Jones v Cutting Edge Services Ltd [1998] UKEAT 204_97_1003

EAT
Jones v Cutting Edge Services Ltd
[1998] UKEAT 204_97_1003 · 1998-03-10
MR JUSTICE BELL : This is an appeal by Mr Jones against the decision of an Industrial Tribunal held at Manchester on 29th October 1996. The unanimous decision of the tribunal entered in the Register on 30th December 1996, was that Mr Jones had not been unfairly dismissed by the respondents, Cutting Edge Services Ltd.Mr Jones was employed on 10th April 1995 by the respondent company as a machine operator. He was dismissed on 23rd February 1996. He had written terms and conditions of employment which among other matters dealt with hours of work and remuneration including a production bonus and overtime. We have a copy of the written terms of employment undated, which was supposed to be in effect at the time of Mr Jones' dismissal. They state that the hours of work are:

"08.00 to 17.00 Daily Monday to Friday"

Remuneration is stated to be a basic salary with a production bonus available after six months employment. The bonus was made up of so many pence per item completed to be paid into a weekly pool and then divided by the number of operatives in the pool who qualified on a percentage basis in relation to each other, 25%, 50%, 75% or 100% according to categories of work or full proficiency at all levels. The written terms and conditions stated:
"Overtime may become available from time to time and is strictly at the discretion of the Production Manager and is payable at time and a half."
The written terms of employment which were in effect until December 1995 spoke of the weekly pool of 10 pence per item being split equally with no different percentages and said:
"Overtime will be available for strip, clean down and machine and factory maintenance at the discretion of the General Manager."
It looks as if that restrictive view of overtime prevailed after December 1995, even when the percentage distribution of the pool came into effect, because the Industrial Tribunal heard evidence from both Mr Jones and Mr Mook, the respondents' General Manager, and found:
"It was generally understood, although the written contract is not clear on this point, that overtime, that is to say a premium rate for extra hours worked above the contractual hours, was only paid for non-production work such as maintenance and cleaning. Production overtime was not rewarded at any premium rate."
That was presumably because the bonus system was thought to reward operatives for the number of items completed and of course they would complete more items if they worked overtime. Whether that was sufficient reward for overtime work, might be a matter of debate. No doubt it rather depended on what percentage one was on, as well as the number of extra items which were finished during the period of overtime hours.The Industrial Tribunal went on to make the following additional findings of fact:
"The operatives in the company were subject to a bonus system which was effectively a pool bonus in which a certain amount of money for each completed item was put into the pool over a target and depending upon the percentage rate that the operative attracted they would receive a percentage of the total. The applicant started initially on no bonus at all and over the course of his employment he was advanced to 25%, 50% and then 75% which was the rate of bonus he enjoyed at the time of his dismissal.
In January 1996 the company began asking its operatives to work extra hours during the week to improve or increase production. The applicant thought that it was not fair and reasonable that he should be expected to work these extra hours without extra reward and initially approached his production manager, Mr Kenmore, and asked if he could either be paid overtime or have his bonus increased to the 100% rate.Mr Kenmore told the applicant that he would see about this but nothing happened and eventually the applicant, along with a number of colleagues, all went to see Mr Mook, the General Manager. There was a meeting at which Mr Mook explained that the bonus system was designed to compensate employees for having to work extra hours and offered to re-negotiate pay arrangements if the operatives were not happy. All of the operatives except Mr Jones said that they were content with the current system.Mr Jones told Mr Mook that he was not content to work overtime unless his bonus was increased to the 100% rate. Mr Mook declined to increase his bonus to the 100% rate and Mr Jones then said that he would therefore not work overtime after that point.In the week of his dismissal Mr Jones was called in to see Mr Mook on 21 February 1996. Mr Mook told him that unless he was prepared to work the same hours as all the other members of staff he would have his bonus rate cut from 75% to 25%. Mr Jones responded by saying that if his bonus rate was cut then he would effectively engage in a "go-slow".Two days later, on 23 February, Mr Mook again called Mr Jones in to see him and gave him an ultimatum. He told him that unless he was prepared to work overtime he would be dismissed. Mr Jones said that he would only work overtime if his bonus was increased to 100%. Mr Mook declined to increase the bonus and Mr Jones reiterated his refusal to work overtime. At this point Mr Mook dismissed Mr Jones."Mr Jones has this morning told us a little more about his recollection of the history of events leading up to 23rd February 1996. He told us that he did work overtime when it was first required. On Wednesday, 14th February 1996, another man succeeded in negotiating a 25% increase in his bonus rate from 50% to 75%, although that man was, Mr Jones said, not of the same skill as himself. Mr Jones worked overtime after Wednesday, 14th February, but on Monday, 19th February, he told Mr Mook as part of an ongoing argument about how much he should be paid, that he would not work overtime unless he got a 100% bonus share. On Monday and Tuesday, 19th and 20th February, he did not work overtime, so that by the time of the meeting with Mr Mook on Wednesday, 21st February, there were two days when he had refused to work after 5 p.m.. By the time of the meeting on Friday, 23rd February, Mr Jones had not worked overtime on Wednesday or Thursday, 21st and 22nd February either, so there were by then four days when he had refused to work overtime.He was asked by a member of this tribunal if Mr Mook gave him a reason for dismissing him. Mr Jones told us: "He said he dismissed me because I would not work the overtime".On 24th March 1996 Mr Jones filed an Originating Application complaining of automatic unfair dismissal by virtue of s.104 of the Employment Rights Act 1996 in that he had been dismissed for an assertion of a statutory right. He did not have sufficient service to bring an application for unfair dismissal otherwise.Mr Jones' route through the various statutory provisions was as follows. By s.104 of the 1996 Act:
"(1) An employee who is dismissed shall be regarded for the purposes of this Part as unfairly dismissed if the reason (or, if more than one, the principal reason) for the dismissal is that the employee- (a) brought proceedings against the employer to enforce a right of his which is a relevant statutory right, or (b) alleged that the employer had infringed a right of his which is a relevant statutory right.

(2) It is immaterial for the purposes of subsection (1)-

(a) whether or not the employee has the right, or(b) whether or not the right has been infringed;but, for that subsection to apply, the claim to the right and that it has been infringed must be made in good faith.(3) It is sufficient for subsection (1) to apply that the employee, without specifying the right, made it reasonably clear to the employer what the right claimed to have been infringed was.(4) The following are relevant statutory rights for the purposes of this section-(a) any right conferred by this Act for which the remedy for its infringement is by way of a complaint or reference to an industrial tribunal.(b) the right conferred by section 86 of this Act, and(c) the rights conferred by sections 68, 86, 146, 168, 169 and 170 of the Trade Union and Labour Relations (Consolidation) Act 1992 (deductions from pay, union activities and time off)."By s.13 of the Act:
"(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.
(2) In this section "relevant provisions", 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, or(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.(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."By s. 23 of the Act:
"(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 ..."
So Mr Jones argued and argues that in refusing to pay him overtime rates or to increase his bonus to 100% to one or other of which he felt entitled, the respondent was paying him less than the total amount of wages properly payable to him. That, he says, amounted to an unauthorised deduction for the purposes of s.13 in relation to which he could present a complaint to an Industrial Tribunal under s.23 making the whole state of affairs an infringement of a relevant statutory right for the purposes of s.104. Of course to succeed under s.104 Mr Jones still had to establish that he alleged that the employer had infringed a right of his which was a relevant statutory right and that that allegation was the reason or the principle reason for his dismissal.In reaching its conclusions, the tribunal referred to Mennell v Newall & Wright (Transport Contractors) Limited [1996] IRLR 384 where the provisions of s.60A of the Employment Protection (Consolidation) Act 1978 the predecessor to s.104 and the Wages Act 1986 the predecessor to s.13 were considered. That case has since the Industrial Tribunal hearing been considered by the Court of Appeal whose decision is reported [1997] IRLR 519 , and we will return to that decision later.After considering Mennell , the Industrial Tribunal concluded:
"Mr Justice Clarke in that decision directs the Tribunal to consider whether or not the applicant had in fact asserted any infringement of a statutory right. Secondly, if such a claim had been made, whether it was made in good faith and, thirdly, if so, whether the principal reason for the dismissal was his assertion of his statutory right. The Tribunal therefore considered these things in turn.
We are in no doubt that the applicant asserted what he considered to be a right. He considered that it was his right to have his bonus rate increased from 75% to 100% as a condition of working overtime. The Tribunal have considered where such a right could possibly arise and we have examined the applicant's contract of employment in some detail. We can find no contractual right contained in the contract of employment which entitles the applicant to assert or insist that he was entitled to an increase in his bonus to 100% as a condition of his working overtime. Even if there were such a contractual right that would not be a statutory right and the best that could possibly be said for the applicant was that he had asserted a contractual right. The applicant says that if he had that contractual right then the breach of it effectively amounted to a reduction or threatened reduction or deduction from his wages contrary to Section 13 of the Employment Rights Act 1996 and effectively in alleging that there had been an infringement of his contractual rights he was also alleging an infringement of the relevant statutory right. The Tribunal cannot go along with this assertion. As we have said, we do not find that there was any contractual right which could found this submission in the first place. Even if there was, we would have expected in such a case to have mention made by the applicant at the very least of the words "statutory right" or a reference to the relevant parts of the Employment Rights Act 1996. Although Section 104(3) says that it is sufficient that the employee makes it reasonably clear to the employer what the right claimed to be infringed was we think at the very least that requires some reference to statutory rights.The next question therefore is whether or not there has been an assertion of a statutory right in good faith. Well, since there has been no assertion of an infringement of a statutory right, this question does not arise and we are led on to the first question posed by Mr Justice Clarke, namely what the principal reason for the dismissal was. In this case we are satisfied that the principal reason for the dismissal was Mr Jone's refusal to work overtime. Although Mr Mook in evidence claimed that his unhappiness concerned Mr Jones's declining productivity and declining quality of work the Tribunal consider that the real reason for Mr Mook's response to the Department of Employment in their questionnaire on Form UB95 which we referred to at some length and which appeared in the applicant's bundle at page 28. We consider that this clearly demonstrates that Mr Mook had in his mind the applicant's refusal to work past 5 o'clock as being a ground for dismissing him and we think that that is unsurprising given the fact that the applicant's refusal to work extra hours was in effect putting him in a position where he benefited from his colleagues' extra work through the bonus system without doing any extra work himself. We were not prepared to accept Mr Mook's assertions that he was quite content for the applicant to refuse to work overtime. We do find that the applicant was dismissed for not working past 5 o'clock during that period. We find that the applicant's reason for not doing that was that he was not being given extra bonus. We can find nothing in the reason for dismissal which would connect it to an assertion or an allegation of an infringement of a statutory right. Taken all in all, this must lead the Tribunal to the conclusion that the applicant has not discharged the burden of proof on him to show that the reason for the dismissal was that he had alleged an infringement of a statutory right and for that reason we find as we have above."The case of Mennell revolved around the proper construction of s.60 of the Employment Protection (Consolidation) Act 1978 (as later amended), the predecessor of s.104 of the Employment Rights Act 1996 as we have already said. In that case Mr Mennell was employed by the appellants Newell & Wright as an HGV driver. The employers issued a new draft contract to all HGV drivers and asked them to sign a copy. One of the clauses in the draft contract provided that the employers could recover certain training costs by way of a deduction from payment of final salary or other emoluments due to the employee on termination of employment. Mr Mennell refused to sign the new contract and he was dismissed. The Industrial Tribunal accepted a submission by the employers that s.68 did not apply to the circumstances of Mr Mennell's case and held that it had no jurisdiction to hear the case on its merits. The Employment Appeal Tribunal allowed Mr Mennell's appeal against that decision and remitted the case to the Industrial Tribunal. The employers appealed to the Court of Appeal and when giving a judgment with which both the other two members of the court agreed, Mummery LJ said at page 523, from paragraph 24:
"The legal position is as follows:
(1) Mr Mennell had no general right under s.53 of the 1978 Act not to be unfairly dismissed by Newell & Wright, as he was not continuously employed for a period of not less than two years ending with 4 November 1994. Section 54 of the 1978 Act did not apply to his dismissal. See s.64(1)(a) of the 1978 Act.(2) It follows that, apart from the possible application of s.60A, the industrial tribunal had no jurisdiction to entertain a complaint by Mr Mennell that he had been dismissed unfairly for what he considered to be an unjustifiable reason, such as his refusal to agree variation in his terms of employment as to the duties he was to perform, his hours of work or his rates of pay. Dismissal for not agreeing to any of those variations might well be regarded as unfair, but is not in law sufficient to confer jurisdiction on the tribunal to entertain a claim by a worker who has not served for a sufficient period to have acquired a right not to be unfairly dismissed."All that applies equally to Mr Jones' case here.At paragraph 26 Mummery LJ continued:
"(3) The industrial tribunal had no jurisdiction to hear any complaint by Mr Mennell against Newell & Wright under the Wages Act 1986. A worker may present a complaint under that Act, even though he cannot satisfy the requirement in the 1978 Act of two years' continuous employment, but s.5(1) makes it clear that the industrial tribunal may only hear a complaint by a worker in a case where the employer ' has made a deduction from his wages'. There is no jurisdiction to entertain a complaint about a threatened deduction from wages. There must be an actual deduction. See also the terms of the ensuing subsection of s.5. It was accepted by Mr Grundy in this court that it was no part of his case that Newell & Wright had made or had even threatened to make an unlawful deduction from Mr Mennell's wages in breach of s.1 of the 1986 Act."
"(4) The critical question raised by Mr Mennell's reliance on s.60A is: what was the reason for his dismissal by Newell & Wright on 4 November 1994? There are two possible answers to that question. The first is that the reason was simply as stated in the notice of termination letter of 4 November, ie refusal to sign the contract. In his IT1, as formally amended and as informally amplified in correspondence conducted by his representative, Mr Mennell never disputed this as the reason for his dismissal. He was issued with the draft contract of employment. He refused to sign unless amendments were made. He did not sign, and was, for that reason, dismissed. The industrial tribunal proceeded on the basis that these facts were not in dispute. That reason for dismissal, without more, would not bring the case within s.60A and the tribunal would have no jurisdiction to hear the case.
(5) The other possible reason for Mr Mennell's dismissal was that he had alleged that the employers had infringed a relevant statutory right of his: s.60A(1)(b). On this point I agree with the Employment Appeal Tribunal that the industrial tribunal were wrong to construe s.60A as confined to cases where the right under the Wages Act had been infringed. It is sufficient if the employee has alleged that his employer has infringed his statutory right and that the making of that allegation was the reason or the principal reason for his dismissal. The allegation need not be specific, provided it has been made reasonably clear to the employer what right was claimed to have been infringed. The allegation need not be correct, either as to the entitlement to the right or as to its infringement, provided that the claim was made in good faith. The important point for present purposes is that the employee must have made an allegation of the kind protected by s.60A; if he had not, the making of such an allegation could not have been the reason for his dismissal."Mummery LJ went on to consider the facts of Mr Mennell's case concluding that he:
"... could not succeed in establishing that such an allegation was the reason for his dismissal, because he was unable, as accepted by his own representative in correspondence, to identify when, where, or to whom or in what terms he had alleged that Newell & Wright had infringed his relevant statutory right."
It follows from what was said by Mummery LJ in that case in our view, that in the present case the Industrial Tribunal was wrong to attach weight, if it did so, to its finding that it could find no contractual right entitling Mr Jones to assert that he was entitled to an increase in his bonus. It was, in our view, wrong to say, if that is what the Industrial Tribunal meant, that if there was such a contractual right it would not be a statutory right let alone a relevant statutory right. There was a right under s.13 not to be paid less than the contract of employment provided for, remediable under s.23 by a complaint to an Industrial Tribunal. If Mr Jones alleged an infringement of such a statutory right in good faith, and his good faith was accepted here, even if his allegation was not correct, and if the reason or if more than one the principal reason for the dismissal was his allegation that the respondent had infringed his statutory right, then Mr Jones had established all that was required for automatic unfair dismissal by virtue of s.104.It may be that, in the light of what Mummery LJ said in Mennell , the Industrial Tribunal was wrong in suggesting that some mention of the words "statutory right" or a reference to the relevant parts of the Employment Rights Act 1996 was required from the employee to the employer for s.101 to take effect, if that is an accurate interpretation of what the Industrial Tribunal said. It seems to us that it might well be sufficient for the employee, in this case Mr Jones, to say for instance "I have a right in law to be paid 100% bonus or time and a half for overtime and a right in law not to have it withheld". However that may be, we agree with the submission of Mr West for the respondent, that to bring his case within the words of s.104(1)(b) "the employee- ... ( b)alleged that the employer had infringed a right of his which is a relevant statutory right.", there must be more than just a dispute about how much the employer is entitled to be paid and the employee must say more than "I am entitled to be paid 100% bonus or time and a half" or some words to that effect. There was no evidence that Mr Jones went further than that in this case. So, in our view, his claim under s.104 was bound to fail on that basis.In any event, Mr Jones still had to prove that an allegation of infringement of a statutory right was the reason or the principal reason for his dismissal.In the reasons for its decision, the Industrial Tribunal said:
"We are satisfied that the principal reason for the dismissal was Mr Jones's refusal to work overtime."
Later it added:
"We do find that the applicant was dismissed for not working past 5 o'clock during that period."
It follows that in the Industrial Tribunal's judgment Mr Jones had failed to prove the vital ingredient that "the reason (or if more than one the principal reason) for the dismissal" was that he had alleged that the respondent had infringed a relevant statutory right, as required for automatic unfair dismissal by operation of s.104(1)(b).In our judgment, the Industrial Tribunal was entitled to come to the conclusion to which it did, that the reason for Mr Jones' dismissal was simply that he did not work the extra hours past 5 o'clock asked of him over the last few days before he was dismissed. The fact that he would not do so because he felt and claimed that he had a right to be paid more if he did so cannot, in our view, make that claim the reason for his dismissal in the light of the Industrial Tribunal's sustainable findings confirmed, if anything, by what Mr Jones has told us today about the reason which Mr Mook gave him for his dismissal.If Mr Jones had worked overtime and claimed to be paid more, saying that he was entitled to be paid more by law, and certainly if he had said that he was entitled to be paid more as a matter of statutory right and not to have the extra money which he claimed deducted, and if he had been dismissed for that, or even more so, if he brought proceedings in the Industrial Tribunal to claim overtime rate or extra bonus to which he thought he was entitled, and he had been dismissed for that, the position would have been different. But that was not what happened in this case.It is for all these reasons that we decide that Mr Jones' appeal must be dismissed.