Appeal No. EAT/0642/01

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 24 October 2001

Before
THE HONOURABLE MR JUSTICE WALL
MISS A MACKIE OBE
MR D NORMAN

MR F SHAMSHIRI-FARD	APPELLANT

(1) TEMPLATE EUROPE LTD (2) MR G PLANT	RESPONDENT

Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING

Revised

	APPEARANCES

For the Appellant	MR I WILSON
(Solicitor)
Under the Employment Law
Appeal Advice Scheme	

MR JUSTICE WALL

1.	This is the Preliminary Hearing of an appeal by Mr Shamshiri-Fard against the decision of an Employment Tribunal sitting at London Central on 2 January 2001.  The application made by the Appellant in his form 

2.	IT1 was in these words:

“I have been working for Template Europe Ltd since 1994, although the name of the company was changed from Axia Information System to Template Europe Ltd in 1997.  I was made redundant on 5th June 2000.

The company owes me the following amounts of payments:

a)	£10,750 for the financial year 1998-99
b)	salaries for May and June 2000
c)	redundancy payment
d)	interests incurred due to late payments.

The company made a single payment of £4,000 only on 5th June 2000.  They have failed to come to a proper agreement for above mentioned payments.”

And then he makes other complaints not relevant for our purposes.
  
3.	The extended reasons given by the Tribunal for rejecting the Appellant’s complaints were in essence that throughout the  period of the Appellant’s employment the company was in serious financial difficulties which meant that it was unable to pay the salaries of its employees.  This led at various points, according to the reasons, to reductions in salaries followed by an alleged inability to pay salaries at all.

4.	In so far as the Appellant was concerned it is said,  in common with other employees, that there was an agreement that his salary would only be paid if and when the Respondent could afford to pay it.  Those agreements were,  it appears, made orally. There is no suggestion in the Tribunal’s findings that they were made in writing.  There was, according to the Tribunal, a meeting of the board on 28 February 2000, at which the Appellant was present, and at which it was once again debated as to whether or not the company could continue.

5.	Finally, at the board meeting on 31 May 2000  (for the initial part of which the Appellant was present) it was clear, as the Tribunal found, that the company’s finances continued to be in a very parlous state.  A vote was taken as to whether the company should cease trading or carry out  further restructuring.  The Appellant, it seems, voted for the former but he was out-voted and immediately thereafter on 2 June 2000 the managing director of the company, Mr Pant wrote a letter to the Appellant in these terms:

“Following the board meeting of this company on the 31st June 2000, (that must be a mistaken reference to 31 May)  the directors have directed that in order to continue trading, it is essential that we close the company’s in-house development activity.  This  results in you becoming redundant with effect from 2 June, 2000.
In order to compensate you for this redundancy and to take into account your participation as an employee of the company during its early years, we, the directors, have decided to make the following discretionary payments to you .
1	An immediate payment of £4,000.
2	A further discretionary £10,000 to be made, in stages, by 31st December 2000, subject only to the company’s ability to pay.
3	A third and final payment of up to £10,000 to be made in stages, during 2001 subject to the company’s ability to pay and also subject to the company’s trading profit during the year 2001.  The conditions under which this third payment will be made, will be determined before the end of September 2000, and relayed to you then.
As you know, the company has excellent chances for recovery during the next 24 months and we expect the payments will be made in full within the timescale indicated above.”

6.	The immediate payment of £4,000 was made but the remaining payments which appeared to relate to redundancy were not in fact made.  The Tribunal was satisfied that the company had never been in a position  to pay the two sums of £10,000 referred to.  
7.	Before the Tribunal, both the Appellant and Respondents were effectively in person and neither had the benefit of representation or legal advice.  When we read the Appellant’s “home made” notice of appeal our initial reaction to it was that there were findings of fact made by the Tribunal which rendered it extremely difficult for the Appellant to claim the payment which he was seeking (by way, effectively, of salary arrears) of  £10,750 for the financial year 1998-99 and salaries for May and June 2000.

8.	However, this morning the Appellant has had the benefit of representation by the ELAAS Scheme. Mr Wilson has helpfully appeared for him and put before us what is clearly a point of law.  He cites paragraph 13 of the Employment Rights Act 1996 part of which I propose to read:

“13.  Right not to suffer unauthorised deductions

(1)	An employer shall not make a deductions 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 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, 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.”

9.	We have also been provided this morning with the Appellant’s contract of employment.  This provides in paragraph 3 that his salary will be paid monthly by credit transfer into his bank account not later than the thirty-first day of each month.  Paragraph 23 of the contract reads:

“23	Variations to the Contract
As detailed above, the Company may from time to time vary the terms of your contract of employment.  Where such variations constitute a change to your contractual terms, you will be notified in writing of the change within one month.”

10.	On this basis, Mr. Wilson takes two short points on the Appellant’s behalf.  The first is, 
that: -
“The Tribunal, having found as a fact that the Applicant had orally agreed to a variation of its contract failed to take into account that if a deduction is authorised by a provision in a contract of employment even if oral it is still necessary for the employer to notify the employee of the effect of that provision in writing” 

Mr. Wilson refers to section 13(2)(b) of the Act,  which I have of course read,  and to paragraph 23 of the Applicant’s contract, which requires any variation to be notified in writing. He submits that  the Tribunal erred  when it said in paragraph 21 of the extended reasons  that it was open to the Appellant to make  an agreement for the variation of his contract without it being reduced to writing. 

11.	In these circumstances it seems to us that in so far as variations of the Appellant’s contract of employment in relation to pay is concerned it is arguable that because the variations were not reduced to writing the Tribunal fell into error and should have concluded that the reductions and variations were unlawful and should not have been made.  That, it seems to us, is an arguable point.  It was not, however, taken below and we have been concerned that where a point is not addressed below by either side this is not the function of the Employment Appeal Tribunal to rectify the deficiency.  However, we have come to the conclusion that where it is arguable that the Tribunal has reached a decision which is wrong in law, resulting in the Appellant being unable to enforce a payment of money,  different consideration can reasonably be said to apply and it would unfortunate if the Employment Appeal Tribunal was not given the opportunity to decide whether or not the point raised by Mr Wilson today is a good one, and that the decision  of the Tribunal was flawed.

12.	We also think there is a practical issue in that it is of course possible for variations in 
relation to pay within the term of the Appellant’s contract to have been contained within his pay slips.  He was  paid by credit transfer on a monthly basis, and there should be documentation by way of receipts or salary slip which would have been  given to the Appellant and kept by the company. In these circumstances, and against the possibility that the variations in the contract may indeed have been included in the pay slips by reference to the amount he was or was not being paid,  we propose to direct that there be  discovery both by the Appellant and Respondent of the payments and pay slips for the Appellant’s salary for the relevant period.  That to say from the date of the first variations of his contract until he ceased to be employed.  

13.	For these reasons we propose to permit the matter to proceed to a full hearing on the 
points raised in the amended notice of appeal,  and it is the amended notice of  appeal which we permit to go forward to a final hearing.