Yemm & Ors v British Steel Plc [1993] UKEAT 341_92_1607

EAT
Yemm & Ors v British Steel Plc
[1993] UKEAT 341_92_1607 · 1993-07-16
MR JUSTICE TUCKEY : On 13 March 1992 the Industrial Tribunal sitting in Cardiff held that applications by the four Appellants did not fall within the Wages Act 1986 and were therefore dismissed for want of jurisdiction. They did not hear and determine the merits of the claims. The Appellants say that the Tribunal did have jurisdiction and that the matter should be remitted to another Tribunal for determination on the merits. The facts are as follows.The Appellants claimed that they had not been paid the right amount by way of shift allowances during the months of August, September and October 1991 by the Respondents their employers, British Steel. The shift allowances were calculated as a percentage the basic pay and the source of the dispute was a change in the shift pattern, apparently imposed upon the Appellants by the Respondents which resulted in a dispute about their entitlement during the months in question. There were before the Tribunal, as indeed before us, a number of documents upon which each party to the dispute relied to support their contentions. The Appellants maintained that the alterations were not in accordance with their contracts and that they should have been paid as before, that is to say they should have been paid the shift allowances which they had been paid in earlier months. The Respondents contended that they were entitled to change the pattern of the shifts under the terms of the Appellants' contracts and that accordingly the payments made were the contractual amounts to which the Appellants were entitled and they were not entitled to the further sums claimed.When the matter came before the Tribunal it appears from their Reasons that they immediately questioned whether they had jurisdiction on the basis that what was being claimed was not a dispute about deductions but a dispute about what the Reasons refer to as `the top line', that is to say the gross amount of pay which the Appellants were entitled to as basic pay and shift allowances. They were right it seems to us, to say that it was a dispute about the top line. Although it could be dressed up, as indeed by reference to the pay-slips in some cases it was, as a deduction, it was not a deduction in the ordinary sense of that word. The Appellants contended that the Tribunal had jurisdiction to hear the claims by reason of section 8(3) of the 1986 Act which we will come to in a moment. That submission was rejected by the Tribunal who having said that what was in dispute was not a deduction but a change in the top line went on to say that in any event it was not properly the subject of a claim before the Tribunal because non-payment of the amounts contended to be due was due to an error of computation within Section 8(4) of the Act.They decided that the case of Delaney v Staples [1991] ICR 331 was not to the point and that the instant case was just like a pay-cut and that nobody had suggested that reducing an employee's gross wage amounted to a deduction. So the applications were dismissed for want of jurisdiction.The decision is said to be erroneous in law. We start with the relevant provisions of the Act. Section 1 says:
"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..."
It is self-evident from that provision that this Act is concerned with contractual entitlement since one of the reasons that an employer may use to justify the making of a deduction is that it was authorised by the worker's contract. That in turn must obviously mean that if there is a dispute about the contract, the Industrial Tribunal, who by virtue of the combined effect of sections 5 and 6 of the Act, have exclusive jurisdiction to hear cases under this Act will have to resolve the contractual issue.Section 7 of the Act defines `wages' for the purpose of the Act and it is common ground that a shift bonus of the type which is in issue here falls within the definition of wages. So we come to section 8 which is the section upon which the outcome of this appeal turns and subsection (3) which reads:
"Where the total amount of any wages that are paid on any occasion by an employer to any worker employed by him is less than the total amount of the wages that are properly payable by him to the worker on that occasion (after deductions) then, except in so far as the deficiency is attributable to an error of computation, the amount of the deficiency shall be treated for the purposes of this Part as a deduction made by the employer from the worker's wages on that occasion."
So it is apparent that this is a deeming provision. It gives a much wider meaning to the word `deduction' than the ordinary use of that word conveys or a reading of section 1 and the earlier sections of this Act would indicate, but it is clear in its terms. It has caused considerable difficulty as to precisely how far it went and has been the subject of conflicting decisions by Industrial Tribunals and in this Appeal Tribunal. The debate was as to whether the subsection had the effect of making disputes where the issue was contractual entitlement to wages, the subject of the Act or not.This conflict in authority has now been resolved by the case of Delaney v Staples . That is a decision of the Court of Appeal which is of course binding on this Tribunal. There, an employee was dismissed and not paid commission and holiday pay which she alleged to be due to her. One of the points in the appeal was whether the non-payment of such commission and holiday pay, which it was conceded fell within the definition of wages under section 7, was a dispute which could be determined under the 1976 Act of not. That raised the question of whether the deeming provision in section 8(3) extended to cover such a dispute.

(H) :

"This subsection provides, in express terms, that wages which are properly payable but not paid are to be treated, to the extent of the non-payment, as within the scope of the expression "deduction". Non-payment of the amount properly payable is to be treated as a deduction. The only exception is for a deficiency attributable to an error of computation.The Act is, indeed, concerned with unauthorised deductions. But section 8(3) makes plain that, leaving aside errors of computation, any shortfall in payment of the amount of wages properly payable is to be treated as a deduction. That being so, a dispute, on whatever ground, as to the amount of wages properly payable cannot have the effect of taking the case outside section 8(3). It is for the industrial tribunal to determine that dispute, as a necessary preliminary to discovering whether there has been an unauthorised deduction. Having determined any dispute about the amount of wages properly payable, the industrial tribunal will then move on to consider and determine whether, and to what extent, the shortfall in payment of that amount was authorised by the statute or was otherwise outside the ambit of the statutory prohibition: for example, by reason of section 1(5). To the extent that the shortfall is found to be a contravention, the industrial tribunal will make an appropriate declaration and orders."He then proceeded to consider various difficulties which had been advanced as reasons against construing section 8(3) in that wide way and rejected them.

(F) where he says:

"Fifth, as already noted, one item in the calculation prescribed by section 8(3) is the "total amount of wages that are properly payable" by the employer to the employee. It is implicit in this that in the event of dispute, this amount will be determined by the industrial tribunal when a complaint has been made under the Act. This must be so in a case where the employer claims that no wages are properly payable as well as in a case where the employer admits that something is due."
We have considered that decision and the submission of the Appellants that it does, contrary to the decision of the Industrial Tribunal, clearly cover the situation here. That is to say the dispute here was as to whether shift payments of the order that the Appellants claimed were due, or whether shift payments of the order that the Respondents claimed were due. That necessarily involved a consideration of the contracts of the Appellants but that was a dispute it seems to us which fell squarely within the deeming provision of section 8(3), subject to one point which we will come to in a moment, and is covered by the case of Delaney v Staples . We are unable to understand why it was that the Industrial Tribunal decided that this case was not to the point but that is what they did and we think they were wrong.However Mrs Williams, Counsel for the Respondents, who realistically accepted the difficulty that the decision in Delaney faced her with argued that the Tribunal were right in saying that this was an error of computation and was therefore excepted from the provisions of section 8(3 because such errors are not covered by the subsection."Error of computation" is further defined by subsection (4) in the following terms:
"In subsection (3) the reference to an error of computation is a reference to an error of any description on the part of the employer affecting the computation by him of the gross amount of the wages that are properly payable by him to the worker on that occasion."
"Gross amount" is defined by subsection 8(1) as the total amount of wages before deductions of whatever nature, so the error of computation must be in the calculation of what the Tribunal called the top line. Accordingly, so it is argued, where you have a dispute about the top line which centres around contractual entitlement, that is excepted from the Act on the basis that the employer can say that he has not made the payment because, if he is wrong in his assertion that the contract entitles him to do what he has done, that is an error of computation.However wide a meaning one gives to the words "error of computation" in this context (and it is clear that subsection (4) does contemplate a wide meaning) we cannot agree that it extends to an error of this kind. An employer who makes a conscious decision not to pay because he believes the contract entitles him to take that course is not making an error of computation; he may be making an error in the sense that he may be mistaken about the terms and effect of the contract, but he is not making by any stretch of language an error of computation. Such an error cannot be characterised as an error of computation. Had this been a valid point we cannot believe that it would not have been ventilated and considered by the Court of Appeal in Delaney since in that case and indeed in every case where there is a contractual dispute about entitlement, it would be open to an employer to take the point and say that the 1986 Act had no application to the facts of such a dispute. The point was not taken in Delaney although it is obvious that the subsection (4) was considered. It was not taken for the simple reason we think, that it is not a good point, with the greatest respect to Mrs Williams and to the Tribunal who here thought that it was.For those reasons we think that the Tribunal erred in law in deciding that they had no jurisdiction to hear this dispute and that these applications should be remitted to a different Industrial Tribunal to be heard and determined in accordance with our ruling.