Israr v The Blue Cross [1996] UKEAT 1202_95_1211

EAT
Israr v The Blue Cross
[1996] UKEAT 1202_95_1211 · 1996-10-04

JUDGE PETER CLARK :

Muhammed Israr, the appellant, has been continuously employed by the respondent animal charity since February 1966. He is a Night Superintendent at the Animals Hospital in Hugh Street, Victoria, London. He is of Asian ethnic origin, having been born in Pakistan in 1938. In 1961 he graduated from the University of the Punjab with BSc in animal husbandry and came to the United Kingdom in 1964. He lives with his family in a flat owned by the respondent at 9 Hugh Street.In 1987 he presented a complaint of unlawful racial discrimination against the respondent. That complaint was withdrawn upon terms agreed and contained in an ACAS Agreement signed by the parties on a form COT3 in April 1988. We shall return to the material terms of that Agreement ["The ACAS Agreement"] later in this judgment.Subsequently he presented further Originating Applications to an Industrial Tribunal, in September 1994 and January 1995, complaining of racial discrimination and breaches of the Wages Act 1986 . Those applications were heard together by the London (South) Industrial Tribunal over five days in September 1995. By a decision in full form dated 25th September 1995, as amended on 8th February 1996, that tribunal dismissed all complaints. Against that decision, Mr Israr now appeals.At the outset of this full appeal hearing we invited Mr Hawthorn, who appeared for the appellant both here and below, to identify the points of law which he wished to argue. He submitted that the appeal raised 12 points. On consideration it seemed to us that these could properly be distilled into essentially four separate matters. We shall consider each in turn.The first point concerns his claim that the respondent unlawfully deducted £16,128 from his wages over time following the ACAS Agreement. The background is as follows.On 16th March 1982 the parties entered into an Agreement in writing amounting to a service tenancy in respect of the residential occupation of 9 Hugh Street. In essence the appellant was granted rent free accommodation of the premises during his employment for the better performance of his duties. The Agreement was terminable by the respondent on four weeks notice. In fact he has remained in occupation of the premises to this day.We turn next to the ACAS Agreement. This provided, under the heading "Salary":
"9,692.31 per annum with effect from 2nd May 1988.
Accommodation provided in lieu of the additional Inner London Weighting of £1,500 per annum. (Respondent to continue paying Applicant's gas bills).Salary calculated from a basic salary of £6,000 per annum for a 42 hour week at normal hours."Thus, submits Mr Hawthorn, it was agreed between the parties, and was a term of the contract between them, that Mr Israr would live rent free in the accommodation, and there has been no subsequent written agreement made between the parties permitting the respondent to deduct rent from his wages.It seems that at the time when the parties entered into the ACAS Agreement neither considered the tax implications of providing rent free accommodation in lieu of the London Weighting Allowance. Pausing here, it was suggested by Mr Hawthorn that the ACAS Agreement was tainted by illegality in that it represented fraud on the Revenue. Accordingly the respondent could not rely upon it. That contention was rejected by the Industrial Tribunal, as do we. There was no question of either party seeking to evade tax. They simply did not direct their minds to the question of taxation in respect of this benefit.Subsequent to the ACAS Agreement, the Inland Revenue enquired into the provision of rent free accommodation by the respondent to its employees, including the appellant. Correspondence passed between the respondent and the Inland Revenue during 1991, culminating in the Revenue ruling that the value of the accommodation was a taxable benefit. Arrears of tax was paid by the respondent, but for the future tax was to be deducted in respect of affected employees under the PAYE system.The Industrial Tribunal was critical of the administrative management of the organisation for not giving Mr Israr a clear explanation of the restructuring of his salary in order to comply with the requirements of the Inland Revenue. But it noted that Mr Israr had been treated as favourably as any other staff who might be in a similar position.The way in which this deduction appeared on the appellant's itemised pay statement is illustrated by his pay slip for the month of February 1992, which is before us. The London Weighting Allowance, by then £179.42 per month, is shown as a credit, and a notional rental figure of £154.08 is shown as a debit.Mr Hawthorn contends that such deduction for rent is unlawful, and similar deductions going back to 1990 also breach the 1986 Act.

(b) Section 1 provides:

"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."It is correct to say that Mr Israr never gave his consent to the new method by which his employer accounted for tax in respect of his rent free accommodation, but the first question is whether there was here a "deduction". The Industrial Tribunal found, in paragraph 36 of their reasons, that there was no deduction within the meaning of the 1986 Act. We agree.The definition of a deduction for the purposes of Part 1 of the Act is contained in section 8(3) which provides:
" (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 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."
The Industrial Tribunal found as a fact that the restructuring of the Mr Israr's wages as a result of the Revenue's decision "made no practicable difference to Mr Israr". Before us it was accepted that the final net figure each month properly reflected the gross pay shown, less all statutory deductions for tax and National Insurance. That, it seems to us, is an end of the matter. There was no deduction for the purposes of the Act; hence there could have been no unlawful deduction.The second point raised in the appeal concerns overtime payments. It seems that when collating information for the purposes of answering the section 65 Race Relations Act questionnaire the respondent discovered that it had been paying Mr Israr for overtime and bank holiday working at a higher rate than that agreed under the contract. Having identified that mistake, and it is common ground that overpayments had been made by mistake, the respondent did not attempt to recover those overpayments previously made, but thereafter calculated overtime on the originally agreed basis. Such a correction, submits Mr Hawthorn, represents an unlawful deduction from the appellant's wages. He submitted, without citing any relevant authority, that it was not open to the respondent to correct their earlier mistake as a matter of contract.We cannot accept that proposition. A unilateral mistake having been made in implementing the agreed term of the contract it would not have been open to the respondent to deduct the earlier overpayments from his wages. However, that did not happen. No estoppel arises in this case; there had been no change of position by the appellant. There was no express or implied consensual variation of the contract whereby the higher rate became the contractual rate for overtime and bank holiday payments. This submission, in our judgment, has no foundation in either fact or law.The third submission concerns the complaint of unlawful racial discrimination. At paragraph 8 of the reasons the Industrial Tribunal set out the well-known guidance to be found in the judgment of Neill LJ in King v The Great Britain China Centre [1991] IRLR 513 , paragraph 38. Mr Hawthorn submits that the Industrial Tribunal failed to apply that guidance to the facts of this case, and in particular failed to draw inferences from what he contends were equivocal and inconsistent replies by the respondent to the section 65 questionnaire. Alternatively, they failed to address that issue in their written reasons with the result that the appellant does not know why he lost on his racial discrimination complaint. See Meek v City of Birmingham District Council [1987] IRLR 250 .We think that the short answer to that submission is contained in the Industrial Tribunal's unchallenged finding at paragraph 44 of their reasons that the appellant had suffered no detriment. Without a finding of "detriment" for the purposes of section 4(2)(c) of the Race Relations Act 1976 this complaint must fail.The fourth point similarly falls. It relates to the comparison made between the appellant, who worked without an assistant and a European night superintendent, Ann Ulrich, who had an assistant. In any event the point is a bad one, since at paragraph 28 of their reasons the Industrial Tribunal find as fact that the reason why the appellant did not have an assistant was because he did not want one, not because he was being less favourably treated than Ms Ulrich on the grounds of his race.That disposes of the four points which we can discern in this appeal. For completeness, it is accepted by Mr Hawthorn that if he fails on these points, his complaint as to the Industrial Tribunal's approach to limitation set out in paragraph 42 of their reasons becomes immaterial.In these circumstances this appeal is dismissed.