MR G T BEST v ST AUSTELL CHINA CLAY MUSEUM LTD [2004] UKEAT 0924_03_1106

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2004] UKEAT 0924_03_1106Case No Appeal No. UKEAT/0924/03Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR G T BESTAPPELLANTST AUSTELL CHINA CLAY MUSEUM LTDRESPONDENT
Before
His Honour Judge Peter Clark Ms K Bilgan Mr S YeboahDate 11 June 2004
[1]APPEARANCES For the Appellant MS CATHERINE O'DONNELL (of Counsel) Instructed by: Messrs Graham & Graham Solicitors High Cross House St Austell Cornwall PL25 4AB For the Respondent MISS SOPHIE BELGROVE (of Counsel) Instructed by: Messrs Stephens & Scown Solicitors 3 Cross Lane St Austell Cornwall PL25 4AX SUMMARY National Minimum Wage / Unfair Dismissal Section 44 of the National Minimum Wage Act 1998 'Voluntary Workers'. Meaning of week's pay where free accommodation provided in return for work done under a contract of service. HIS HONOUR JUDGE PETER CLARK The principal issue in this appeal involves the proper construction of section 44 of the National Minimum Wage Act 1998 (" NMWA ") excluding 'voluntary workers' from entitlement to payment of the National Minimum Wage ("NMW"). The appeal is brought by Mr Best, the Applicant before the Truro Employment Tribunal which by a reserved decision promulgated with Extended Reasons on 23 September 2003 found that he was excluded from NMW entitlement by virtue of section 44 during his employment with the Respondent, St Austell China Clay Museum Ltd. The Tribunal further found that he was unfairly dismissed by the Respondent but entitled to nil compensation . Issues also arise in respect of that latter finding. For good measure the Applicant has made a late application to amend his Notice of Appeal to add further grounds. That application is opposed. Having set the scene we first turn to the facts of the case. The Facts[2]The Respondent is a registered charity which owns and operates The China Clay Museum, Wheel Martyn near St Austell, Cornwall. The museum is open to the public.[3]In October 1996 the Respondent advertised a vacancy for a caretaker / cleaner for the museum. No wages were offered for the post but the incumbent would have the benefit of free exclusive accommodation in the lodge on the museum grounds, the Respondent paying Council Tax and water rates on the lodge and, the Tribunal found, permitting some private use of the telephone installed.[4]The Applicant successfully applied for the job. Having done so he entered into a written agreement with the Respondent under which he became the service occupier of the lodge, free of Council Tax and water rates. He was responsible for electricity charges at the lodge. In return he was to undertake 17 hours work per week. The nature of the work, broadly security and cleaning, was detailed in a document headed " Caretaker Duties ". That document refers to limited use of the telephone. Thus the bargain was rent-free use of the lodge including Council Tax, water rates and limited use of the telephone in return for 17 hours work per week. No wages were to be paid under the agreement and none were.[5]The arrangement ended when, without prior consultation, the Respondent terminated the Applicant's employment (as the Tribunal found it to be) by reason of redundancy on 6 January 2003. The Complaint[6]By an Originating Application dated 3 April 2003 the Applicant complained of unfair dismissal and failure to pay wages or unauthorised deduction from wages. Within that complaint the Applicant contended(a) that he was employed by the Respondent,(b) that he was unfairly dismissed from that employment, and(c) that he had been entitled to receive the NMW since 1 April 1999 when the relevant provisions of the Act came into force, but had received no wages from the Respondent.[7]By their Notice of Appearance the Respondent(a) denied that it employed the Applicant, contended(b) that if he was an employee his dismissal was by reason of redundancy, alternatively some other substantial reason, and was fair, and(c) that he was excluded from NMW protection by virtue of being excluded by section 44 of the Act or, if he was so entitled, the Respondent was entitled to set off the value of the free accommodation provided to him. The Tribunal Decision[8]The Tribunal found:(1) The Applicant was employed by the Respondent under a contract of service.(2) He was dismissed by the Respondent by reason of redundancy.(3) That dismissal was unfair solely on the ground of lack of consultation.(4) Had proper consultation taken place the Applicant would have had no chance of retaining his employment applying the Polkey principle.(5) As to compensation for unfair dismissal, the basic award was 9 weeks wages; he had lost some employment rights; his future loss would be very limited. It would not be just and equitable to award any compensation in light of the fact that he had been permitted to continue in his rent-free accommodation for 13 weeks following dismissal.(6) As to the NMW claim: (i) having been employed by the Respondent under a contract of service he was a worker within the meaning of the Act (see section 54 (3) (a)), but (ii) he fell within the exclusion contained in section 44 (1). The accommodation provided for him was reasonable in the circumstances of the employment (see section 44 (1) (b)). Accordingly, there had been no failure by the Respondent to comply with the terms of NMWA . The Appeal NMW[9]There is no challenge by the Respondent to the Tribunal's finding that the Applicant was a "worker" within the meaning of NMWA . It is not suggested that he received any wages, let alone the minimum wage, during his employment. Thus, subject to the provisions of section 44 (1), he is entitled to arrears at the prescribed minimum level from 1 April 1999 until 6 January 2003. A calculation, prepared by solicitors acting for the Applicant produced as a total arrears figure for that period £10,976.56, making some allowance for free accommodation. That was the money claim.[10]Section 44 NMWA is grouped within sections 43 to 45 of the Act under the heading " Exclusions ". It provides, so far as is material: " Voluntary workers 44. (1) A worker employed by a charity, a voluntary organisation, an associated fund-raising body or a statutory body does not qualify for the national minimum wage in respect of that employment if he receives, and under the terms of his employment (apart from this Act) is entitled to,- (a) no monetary payments of any description, or no monetary payments except in respect of expenses - (i) actually incurred in the performance of his duties; or (ii) reasonably estimated as likely to be or to have been so incurred; and (b) no benefits in kind of any description, or no benefits in kind other than the provision of some or all of his subsistence or of such accommodation as is reasonable in the circumstances of the employment.[11]The Notice of Appeal dated 4 November 2003 formulates the single ground of appeal in relation to this part of the case as follows:
"6.1.1 Having found that the Appellant was an employee the Tribunal erred in finding that the Appellant then fell within the exclusion set out in Section 44(4) [sic] National Minimum Wage Act 1998 and was not entitled to the National Minimum Wage Act as being a Voluntary Worker."
[12]Following directions which I gave on 27 November 2003 the appeal was set down for a preliminary hearing which was held before His Honour Judge Serota QC and members on 9 February 2004.[13]Prior to the preliminary hearing, the Applicant's solicitors, by a letter dated 20 January 2004 made application to amend the Notice of Appeal by adding the following grounds relating to the NMW claim:
"(a) The Tribunal failed to give any or any sufficient reason for the conclusion that the accommodation was 'reasonable in the circumstances of his employment; under Section 44(4) National Minimum Wage Act 1998. (b) The Tribunal erred in finding that Mr Best came under the exclusion in Section 44 National Minimum Wage Act 1998 as it did not take into account its findings that Mr Best received other benefits in addition to accommodation, that is the payment of Council Tax and water rates and use of the telephone."
[14]In allowing the matter to proceed to this full hearing by an Order seal dated 11 February

Judge Serota's division gave this direction at paragraph 9:

"9. The question of whether permission to amend the Notice of Appeal is to be decided at the hearing [the full hearing]. It is recorded that the ground (b) in the letter of 20 th January 2004 was not the subject of submissions before the Employment Tribunal."
[15]In this way the opportunity was given to the Respondent to object to the proposed amendments. Objection is taken by Miss Belgrove and we shall deal now with the application to amend. New Ground (a)[16]This may be described as the " Meek point": Did the Tribunal give sufficient reasons to explain their finding that 'the accommodation provided for Mr Best was reasonable in the circumstances of his employment' (Extended Reasons paragraph 9)?[17]Miss Belgrove submits that the proposed amendment was raised 2½ months after the time for appealing had expired; no good reason for the delay is advanced; the Respondent will suffer prejudice if the amendment is permitted.[18]We reject those submissions in respect of new ground (a). It seems to us that the amendment represents a permissible extension of the original section 44 ground of appeal; no prejudice is caused to the Respondent who has had ample notice of it and in all the circumstances it is just to permit this amendment. New Ground (b)[19]Here a further, highly material factor arises. As paragraph 9 of the preliminary hearing directions records, this proposed ground was not the subject of submissions before the Employment Tribunal. In particular, it was not argued on behalf of the Applicant below, looking at section 44 (1) NMWA , that he escaped that exclusion provision on the basis that he was entitled to benefits, namely Council Tax, water rates and use of the telephone, which did not fall within the expression 'provision of some or all of his subsistence or of such accommodation as is reasonable in the circumstances of the employment."[20]We are conscious of the well-established Kumchyk principle, that new points will not be permitted for the first time on appeal save in exceptional circumstances. Even if the point goes to the Tribunal's jurisdiction (which this point does not) it will not be entertained where further factual enquiry is required, unless exceptional circumstances arise. See Glennie v Independent Magazines (UK) Ltd [1999] IRLR 719 .[21]Further, we are reminded by Miss Belgrove of the principle of finality of litigation, succinctly set out in the judgment of Stuart-Smith LJ in Jones v Governing Body of Burdett Coutts School [1998] IRLR 521 at paragraph 29.[22]Here, a factual point is raised by Miss Belgrove. She contends that whereas limited use of the Respondent's telephone at the lodge was permitted when the Applicant's employment began in October 1996, in 1999 he had his own private telephone line installed and the earlier concession ceased.[23]Ms O'Donnell accepts there is a difficulty factually over the question of the limited use of telephone. However, she submits that it was found as fact, and not in dispute, indeed contained in the original written agreement, that the Respondent would pay Council Tax and water rates on the lodge. She submits that that amounted to a benefit not included in section 44 (1) (b) and accordingly took the Applicant outside the exclusionary provisions of the section.[24]It seems to us that, leaving aside the substantive question as to whether or not those payments fell within the definition of the provision of accommodation, that these are matters which could and should have been raised before the Employment Tribunal for their determination. Were we to allow the appeal on this point, it would have the effect of overturning an Employment Tribunal decision on a basis which was never argued before it. We can see no exceptional circumstances which permit us to take that course and consequently, following the well-establish principles, we shall not permit this part of the amendment. The Substantive Grounds (1) Construction of Section 44 (1) NMWA[25]Ms O'Donnell accepts that at first blush and on a literal interpretation section 44 (1) excludes from NMW protection workers employed by certain charitable and kindred organisations who receive certain limited defined benefits, expenses, subsistence payments or accommodation. Thus, if the contractual arrangements fulfil these criteria, the worker is excluded from NMW protection. On the face of it she accepts that excludes Mr Best.[26]However, she advances a subtle argument relying particularly on the use of the expression ' Voluntary Workers ' at the head of section 44. We accept of course that the heading to the section is part of the Act and may require interpretation, although equally we accept Miss Belgrove's submission that it may not take us terribly far.[27]Ms O'Donnell submits that section 44 is intended to apply to voluntary workers only. That expression is not defined in the Act. What is clear, she submits, is that(a) the Applicant was a worker and(b) his employment was not voluntary. Therefore he was not a voluntary worker caught by section 44.[28]It seems to us, having heard full argument, that Ms O'Donnell's submission suffers from an internal inconsistency. She seizes on the words ' Voluntary Worker ' as meaning a worker who is a volunteer. She then defines a volunteer as a person who assists a charitable organisation without obligation to do so. However, such a person is not employed under a contract of service, nor engaged under a contract for services because the necessary mutuality of obligation is absent (see for example, South East Sheffield Citizen's Advice Bureau v Grayson [2004] IRLR 35). He is therefore not a worker. On that ground he is excluded from NMW protection.[29]In our judgment the meaning and purpose of section 44 and its heading is pellucidly clear. It concerns workers, as defined in section 53, employed in the voluntary sector, as defined in section 44 (1), who do not receive pay, but do receive subsistence, expenses or free accommodation in circumstances relevant to the employment. That fits Mr Best's case neatly, as the Tribunal found. He is excluded from NMW protection by virtue of section 44.[30]Ms O'Donnell stressed the overall objective of NMW to provide a minimum pay floor for all workers, subject to exceptions. One of those exceptions found in section 44 was designed to relieve certain charitable and other similar organisations from the obligation to pay a minimum wage to workers who are not paid. We find that section neither ambiguous, nor absurd. The meaning is clear and the result of the literal interpretation consistent with a clearly understandable objective. Accordingly, Pepper v Hart does not apply. We have not found it necessary to resort to Hansard . (2) The Meek Point[31]It was not submitted below that on the facts as found the accommodation provided to the Applicant was not reasonable in the circumstances of the employment. Had it been so argued we think, having heard Ms O'Donnell, such argument would be bound to fail. It is difficult to imagine a more close connection between employment as a caretaker / cleaner, with some security duties on a site, with having the employee living in accommodation provided on site.[32]The complaint here is that the Tribunal merely found (paragraph 9) that the accommodation provided for Mr Best was reasonable in the circumstances of his employment. That does not explain their reasoning in reaching that conclusion, submits Ms O'Donnell. However, the conclusion must be read in the light of the Tribunal's findings of fact and the submissions made. Since that conclusion flows naturally from the nature of the employment as found, and the location of the accommodation, no further explanation was required, particularly in the absence of argument to the contrary on behalf of the Applicant. Unfair Dismissal Compensation[33]The Tribunal dealt with compensation at paragraph 10 of their reasons. We have earlier summarised their findings.[34]We accept the submissions from both Counsel that insofar as the Tribunal purported to set off the 13 weeks additional free accommodation following the Applicant's dismissal against the Applicant's basic award entitlement of 9 weeks pay, under section 119 ERA , they were wrong to do so as a matter of law.[35]However, the real issue, given that nil compensation was ordered, is what was 9 weeks pay in the circumstances of this case?[36]The definition of a week's pay for present purposes is to be found in section 221 (2) ERA . "221 (2) Subject to section 222, if the employee's remuneration for employment in normal working hours (whether by the hour or week or period) does not vary with the amount of work done in the period, the amount of a week's pay is the amount which is payable by the employer under the contract of employment in force on the calculation date if the employee works throughout his normal working hours in a week." So the amount of a week's pay is the amount which is payable by the employer under the contract.[37]Ms O'Donnell has referred us to a number of old cases in the Industrial Tribunal under the Redundancy Payments Act 1965 , which show that accommodation does not count as pay. Similarly, S & U Stores Ltd v Wilkes [1974] IRLR 283 (NIRC) is authority for the proposition that benefits in kind are not pay. All of these cases indicate to us that free accommodation is not pay. The fact that in those cases the accommodation or other benefit was in addition to money payments is nothing to the point.[38]Further, we note that benefit in kind is expressly excluded from the definition of 'wages' (section 27 (5) ERA ). We think that exclusion is consistent with our interpretation of 'pay' in section 221 (2).[39]Finally, Ms O'Donnell makes the point that the Applicant received nothing for his loss of statutory rights. The obligation on the Tribunal is to make a compensatory award for unfair dismissal which is just and equitable in all the circumstances (section 123 (1) ERA ). It is clear that the Tribunal found that the provision of free accommodation for 13 weeks post-dismissal extinguished any loss of employment rights or notional consultation period. That was, in our judgment, a permissible finding.[40]In these circumstances and for these reasons we shall dismiss this appeal.