Clare v Arundel Ex-Servicemen's Club [1998] UKEAT 1344_97_1805

EAT

Clare v Arundel Ex-Servicemen's Club

[1998] UKEAT 1344_97_1805 · 1998-05-18

MR JUSTICE LINDSAY : We have before us by way of a final appeal the appeal of Mr B. Clare in the case Clare against Arundel Ex-Servicemen's Club. Mr Clare was engaged, to use a neutral word, as the secretary of that club.

It is necessary to go briefly into the background here. On 8 June 1997 there was a special meeting of the members of the club and they voted to reduce Mr Clare's wages by £60 a week. It seems that the balance of his wages was then or later increased by 3.9% but, even so, the resolution, when put into effect, represented a significant reduction in his wages. That was 8 June. On 18 June his solicitors complained by letter that that represented an unlawful deduction from his wages under section 13 of the Employment Rights Act 1996 .

On 29 July 1997 Mr Clare lodged an IT1 and it made two complaints. Firstly, that there had been an unlawful deduction from his wages and secondly, that the club had failed to give him a written contract, notwithstanding repeated requests in that behalf. We should add that Mr Clare did not have his employment terminated. There is no dismissal, constructive or otherwise, in this matter.

The IT1 which Mr Clare lodged averred that Mr Clare was appointed secretary of the club on 31 May 1995 and was later elected so by the members in June 1995. The IT does not assert any particular terms of any contract of employment or, indeed, contract for services. The IT1 goes on to aver a pay rise, in January 1997, to £274 a week. That was the IT1.

On 14 August 1997 the club lodged its IT3 which took two points. Firstly, that Mr Clare was not an employee but an office holder and secondly, that his remuneration was, in any event, variable as the club in general meeting might determine and that that was what had happened in this case so that the variation, the reduction, was, in effect, authorised. That was the club's case.

On 6 October there was a one-day hearing before the Industrial Tribunal. Mr Clare alone gave evidence and the club was represented by Counsel.

On 9 October the Industrial Tribunal gave its summary reasons for its decision, although those have not been seen by us, and on 23 October there were promulgated the extended reasons for the decision which, of course, we have seen. The unanimous decision of the Tribunal was that the Applicant, Mr Clare, was employed by the respondent club but that no unlawful deduction from his wages had been made.

The Decision addresses the question of whether Mr Clare was an employee. What the Tribunal says on that is this:

"The first issue that we have to decide in this case is whether or not the applicant was an employee of the respondent club. The applicant says that he was, the respondents take a somewhat neutral view but suggest that he was not. We have to make that decision at the start."

On that they concluded:

"We think that unquestionably on the totality of the evidence we have heard it is manifestly clear that the applicant was an employee and we so find."

The Industrial Tribunal then turn to whether there had been an improper deduction from his wages. It seems to us that, plainly, the only starting point for an enquiry of that kind is to find out what the employee should have been paid and that requires an investigation of what were the terms of his contract, either as originally made and remaining unchanged or as they might have been duly varied from time to time. The Industrial Tribunal recognised that to be a starting point. What they say in their paragraph 5 is:

"In this case we have to determine what was properly payable."

They look into the reduction which was complained of and as to that they say this:

"That is something which has been explained to us by the presentation of copies of the club minutes which were kept by the applicant. They show that there was an extraordinary general meeting of the Club at which the membership objected to the remuneration being paid to the applicant. As a result of that objection the applicant's pay was reduced by £60 per week. The committee of the Club appear not to have fully approved of the decision of the members but whether they did or whether they did not it is clear that they formally implemented the decision of the members and the result was that from the beginning of June 1997 the applicant's pay was only £222.40. It is clear from the rules of the Club that the pay of the Secretary is a matter to be determined by the members and the committee and they have the right to make those decisions."

Was a reduction in that way a breach of Mr Clare's contract? Was he, in other words, suffering a deduction which he could claim to be wrongful or was it that his contract included that his remuneration might be varied and, indeed, reduced in that way? Unfortunately, the Industrial Tribunal does not answer that question. What they say is this:

"It may well be that their decision [the decision of the club committee or by the members] is in fact a breach of the applicant's contract of employment, but this Tribunal cannot deal with a breach of contract."

And it goes on to give its reasons for that.

What was his contract? It is to be borne in mind that one of his initial complaints had been that, despite his requests, it had never been reduced to writing. The club rules provided for the secretary to be one of its officers and they also provided that he should have such salary as the committee of the club or the club in general meeting should, from time to time determine, but simply to point to the club rule is not to answer what was Mr Clare's contract. A whole series of questions might fall to be answered. Was Mr Clare told of this rule when he joined or, at all events, before June 1997? Had he agreed to that rule being embodied into his contract, either from the outset or, at any rate, from June 1997? Was there any agreement that, if there was to be variation, it should be upwards only? Was there any agreement that there should be no reduction without first giving him a hearing? Was there any agreement that, indeed, he was to have a fixed salary, whether or not, strictly speaking under the club's rule, that should or could have been offered to him? What would have been the constitutional position if he had been offered and had accepted a fixed salary in a way that therefore did not accord with the club's rules? What was the period of his employment? Was it that he was employed for a series of short spells at an agreed salary for each separate spell and then, another spell at another salary and so on, or was it one seamless employment? No doubt there will be other questions than those, but none of those questions were addressed. Instead, the Industrial Tribunal, having begun by saying, "It may well be that their decision is in fact a breach of the applicant's contract of employment", went on to say:

"... but this tribunal cannot deal with a breach of contract unless there has been a termination of employment (see Industrial Tribunals Extension of Jurisdiction Order 1994 Article 3(a). We can only say what is properly payable under the contract as it has been arbitrarily changed. It seems to us that the proper sum has been paid and it follows that the applicant's claim for an unlawful deduction of wages cannot succeed."

We have some difficulty following that. Are they saying that the change, being arbitrary, is impermissible or are they saying that it was permissible despite being arbitrary? Is their conclusion that the proper sum was paid an acceptance that the remuneration was to be whatever the club's rules and club's meetings declared it to be? If that is the case, how can they have said "It may well be that their decision is in fact a breach of the applicant's contract of employment"?

So there is a deal of confusion there, as it seems to us and, in any event, is it not that their view that they could not deal with a breach of contract itself an error of law? As to that we need to look at the legislation. Section 13 (1) of the Employment Rights Act 1996:

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

There is here no indication of any such previous signification in writing.

"(2) In this section 'relevant provision', in relation to a worker's contract, means a provision of the contract comprised - (a) in one or more written terms of the contract of which the employer has given the worker a copy on an occasion prior to the employer making the deduction in question."

Here, it will be remembered that it is Mr Clare's complaint there never has been a written version of the contract, still less one given to the worker. Continuing with the Statute:

"(b) in one or more terms of the contract (whether express or implied and, if express, whether oral or in writing) the existence and effect, or combined effect, of which in relation to the worker the employer has notified to the worker in writing on such an occasion."

Again, the absence of writing provides a difficulty for the employer.

"(3) Where the total amount of wages paid on any occasion by an employer to a worker employed by him is less than the total amount of the wages properly payable by him to the worker on that occasion (after deductions), 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 a Tribunal therefore has to look into whether, inter alia , a deduction is authorised by the contract or not and so inevitably the question whether there has been performance of a contract or breach of a contract arises, not with a view to an award of damages for breach of contract but simply to answer whether there has been an unlawful deduction. Section 23 of the Act, says:

"(1) A worker may present a complaint to an industrial tribunal - (a) that his employer has made a deduction from his wages in contravention of section 13 (including a deduction made in contravention of that section as it applies by virtue of section 18(2))."

The Industrial Tribunal can order payment by the employer of the improper deduction which it finds to have been made; at section 24 (a):

"24 Where a tribunal finds a complaint under section 23 well-founded, it shall make a declaration to that effect and shall order the employer - (a) in the case of a complaint under section 23 (1) (a), to pay to the worker the amount of any deduction made in contravention of section 13."

So, with respect to the Industrial Tribunal, there is an ability in an Industrial Tribunal to look into what the terms of the contract were, to find out whether there has been a breach by way of an improper deduction and to make good that improper deduction by ordering the payment of the amount improperly deducted. Is there anything in the Industrial Tribunals Extension of Jurisdiction Order 1994 which precludes that? It would be surprising to find it, because, after all, the title of that Order is Industrial Tribunals Extension of Jurisdiction Order, rather than restriction. What that Order does is that it enlarges the jurisdiction of the Industrial Tribunal where there has been a termination, but that is not to say that under other legislation where there is no requirement of a termination, the jurisdiction is affected by the 1994 Order. The 1994 Order does not and could not restrict jurisdiction conferred by the 1996 Act. Not only is the 1996 legislation an Act, rather than a subsidiary legislation but, of course, the 1996 Act is after the 1994 Order. Nothing in the 1994 Order precluded the Industrial Tribunal here from fully deciding the section 13 claim and the Industrial Tribunal was wrong to regard itself as so precluded. There is, in other words, an error of law at that point.

We have been addressed by Mr Woodhouse representing Mr Clare and we have been addressed by Mr Coles, on behalf of the committee of the club. Mr Coles has not found himself in an easy position, but we are grateful to him for the assistance that he has given.

In the circumstances, we leave the Industrial Tribunal's decision that Mr Clare was an employee as it is; that has been ruled on and we have seen no error of law in that conclusion. But, as for the rest of the issues that arise on the IT1 and the IT3 (which remaining issues will, of course, include precisely what were the terms of Mr Clare's employment) those we see as appropriate to remit to the Industrial Tribunal for them to hear evidence on and for them to conclude. All that is to be gone into on the basis that the 1994 Order does not preclude that investigation.

The question then arises, should it be to the same Tribunal or to a different Tribunal? The very fact that the Tribunal has made, as we would see it, an error of law, does not preclude the matter going back to the same Tribunal nor is there any other reason barring the same Tribunal from hearing the case. Ultimately, we think that the choice of whether it is the same Tribunal or a different Tribunal is best left to the local Industrial Tribunal. Sometimes, as my members remind me, to require the matter to be heard again by the same Tribunal delays a hearing in that the precise constitution which originally heard the matter cannot be repeated conveniently, whereas if one had sent it back to any Tribunal, the matter could have been heard earlier. Whether this particular three-man Tribunal is easy or difficult to reconstitute is, of course, a matter that we have no information on.

So we remit the matter to the Sheffield Industrial Tribunal but leave it to that Tribunal to determine whether it should be the original three or some other constitution that hears the matter and, of course, it will be open to the Industrial Tribunal in Sheffield to re-list the matter for directions in relation, for example, to the giving of evidence and for any other procedural matters that need to be attended to.

All we do at this stage, leaving the decision that Mr Clare was an employee as it is, is that we remit the rest of the matter for hearing by an Industrial Tribunal on the footing that the 1994 Order does not preclude an investigation of the kind that we have spoken of.