Parliament beyond doubt.Before we are entitled to have regard to the contents of Hansard we must look to the advice given by the House of Lords in Pepper v. Hart (supra). We refer only to the speech of Lord Browne-Wilkinson in paragraph 80 of the IRLR Report. He says this:
"My Lords, I have come to the conclusion that, as a matter of law, there are sound reasons for making a limited modification to the existing rule (subject to strict safeguards) unless there are constitutional or practical reasons which outweigh them. In my judgment, subject to the questions of the privileges of the House of Commons, reference to parliamentary material should be permitted as an aid to the construction of legislation which is ambiguous or obscure, or the literal meaning of which leads to an absurdity. Even in such cases references in courts to parliamentary material should only be permitted where such material clearly discloses the mischief aimed at or the legislative intention lying behind the ambiguous or obscure words. In the case of statements made in Parliament, as at present advised I cannot foresee that any statement other than the statement of the Minister or other promoter of the Bill is likely to meet these criteria."
At 102 he says this:
"I therefore reach the conclusion, subject to any question of parliamentary privilege, that the exclusionary rule should be relaxed so as to permit reference to parliamentary materials where: (a) legislation is ambiguous or obscure, or leads to an absurdity; (b) the material relied upon consists of one more statements by a Minister or other promoter of the Bill, together if necessary with such other parliamentary material as is necessary to understand such statements and their effect; (c) the statements relied upon are clear.

..."

As can be understood from the submissions which have been made to us the construction of this legislation leaves the position somewhat obscure. If we are wrong and it is not obscure and this sub-section must be read literally, then the appeal must succeed. However, in order to satisfy ourselves that this is the proper approach in the light of the reasoning which persuaded us in Ayres , we feel this is an occasion where we should look at Hansard for guidance. It was not seriously argued to the contrary. Indeed, Mr White asked us to look at a passage from the debate in the House of Lords.We have been referred to two passages from Hansard. The first is a report of Standing Committee K on 27th February 1986 when Clause 1 was being debated. The relevant Minister was the Parliamentary Under Secretary of State for Employment - Mr David Trippier. The relevant passages in the Report of Hansard start at column 124 and continue to 125. We would refer to the passage starting at column 124 as follows:
"Mr Trippier: I ask the Committee to accept the need for an amendment to clause 1(6). There is concern about the possible implications of the Bill for industrial tribunals.
If a worker is involved in a go slow or similar industrial action where he stays at work but deliberately hampers production, the employer is often entitled to make a deduction from his wages. There may be an express term in the contract that allows for such an eventuality, but more often there is an implied term in the contract that the worker does not behave in that way. However, if the worker does behave in that way, his employer is not obliged to pay his wages in full. The worker can go to a civil court and argue that the employer is in breach of contract in making such a deduction. There have been a number of such cases, and where courts have disagreed with the employer's interpretation of the implied term, an award has been made to the worker.The amendment seeks to leave unchanged the situation relating to deductions made because of the worker's part in industrial action."
"Mr Trippier: ...
Clause 1 will not apply to tax deductions. If the worker believes that a deduction is not contractually authorised, his means of redress is the civil court for breach of contract, rather than an industrial tribunal. Such contentious and difficult problems where, as the Committee knows, emotions occasionally run high are best dealt with by the courts, not industrial tribunals. Therefore, deductions made as a result of industrial action should be separated from those deductions about which a complaint may be made to an industrial tribunal.That would not alter the right of workers to claim back deductions not authorised by the contract, but the avenue of redress would be changed. Complaints of breach of contract would be to the courts, not to a tribunal. I ask the Committee to support the amendment."The other passages from the debate in the House of Lords on the Wages Bill on 24th June 1986, HL Vol.477 at columns 205 where the Government Minister for Employment, Lord Trefgarne gives an indication to the same extent. We need only refer to two paragraphs from his speech:
"Lord Trefgarne: Perhaps I may just swiftly explain the objective of Clause 1(5)(e). If a worker is involved in industrial action - for example, in a go-slow or other similar action in which the worker stays at work but deliberately hampers production - the employer is often entitled to deduct something from his wages. There may be an express term in the contract that allows for that, but more often there will be an implied term in the contract that the worker does not behave in that way and that, if he does, the employer is not obliged to pay his wages in full.
The worker can of course go to the civil court and argue that the employer is in breach of the contract in making such a deduction. There are a number of cases where a worker has taken an employer to court and, in some instances, the courts have disagreed with the employer's interpretation of the implied term of the contract and have made an award to the worker."These passages clearly support the submissions placed before us by Mr Elias.It follows from what we have said above that some of the reasoning of this Tribunal in Ayres can no longer stand. We allow the appeal and find that the Industrial Tribunal in the present case had no jurisdiction to hear the Applicant's claim.