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You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> R G Carter Harleston Ltd v Jarvis & Ors [1996] UKEAT 756_95_2802 (28 February 1996) URL: http://www.bailii.org/uk/cases/UKEAT/1996/756_95_2802.html Cite as: [1996] UKEAT 756_95_2802

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BAILII case number: [1996] UKEAT 756_95_2802

Appeal No. EAT/756/95

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 28 February 1996

THE HONOURABLE MR JUSTICE MUMMERY (P)

MR A C BLYGHTON

MRS R A VICKERS

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R G CARTER HARLESTON LTD          APPELLANTS

MR A P JARVIS & OTHERS          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR P WALLINGTON

(of Counsel)

Messrs Eversheds

Solicitors

Holland Court

The Close

Norwich

NR1 4DX

For the Respondents MR A HOGARTH

(of Counsel)

Messrs O H Parsons & Partners

Solicitors

3rd Floor

Sovereign House

212-224 Shaftesbury Avenue

London

WC2H 8PR


 


MR JUSTICE MUMMERY (PRESIDENT): This appeal is against the decision of the Industrial Tribunal held at Norwich on 7 and 26 April 1995. The case was heard by a Chairman alone. He decided that complaints by five Applicants under the Wages Act 1986 were well founded. The complaints were made against the Respondent, R.G. Carter Harleston Ltd. The case was adjourned for a further hearing on remedy.

The extended reasons for the Chairman's conclusion were notified to the parties on 25 May. R.G. Carter Harleston served a notice of appeal dated 3 July.

The appeal was argued by Mr Wallington, on behalf of the Appellants, and Mr Hogarth, on behalf of the Respondents. Neither of them appeared in the Industrial Tribunal. We are grateful to them for the help on the unusual circumstances of this case.

The background to the case is that, on 6 August 1994, Mr Jarvis and other Applicants, who were self-employed sub-contractors in carpentry work under contracts with the Appellants, presented an application to the Industrial Tribunal complaining of unlawful deductions from wages on a continuous basis and wrongful assessment to Construction Industry Training Board levy.

The complaint was succinctly expressed in the IT1 in these terms:

"The company [the Appellants] stopped 2% of my wages for what they claim is a levy imposed by the Construction Industry Training Board (CITB) [and that is referred to as CITB in that document and by me from now on].

The CITB levy is applicable only to the main contractor [the Appellants were a main contractor] and is further governed by the small firms exclusion level of £61,000.00.

I am not an employer in the construction industry, any attempt to rectify this deduction has been to no avail.

The company are continuing to make this deduction."

The Appellants contested the case in their Notice of Appearance dated 26 August 1994. They said that Mr Jarvis and the other Applicants were not employees of theirs. They were self-employed labour and sub-contractors. It was accepted that the Wages Act applies to payments made to the Applicants by the Appellant Company. They said that the CITB levy was made by the Board pursuant to the Industrial Training Levy (Construction Board) Order, a statutory instrument made every year under the Industrial Training Act 1982. Under that order, construction industry employers are required to pay a levy of 0.25% of pay in respect of workers employed by them and 2% of payments made to persons working under labour- only agreements.

They referred to the exemption for small employers. They said that they were free to agree with labour only sub-contractors whatever terms as to remuneration they wished to agree, and to agree any deductions that might be made from those payments. The terms agreed between them and the Applicants in respect of labour only sub-contracts issued to the Applicants were only for an hourly rate, less 2%. The 2% was the amount which the Company was obliged to pay in respect of that contractor to the Training Board.

They said that that contractual term was evidenced by a memorandum sent to the Applicants by the Company on 28 March 1991, and was on order forms issued to the Applicants for the supply of labour only services. The order forms state both an hourly rate and that the payment of that rate was subject to the deduction of the 2% CITB levy. So the Company argues first, that no deduction of wages was made, since each week the Applicant received the amount properly payable to him, which is calculated by multiplying the number of hours worked by the quoted hourly rate, less 2%. Putting it another way, they say there was no deduction. They simply paid what they agreed to pay.

Alternatively, if, under the Wages Act, that method of calculation did amount to a deduction within the meaning of the Act, it was a lawful deduction because it was made pursuant to the contract with the Applicants and was properly notified to them in writing.

Finally, it is argued that the claim that the Applicants had been wrongly assessed by the Training Board to levy is misconceived. They have not been so assessed by the Board. They could not be, as they are small employers. They say in conclusion:

"The situation is simply that the Respondent [the Company] is liable to pay levy in respect of the Applicant and has chosen to agree terms with the Applicant whereby that levy is funded by making a lower payment for labour services to the Applicant."

That statement of defence is a clear outline of the way in which the Company was seeking to defend the case.

The defences of the Company were rejected by the Chairman. Before examining his findings of fact and the reasons which led him to reject the defence advanced by the Company, it is necessary to refer to the key sections of the 1986 Act.

Section 1(1) contains a general prohibition on deductions from wages. It is in these terms:

"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 common ground that that prohibition applies as between the Company and these Applicants, although the Applicants are not employees of the Company. That is because of the definition in Section 8(2) of the contracts to which the Act applies. In Section 8(1), the interpretation section, a "worker" is defined as an individual who has entered into or works under one of the contracts referred to in sub-section (2). Any reference to a worker's contract is to be construed accordingly.

In Section 8(2) the contracts listed not only include contracts of service and contracts of apprenticeship, but also:

"(c) any other contract whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual,

in each case whether such a contract is express or implied and, if express, whether it is oral or in writing."

Returning to Section 1, sub-section (5) need not be read in full. It lists a number of instances ((a) to (f)) where deductions are made, but nothing in the section which contains the prohibition applies to such deductions.

The other important section is sub-section (3) of section 8. That states that certain deficiencies are treated as deductions by the employer from the worker's wages. It is provided that:

"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 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."

Section 5 provides for the machinery for dealing with complaints of unauthorised deductions. Such complaints may be brought before an Industrial Tribunal, even though they may appear, at first sight, to be cases more appropriate for a County Court. If it is a case of an unauthorised deduction, within the wide meaning of that term in Section 8(3), it may be brought before an Industrial Tribunal. It is provided in Section 5(3):

"5(3) Where a complaint is brought in respect of -

(a) a series of deductions or payments, or

(b) ...

sub-section (2) [which contains the three month time limit for bringing a case] shall be read as referring to the last deduction or payment in the series or to the last of the payments so received (as the case may require)."

A line of cases under the Wages Act has established that the Industrial Tribunal, in dealing with an application under the 1986 Act, may have to decide what may be regarded as a matter of common law rather than as a matter of statutory employment law. One case cited by Mr Wallington, Greg May (Carpet Fitters & Contractors) Ltd v Dring [1990] ICR 188 at 194, is an example of where the Employment Appeal Tribunal chaired by Knox J, recognised that, in answering the question posed by Section 8(3) "What is the total amount of wages properly payable by the employer to the worker", the Industrial Tribunal and this Tribunal may have to decide matters of contract or common law. He says, having referred to Section 8(3):

" ... what test does the industrial tribunal apply to decide what is properly payable if, as we have indicated, it has jurisdiction to do that under section 8(3) and section 5(1)(a).

It seems to us quite clear that the test that must be applied in the industrial tribunal is the same as would be applied in a court of law because `properly payable' means payable according to law and the law, of course, has to be applied indifferently in any tribunal that has occasion to apply it. We, therefore, see no difficulty in so construing `properly payable'. It does, of course, have the effect that the industrial tribunal has to apply the common law rules, together of course with any relevant statutory provision and the question is a relatively simple one, although its solution may not always be easy: was the sum in question properly payable in law or not?"

That is the crucial question in this case. In order to determine the correct answer to that question, we must next turn to the decision which contains the Chairman's findings of fact and reasoning.

The Chairman set out the background to the dispute. He said that from the middle of 1991 the Company had adopted a practice of reducing payments made to their self-employed contractors by 2%. It was indicated that this related to the CITB Levy.

We refer to a number of documents now which explain the decision.

First, there is a memorandum on the Company's headed paper with a distribution list to various people, including the Applicants. It is sent by Mr Travers with copies to various people in the Company. It is addressed to "Labour Only Sub-Contractors, (List Below)". It says at the head of the distribution list "(Sent Out Wed.3rd April'91 - with payments)". Mr Travers, the Director & General Manager, wrote this, under his signature:

"As you may already know, we are required to make a payment to the C.I.T.B. for future training, as a percentage of all labour and `labour only' expenditure in the Company. The Company Policy, as and from the 1st April, 1991, will be that this sum will be deducted from your payments, which amounts to 2% of your gross figure.

Unfortunately this is another piece of `red tape' which we have to conform to, and look forward to your support for the future."

The levy payments in question are imposed under the Industrial Training Act 1982 on

employers and contractors in the construction industry. The levies have to be paid to the CITB. The relevant obligation is to pay 2% of the payments made to self-employed sub-contractors. It is a statutory obligation on a main contractor, such as the Company. There is no statutory obligation or power to pass on the levy to sub-contractors. There is no direct imposition of a levy on them. There is not, as Mr Wallington pointed out, any prohibition on passing on the levy obligation to the sub-contractors.

The Chairman referred to the sections in the 1986 Act. He accepted that the relationship between the parties was one which, by reason of section 8(2) of the 1986 Act, gave the Tribunal jurisdiction. He referred to the evidence of each of the Applicants and of witnesses on behalf of the Company. In addition, he had the bundles of documents. In addition to the memorandum quoted above he also saw standard form payment forms and order forms used by the Company. In the specimen subcontractors weekly payment forms there are boxes at the bottom, to be completed with the total payment to be made. They include (in a printed form) not only a gross valuation, but also an item printed "Less C.I.T.B. Levy".

We have also been shown order forms for particular subcontractors which specify the work which they are to do and the site at which the work is to be done. They have written on them, at the bottom of the work specification, these words:

"Hourly Rate

Rates of Pay Subject to

2% C.I.T.B. Levy."

There are slight variations, but what is significant about the order forms we have seen is the repeated reference to "rates of pay subject to the 2% C.I.T.B. Levy".

The Chairman then set out findings of fact about the individual Applicants and the time they started to do work for the Company.

He described the Company procedures of issuing works orders to the Applicants to undertake labour only carpentry works at specific sites. Some of the works orders specified an hourly rate. The hourly rate differed from site to site. It differed as between different Applicants. The rate may be lower, higher or the same as the rate for the work previously carried out by the Applicants.

On occasions, it was accepted that, although no details were given to the Chairman, that the rate might have changed during the work on a particular site. All the Applicants were provided with continuous work from the date of first starting until their various applications were made to the Tribunal. The Applicants accepted that the Company were under no obligation to offer them new work, once work was finished at each individual site.

The Applicants all understood that they were employed as self-employed contractors. They were responsible for their own tax. They were not paid holiday or sick pay. They were paid at a higher rate than employees and did not get allowances for travel or free transport. They had to provide their own tools.

The Chairman summarised the events which immediately led up to the change of circumstances. He quoted from the memorandum of 28 March 1991. He heard evidence from three of the Applicants who were the only ones working for the Company at that time. They denied receiving the document. Evidence was given to the Tribunal on behalf of the Company by Mr Mullenger. He was an Accounts Co-Ordinator. He said he was sure that he placed the memorandum in the wages packets of the employees mentioned on the distribution list at the bottom of the document.

The Chairman said that he was not satisfied that those Applicants did receive the memorandum. The Company had not satisfied the burden of proving receipt of the memorandum. Subsequently, the Chairman found, in nearly every case in which new works orders were issued to the Applicants, the words already quoted from the various payment forms and order forms appended, that is "rates of pay subject to 2% CITB levy". The Applicants were paid weekly. On each subsequent weekly payment a sum equivalent to the 2% was deducted. He was shown the payments forms which had the printed item which read "Less CITB levy".

The Chairman found that the situation was slightly different in relation to two of the Applicants. I need not dwell on that. He dealt with the objections raised to the stoppages. He heard evidence from Mr Jarvis that he raised the question of the stoppage soon after it was first made with the Site Foreman, a Mr Skillings. He was told that the money was to be used for training and for apprentices. He thought the money was being paid direct to the CITB. He accepted this and raised no further objections, because he believed that the deduction was a common policy. He felt that he had to accept the deduction or he would lose his job.

Mr Smith, another Applicant, thought he had raised it with another representative of the Company. He thought that the money was being paid direct to the CITB and would be used for training apprentices. Mr Last, another Applicant, thought the deduction was authorised by higher authority and would be used for training services. He had raised the matter with Mr Skillings and was given a similar explanation to that given to Mr Jarvis. When Mr Read, another Applicant, raised these stoppages with his site agent, he was told the money would go to the CITB and that the employees had to pay it. He also believed the money would go for training.

The Chairman said at the end of that paragraph 4.9:

"Mr Ford [he was a Contracts Manager of the Company] informed me that if any of the Applicants had refused to accept the deduction they would have lost their employment."

The Company's witnesses told the Chairman that they had made a policy decision to reduce their sub-contractor's wages by 2% which they had had to pay to the CITB under the 1982 Act. It was common ground that there was no statutory authority for making that deduction. The Company accepted that what they were trying to do was to recoup themselves the amount that they had to pay the Board.

The case for the Applicants was put to the Chairman. He set out, in a summary, the arguments advanced by Mr McKay on behalf of the Applicants. The Chairman came to these conclusions. He said, having considered the provisions of Section 8(3), that he concluded:

"The amount of wages properly payable to the worker must be based on the hourly rate stated on the orders. Section 8(3) states that any deficiency from that proper amount shall be treated as a deduction. I find that the Respondents [the Company] have therefore made a deduction of the 2%."

He rejected the submission of the Company that the 2% was just a mathematical tool for arriving at the correct hourly payment. He said the easiest way of achieving that would be for the Company to have quoted in their orders the appropriate reduced figure. They did not do that. On the contrary they adopted a specific reference to a deduction, as in the form that said "Less CITB levy".

He considered the question of the contractual relationship between the Company and the Applicants. He found that the various Applicants had continuous contractual relations with the Company following the original commencement of their employment. From time to time rates of pay were mutually amended. He did not feel that the variations in pay in themselves affected the continuing contractual relationship. He referred to the sparsity of contractual documentation, but he came to a clear conclusion on the question of the contractual relationship. He said in paragraph 5.6.:

"5.6 My finding is, therefore, that in each and every case a contractual arrangement was entered into initially for an hourly rate and that the Respondents [the Company] subsequently varied that by the deduction of the 2%. It is equally clear however that nearly every subsequent work order and every subsequent weekly payment referred to the deduction. All the Applicants were therefore aware that the deduction was being made."

The Chairman referred to the fact that the passage of some three years from the time when the deductions began to the time when the proceedings were started, weighed heavily in favour of a presumption that the Applicants had accepted. But on the other hand he had heard evidence from all of them, which was not rebutted, that they had protested to the Site Agent. He made findings of fact that there had been complaints. He went on to say that:

"5.9 What weighs with me more heavily concerning the question of acceptance is the nature of the explanation which was given to the Applicant for the deduction. I have already found that the Applicants did not have knowledge of the memorandum of the 28th March 1991. The Works Orders and the Weekly Payment Forms clearly identified the deduction as a CITB levy. When the Applicants queried it with the Site Agent they were informed that the payment was for the training of apprentices."

The Applicants thought that it was an authorised deduction, one which they had to agree to. In this part of the case the Chairman made crucial findings of fact. He said:

"5.10 ... I find that they [the Applicants] were misled in this conclusion by the way in which the matter was presented to them by the Respondents [the Company] and the Respondents employees. The wording both on the work orders and the weekly payment forms appear to indicate that this is a deduction which is to be paid to the CITB. This, as accepted by the Respondents, is incorrect. They were merely endeavouring to reimburse themselves for the amount which they would have to pay. They had no right to deduct this sum from their contractors unless freely and openly agreed to. It is quite clear to me that they tried to fudge the issue by giving the impression that the money was to go direct to the CITB. Any consent must be informed consent and not influenced by misrepresentation by the other party. A work order which states boldly `rates of payment subject to a 2% CITB levy' leave no margin of doubt in my mind that a sub-contractor can justifiably come to the conclusion, without further explanation, that those payments were to go to the CITB and not into the employer's pocket."

The Chairman concluded that:

"5.11 ... despite the passage of three years from the commencement of the deductions, that the Applicants had not consented to, nor approved, the deduction in any effective form. The Respondents are the authors of their own misfortune in this in that they did not properly and adequately explain the situation to their contractors."

He held that the complaints were well founded and that the Tribunal did have jurisdiction to deal with all deductions made in respect of each of the Applicants since April 1991.

In order to succeed in an appeal it has to be shown to this Tribunal that there is an error of law on the part of the Industrial Tribunal. There is no jurisdiction in this Tribunal to question or differ from the findings of fact made by the Industrial Tribunal after hearing evidence.

On the appeal Mr Wallington presented ingenious arguments. He accepted that there was no dispute that the Applicants were workers. The issue was whether they had suffered unauthorised deductions within Section 8(3). He said that, on the proper construction of Section 8(3), if something is paid to a worker, there is only a deduction if it is less than whatever was properly payable. He referred to the case already cited in Greg May for the proposition that the meaning of "properly payable" is what is properly payable according to law.

His submission was that the sums properly payable under each of the contracts of the Company with the Applicants were those calculated in accordance with the rates set by the Company for each job and were accepted by the Applicants in undertaking the job. That was a matter of construction of the contract and therefore a matter of law. He argued that there was no reason why an employer could not express the formula for calculating a total wage, as for example £6 an hour - 10%, or as £5 an hour + 8%. Whichever way the formula was expressed, the wage properly payable in each case would be £5.40 an hour. There was no legal requirement that parties had to express their contracts elegantly or simply. The use of words of "deductions" such as "less" or "subject to" is not only not decisive, but also not significant. He referred to different meanings of deductions within the 1986 Act itself.

Mr Wallington's primary argument was that there were, in this case, no deductions within the meaning of Section 8(3) and the 1986 Act could not be invoked. There were no deductions, because the Company had paid to each of the Applicants the total amount of the wages properly payable to them on each occasion. They had agreed a rate of pay calculated by reference to an hourly rate less a 2% for the CITB levy. That was a lawful way of calculating the wages. They agreed that that would be their hourly rate of remuneration. They were paid that. So it is simply a matter, as he said a number of times, of the Company paying them what was due to them. He relied on an alternative argument which used, as its centrepiece, the words in brackets in Section 8(3) of the 1986 Act, "after deductions". Knox J in the Greg May case observed that that clearly covered statutory deductions, such as tax and national insurance and deductions under attachment of earnings orders. Knox J also said:

"It would seem reasonably clear that the word `deductions' ... refers to such matters as deductions for income tax, national insurance and the like, and not to deduction in the sense in which that word is used in the Wages Act 1986."

Mr Wallington submitted that that expression:

" ... is not limited to statutory deductions ... . It is submitted that the true distinction between deductions left out of account by s8(3) and those which required to be authorised under s1 to escape illegality is that deductions required by law or the contract, on a continuing basis, are excepted from s8(3) by the parenthetical exclusion. The contractual deduction here was the 2%. The price of labour under the contract (or contracts) was not fixed and so no prior agreement was needed to the introduction of the 2% deduction as such: agreement was sought and obtained to the hourly rate less 2% as a package. If (contrary to the primary submission) the 2% was a deduction, it was contractually agreed and therefore within the deductions left out of account by `after deductions'.

13. This construction of s8(3) is not precluded by Knox J's dicta in Greg May ..."

He said that neither of these submissions was affected by the Tribunal's finding that there was no contractual acceptance by the Applicants of the deductions. The reasoning used to reach that conclusion was flawed. Accepting the finding of the Chairman that there was a continuing contract for this purpose, he argued that the only possible term as to pay was that it was at the rate offered by the Company for each job. It could be lower for one job than for the previous job. The hourly rate offered after April 1991 was offered conditionally. It was open for acceptance only conditionally. No generalised consent to a change in the contract was needed since there was no change in the contract. The issue whether the Applicants were misled as to their obligation to concede the deduction is irrelevant. They were in no different position than if the Company had simply offered hourly rates 2% lower than had previously been offered for new jobs. Each Applicant would either have agreed to work at the new rate or would not be given the job.

Mr Wallington concluded this part of the case by saying that, if he succeeded on either of these arguments, what I think may be called "the hourly rate argument" and "the deductions argument", the matter would have to be sent back to the Industrial Tribunal to identify any deductions that were made for work that was not supported by a works order identifying 2% deduction and if so, whether any such deduction occurred within the three month period prior to the presentation of the claims.

He referred finally to an argument which he said supported his earlier points and was not really an independent point. That was whether there was one contract or a series. His general submission was that the Applicants were engaged under a series of consecutive contracts, each constituted by the offer and acceptance via a works purchase order of a new job, usually at a new site. The practical effect of that would be that the terms of each contract would include those written on the works order. Even if the 2% was a deduction it would therefore be a relevant provision of the Applicants contract authorising it for the purpose of Section 1(1) within the definition of a relevant provision in Section 1(3)(a) or (b). He developed that argument. We do not find it necessary to deal with that, as he accepts it is not an independent point.

The question we have to decide is, whether either of these arguments raise a question of law erroneously decided by the Tribunal. We have heard arguments from Mr Hogarth which support the reasoning of the Tribunal. We are grateful to him for highlighting various aspects of the Tribunal's reasoning in support of their conclusion that the Applicants' claim should succeed.

We have reached the conclusion that the Tribunal and Mr Hogarth are right on this matter. There is no error of law on either point developed by Mr Wallington.

The legal position, in our view, is this. It is common ground that the Applicants are workers within the meaning of the 1986 Act and that the Company is, for that purpose, their employer. It is not in dispute that there is a general prohibition under Section 1 on making any deduction from the wages of a worker, unless it has been authorised by statute or a relevant contractual position or has been agreed to or consented to in writing.

It is common ground that, if there were deductions in this case, they do not fall within any of those excluded from the operation of the 1986 Act, as set out in Section 1(5).

The case therefore turns on the interpretation and application of Section 8(3). Section 8(3) poses two main questions. The first is "What were the total amount of wages properly payable by the employer to the worker on the relevant occasion?". That has to be decided in accordance with ordinary legal principles of common law and contract.

The second question, once the first question is answered, is, "What were the total amount of wages paid on any occasion by the employer to the worker and if what is paid is less than what was properly payable, the deficiency is treated as a deduction?". This whole case hinges on what, in all the circumstances of this case, was properly payable by the employer to the workers.

We reject Mr Wallington's submission that what was properly payable was what he calls the agreed hourly rate less 2%. What was properly payable was the hourly rate. The references in the order form to hourly "rates of pay subject to 2% CITB levy" can have no affect on what was properly payable, because the rates of pay payable by the Company to the Applicants were not "subject to a 2% CITB levy". They were not subject to any levy at all. The only person subject to the levy was the Company. To state on an order form that the pay was subject to a 2% CITB levy can have no affect on what is properly payable. It is simply stating something which the Company itself has admitted is incorrect.

It cannot be avoided by saying, "Although it is not pay subject to a levy, they have agreed to accept that rate of pay". That is not the way the matter is expressed. It is expressed as rates of pay subject to a levy which it was not subject to. It is not expressed as an agreement by the Applicants with the Company that that is to be their rate of pay. The argument fails.

No reliance can be placed on the memorandum because the Chairman found as a fact that that had not been seen by the Applicants and therefore, could not amount to evidence of any agreement by them about the rates of pay or about deductions.

The same applies to the payment form which has printed on it "Less C.I.T.B. Levy". This has no effect on what was "properly payable" by the Company to the Applicants. It had no effect on what was properly payable by the Company to the Applicants because the Applicants' pay was not subject to a CITB levy, nor were they. If something is expressed as a levy, it is not, and cannot be, an agreement. A levy is a payment or liability imposed by law, not a liability which arises out of a contractual obligation. We reject Mr Wallington's first argument.

As to his second argument, we find that this was a deduction. The subtraction of the 2% was treated as a deduction within the meaning of Section 8(3) because it satisfies the requirement that the Applicants were paid less than the total amount of the wages that were properly payable to them. The words in parenthesis "after deductions" cannot be used as an escape clause. If they did, it would make nonsense of the definition of a deduction in Section 8(3).

It is not necessary to decide exactly what is embraced by "deductions" referred to in the parenthesis. It is clearly not something treated as a deduction by virtue of that definition. Otherwise, the statutory provision would be emptied of meaning.

For those reasons we reject the two arguments advanced by Mr Wallington as errors of law on the part of the Chairman. Having found that he did, as a fact, that the memorandum had not been received by the Applicants and they had no knowledge of its contents, he was bound to decide the case in the way that he did. Paragraphs 5.10 and 5.11 of the extended reasons containing the crucial findings of fact in this case, made it inevitable that the Applicants' claim would succeed.

We do not find it necessary to deal with the single or continuous contract point which I have mentioned. As Mr Wallington said, it is not an independent point. It is therefore unnecessary to deal with it.

For those reasons the appeal is dismissed.

--------------------------------------

Following the judgment on the merits of the appeal, Mr Hogarth made an application that the costs of the appeal should be paid by the Company. He relied on Rule 34 of the Employment Appeal Tribunal Rules, which confer jurisdiction to make an order against the party at fault, to pay costs if it appears to the Appeal Tribunal that any proceedings were unnecessary, improper or vexatious, or that there has been unreasonable delay or other unreasonable conduct in bringing or conducting the proceedings.

Mr Hogarth said that there had been unreasonable conduct in pursuing this appeal, because is was hopeless. It always had been hopeless, from the time when the Chairman made his findings of fact in the extended reasons.

Mr Wallington opposed the application. He reminded us that we have a discretion in the matter. He said we had taken an hour to explain why we dismiss the appeal. Mr Hogarth's application was a case of being wise after the event. He also pointed out that, if his clients had been in error in the way that they dealt with the Applicants, it was because they had gone the wrong way about doing it. They have in fact since made arrangements in relation to the 2% levy with the sub-contractors in a way which would not give rise to the issue in this case.

We have considered these arguments. We have come to the conclusion that we should not make an order for costs. It is an unusual case. Most Wages Act cases are more straightforward disputes between employers and employees with contracts of service. Those cases are easier to resolve than this kind of arrangement where the sub-contractors have different orders where there may be different rates of pay. That gives rise to the kind of arguments we have heard on the appeal.

The case does not deserve an order for costs. We were helped by the arguments we have heard, to reach a firm conclusion. The time was not wasted, even though the appeal was unsuccessful.

The application for costs is refused.

[Justice Mummery talking in court]

The order we make is "dismiss the appeal" - no order for costs and remit to the Industrial Tribunal to calculate.

Mr Blyghton made a good observation. Unless agreement can be reached, I do not know.

It is often cheaper in this kind of situation now to agree the amounts than it is to pay people to go back and argue about it. I thought the ball was in your court. Can you produce some estimate of what they are?

[Counsel replying: .......[cannot hear it properly]

[Mr Justice Mummery]

Yes. If you take the initiative and calculate something to put forward to give them a limited time to accept it or reject it. That will keep things moving because this goes back a long way and it should be cleared up. Is there anything else? No. Well thank you very much for your help.

[court rise]