MRS LYNDA BRUCE MISS DONNA E GREIG MR ANDREW KINNAIRD v WIGGINS TEAPE (STATIONERY) LTD [1994] UKEAT 1050_93_1305

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [1994] UKEAT 1050_93_1305Case No Appeal No. UKEAT/1050/93
Between
MRS LYNDA BRUCE MISS DONNA E GREIG MR ANDREW KINNAIRDAPPELLANTWIGGINS TEAPE (STATIONERY) LTDRESPONDENT
Before
Mr Justice MummeryDate 13 May 1994
[1]This is an appeal from a decision of the Industrial Tribunal held at Aberdeen on 18th June and 17th September 1993. For full reasons notified to the parties on the 25th November 1993 the Tribunal dismissed applications made under the Wages Act 1986 (the 1986 Act) by 3 workers, Mrs Bruce, Miss Greig and Mr Kinnaird (the workers) against their employers, Wiggins Teape (Stationery) Ltd (Wiggins Teape). The Tribunal held that Wiggins Teape had not made any deductions from wages within the meaning of s.8(3) of the 1986 Act. The Facts The dispute arose out of an attempt by Wiggins Teape to make a unilateral reduction in the rate of overtime pay which the workers claimed was payable to them. The findings of fact made by the Tribunal were as follows:-(1) In about January 1989 Wiggins Teape, in order to meet the current needs of their business, agreed to pay enhanced overtime rates to the "rolling night shift" personnel who included the workers. The rates were double those paid to the "original night shift" personnel. The increase in the overtime rate was not covered by any written agreement nor was it contained in the written particulars of employment.(2) In October 1992 Wiggins Teape decided for business reasons that, from the 1st November 1992, workers on the rolling night shift would be paid the same overtime rates as those on the original night shift - "normal overtime rates" would apply.(3) This decision was made known to the workers on the rolling night shift and to their Union representatives. They objected. They did not agree to any change in the overtime rates nor did the Union on their behalf.(4) After 1st November 1992 Wiggins Teape ceased to pay the enhanced rates for overtime work. The workers on the rolling night shift continued, under protest, to work overtime on the rolling night shift. They made application to the Tribunal under the 1986 Act on the 29th January 1993 complaining of unauthorised deductions from their wages. Decision of the Tribunal The essence of the Tribunal's decision was that there were no deductions from the workers' wages within the meaning of s.8(3) of the 1986 Act. The Tribunal held:
"The Wages Act nowhere provides that any employer may not reduce the rate of pay which he pays to his employees without their agreement. The purpose of the Act is to protect workers in relation to the payment of wages, not to protect their rates of pay. It deals with deductions and not reductions."
As the Tribunal adopted this approach to the workers' applications, it declined to decide issues argued before it as to whether the enhanced rates were contractual or not and whether they were reasonable or not. In the Tribunal's view, the position was that the Wages Act could not be invoked by workers "in support of an argument which in essence was that the employers had reduced their wages, that the reduction was not authorised by any relevant provision in their contracts of employment and that they had not agreed to it, that therefore the purported reduction was ineffective and the Tribunal had to make an order requiring the employers to pay the difference between what was paid and the contractual pay which was properly due. In our opinion, the Wages Act provides the Applicants with no such remedy ..." The Tribunal's analysis of the position was that, on the one hand, if the enhanced rates were not contractual, Wiggins Teape were entitled to withdraw them unilaterally without being in breach of the Wages Act or in breach of contract. If, on the other hand, they were contractual, the workers had the option of either accepting the reduced overtime rates or of arguing that the reduction was a fundamental breach of their contract which entitled them to resign and claim for constructive dismissal. The Legal Position In our judgment, the Industrial Tribunal erred in law in its interpretation and application of the provisions of the Wages Act 1986 to the facts found by it. We shall, therefore, allow the appeal and remit the case to the Industrial Tribunal to make the necessary calculations of entitlement. The reasons for our conclusions are these. A worker is entitled to present a claim to an industrial tribunal that his employer has made a deduction from his wages in contravention of s.l(l) of the 1986 Act . The three questions which arose for decision on the applications in this case were: (1) What were the " wages " of the workers at the relevant time? (2) Did Wiggins Teape make a " deduction " from those wages within the meaning of the 1986 Act. (3) If so, were those deductions made in contravention of the general restriction on deductions contained in s.l(l) of the 1986 Act ? A. Wages Wages, in relation to a worker, are defined by s.7 as meaning "any sums payable to the worker by his employer in connection with his employment, including - (a) any fee, bonus, commission, holiday pay or other emolument referable to his employment, whether payable under his contract or otherwise. ..." This definition is wide in its reference to " any sums ", to the fact that the sums are payable "in connection with his employment" and to sums which may or may not be payable under his contract. It is wide enough to include sums payable for overtime. B. Deductions The relevant provisions are contained in s.8(3):
"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 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."
According to the authorities this Section has a broad effect having regard (a) to the basic object of the Act which is "to see that workers receive their wages in full at the time they are due". Delaney v. Staples [1991] IRLR 112 at 114; and (b) to the fact that the subsection is a deeming provision which enlarges the ambit of the Act by extending the scope of the expression "deduction". As Nicholls LJ held in Delaney v. Staples (Supra) the 1986 Act does not draw a distinction between, on the one hand, a mere non-payment or refusal to pay wages, and, on the other hand, a deduction from wages. The position is that any shortfall in the payment of the amount of wages properly payable to the worker is to be treated as a deduction. Nicholls LJ said at 114:
"If on his pay day, when an employee is due to be paid, a worker receives less wages than he should have done, the deficiency is to be regarded as a deduction for the purposes of the Act."
If, on the facts, there is a dispute as to the amount of wages properly payable by the employer to the worker, the Industrial Tribunal must determine that dispute in order to decide whether there has been an unauthorised deduction. For these reasons we are of the view that no valid distinction is to be drawn for the purposes of the 1986 Act between, on the one hand, a deduction from wages and, on the other hand, a reduction in wages. The issue is whether, for whatever reason, apart from an error in computation, the worker is paid less than the amount of wages properly payable to him. The crucial question is, therefore: what was the amount of wages "properly payable" to the workers? On the facts found by the Industrial Tribunal the conclusion on this point is clear. Wiggins Teape agreed to pay the enhanced rate of overtime to personnel, including the workers, on the rolling night shift. They in fact paid the enhanced rate for almost four years. The workers have never agreed to a reduction in the enhanced rate. After the decision was taken to reduce the enhanced rate the workers continued to work under protest There was no finding by the Tribunal that the workers, by continuing to work, accepted a reduction or other variation in the amount of wages payable to them for overtime. There was no provision in the contract of employment or in the particulars of employment which entitled Wiggins Teape to reduce the wages of their workers unilaterally. There was no evidence that the increase in the overtime rate was agreed only for a limited period or was terminable by Wiggins Teape unilaterally and without notice. It is clear from cases such as Rigby v. Ferodo [1987] IRLR 516 at 518 that a worker may continue to work under protest without „ impliedly consenting by conduct to a reduction in wages which his employer hopes to bring about. The workers simply continued to work under protest. There was no acceptance by them of a change in their wages. C. Contravention Section 1 of the 1986 Act provides:
"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."
In the view of the Tribunal it is irrelevant that, as Wiggins Teape contend, the purpose of the change made in the rate of overtime pay was to correct an anomaly which had resulted in rates being paid above the level in the national agreement. It is also irrelevant that the workers did not treat the decision to reduce the wages as a repudiatory breach of the contract and sue for constructive dismissal or that the workers continued to work when aware of the decision made by the employer to reduce the rate. Conclusion In brief, the reason why the Industrial Tribunal erred in law was that it misconstrued the provisions of the Wages Act 1986 and the decisions on it as drawing a distinction between a deduction from wages and a reduction in wages. That is a false antithesis. On a proper analysis of the provisions of the 1986 Act and their application to the facts of this case the Tribunal could only have come to one conclusion: deductions were made and were unauthorised. For those reasons the appeal is allowed. The case is remitted to the Industrial Tribunal to calculate the amount due to the workers in respect of the unauthorised deductions. This is an appeal from a decision of the Industrial Tribunal held at Aberdeen on 18th June and 17th September 1993. For full reasons notified to the parties on the 25th November 1993 the Tribunal dismissed applications made under the Wages Act 1986 (the 1986 Act) by 3 workers, Mrs Bruce, Miss Greig and Mr Kinnaird (the workers) against their employers, Wiggins Teape (Stationery) Ltd (Wiggins Teape). The Tribunal held that Wiggins Teape had not made any deductions from wages within the meaning of s.8(3) of the 1986 Act. The Facts The dispute arose out of an attempt by Wiggins Teape to make a unilateral reduction in the rate of overtime pay which the workers claimed was payable to them. The findings of fact made by the Tribunal were as follows:- (1) In about January 1989 Wiggins Teape, in order to meet the current needs of their business, agreed to pay enhanced overtime rates to the "rolling night shift" personnel who included the workers. The rates were double those paid to the "original night shift" personnel. The increase in the overtime rate was not covered by any written agreement nor was it contained in the written particulars of employment. (2) In October 1992 Wiggins Teape decided for business reasons that, from the 1st November 1992, workers on the rolling night shift would be paid the same overtime rates as those on the original night shift - "normal overtime rates" would apply. (3) This decision was made known to the workers on the rolling night shift and to their Union representatives. They objected. They did not agree to any change in the overtime rates nor did the Union on their behalf. (4) After 1st November 1992 Wiggins Teape ceased to pay the enhanced rates for overtime work. The workers on the rolling night shift continued, under protest, to work overtime on the rolling night shift. They made application to the Tribunal under the 1986 Act on the 29th January 1993 complaining of unauthorised deductions from their wages. Decision of the Tribunal[2]The essence of the Tribunal's decision was that there were no deductions from the workers' wages within the meaning of s.8(3) of the 1986 Act. The Tribunal held:
"The Wages Act nowhere provides that any employer may not reduce the rate of pay which he pays to his employees without their agreement. The purpose of the Act is to protect workers in relation to the payment of wages, not to protect their rates of pay. It deals with deductions and not reductions."
[3]As the Tribunal adopted this approach to the workers' applications, it declined to decide issues argued before it as to whether the enhanced rates were contractual or not and whether they were reasonable or not. In the Tribunal's view, the position was that the Wages Act could not be invoked by workers "in support of an argument which in essence was that the employers had reduced their wages, that the reduction was not authorised by any relevant provision in their contracts of employment and that they had not agreed to it, that therefore the purported reduction was ineffective and the Tribunal had to make an order requiring the employers to pay the difference between what was paid and the contractual pay which was properly due. In our opinion, the Wages Act provides the Applicants with no such remedy ..."[4]The Tribunal's analysis of the position was that, on the one hand, if the enhanced rates were not contractual, Wiggins Teape were entitled to withdraw them unilaterally without being in breach of the Wages Act or in breach of contract. If, on the other hand, they were contractual, the workers had the option of either accepting the reduced overtime rates or of arguing that the reduction was a fundamental breach of their contract which entitled them to resign and claim for constructive dismissal. The Legal Position[5]In our judgment, the Industrial Tribunal erred in law in its interpretation and application of the provisions of the Wages Act 1986 to the facts found by it. We shall, therefore, allow the appeal and remit the case to the Industrial Tribunal to make the necessary calculations of entitlement.[6]The reasons for our conclusions are these.[7]A worker is entitled to present a claim to an industrial tribunal that his employer has made a deduction from his wages in contravention of s.l(l) of the 1986 Act . The three questions which arose for decision on the applications in this case were:(1) What were the " wages " of the workers at the relevant time?(2) Did Wiggins Teape make a " deduction " from those wages within the meaning of the 1986 Act.(3) If so, were those deductions made in contravention of the general restriction on deductions contained in s.l(l) of the 1986 Act ?[8]A. Wages[9]Wages, in relation to a worker, are defined by s.7 as meaning "any sums payable to the worker by his employer in connection with his employment, including - (a) any fee, bonus, commission, holiday pay or other emolument referable to his employment, whether payable under his contract or otherwise. ..."[10]This definition is wide in its reference to " any sums ", to the fact that the sums are payable "in connection with his employment" and to sums which may or may not be payable under his contract. It is wide enough to include sums payable for overtime. B. Deductions[11]The relevant provisions are contained in s.8(3):
"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 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."
[12]According to the authorities this Section has a broad effect having regard(a) to the basic object of the Act which is "to see that workers receive their wages in full at the time they are due". Delaney v. Staples [1991] IRLR 112 at 114; and(b) to the fact that the subsection is a deeming provision which enlarges the ambit of the Act by extending the scope of the expression "deduction".[13]As Nicholls LJ held in Delaney v. Staples (Supra) the 1986 Act does not draw a distinction between, on the one hand, a mere non-payment or refusal to pay wages, and, on the other hand, a deduction from wages. The position is that any shortfall in the payment of the amount of wages properly payable to the worker is to be treated as a deduction. Nicholls LJ said at 114:
"If on his pay day, when an employee is due to be paid, a worker receives less wages than he should have done, the deficiency is to be regarded as a deduction for the purposes of the Act."
[14]If, on the facts, there is a dispute as to the amount of wages properly payable by the employer to the worker, the Industrial Tribunal must determine that dispute in order to decide whether there has been an unauthorised deduction.[15]For these reasons we are of the view that no valid distinction is to be drawn for the purposes of the 1986 Act between, on the one hand, a deduction from wages and, on the other hand, a reduction in wages. The issue is whether, for whatever reason, apart from an error in computation, the worker is paid less than the amount of wages properly payable to him.[16]The crucial question is, therefore: what was the amount of wages "properly payable" to the workers? On the facts found by the Industrial Tribunal the conclusion on this point is clear. Wiggins Teape agreed to pay the enhanced rate of overtime to personnel, including the workers, on the rolling night shift. They in fact paid the enhanced rate for almost four years. The workers have never agreed to a reduction in the enhanced rate. After the decision was taken to reduce the enhanced rate the workers continued to work under protest There was no finding by the Tribunal that the workers, by continuing to work, accepted a reduction or other variation in the amount of wages payable to them for overtime. There was no provision in the contract of employment or in the particulars of employment which entitled Wiggins Teape to reduce the wages of their workers unilaterally. There was no evidence that the increase in the overtime rate was agreed only for a limited period or was terminable by Wiggins Teape unilaterally and without notice. It is clear from cases such as Rigby v. Ferodo [1987] IRLR 516 at 518 that a worker may continue to work under protest without „ impliedly consenting by conduct to a reduction in wages which his employer hopes to bring about. The workers simply continued to work under protest. There was no acceptance by them of a change in their wages. C. Contravention[17]Section 1 of the 1986 Act provides:
"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."
[18]In the view of the Tribunal it is irrelevant that, as Wiggins Teape contend, the purpose of the change made in the rate of overtime pay was to correct an anomaly which had resulted in rates being paid above the level in the national agreement. It is also irrelevant that the workers did not treat the decision to reduce the wages as a repudiatory breach of the contract and sue for constructive dismissal or that the workers continued to work when aware of the decision made by the employer to reduce the rate. Conclusion[19]In brief, the reason why the Industrial Tribunal erred in law was that it misconstrued the provisions of the Wages Act 1986 and the decisions on it as drawing a distinction between a deduction from wages and a reduction in wages. That is a false antithesis. On a proper analysis of the provisions of the 1986 Act and their application to the facts of this case the Tribunal could only have come to one conclusion: deductions were made and were unauthorised.[20]For those reasons the appeal is allowed. The case is remitted to the Industrial Tribunal to calculate the amount due to the workers in respect of the unauthorised deductions.