Appeal No. UKEAT/0345/04/DZM

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 3 December 2004

Before
HIS HONOUR JUDGE MCMULLEN QC
MR P R A JACQUES CBE
MRS M V McARTHUR

ROYAL MAIL GROUP PLC	APPELLANT

MR O P SHOTTON	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR PETER EDWARDS
(Of Counsel)
Instructed by:
Messrs Hammonds
Solicitors
2 Park Lane
Leeds
LS3 1ES	
For the Respondent	MS SOPHIE BUCKLEY
(Of Counsel)
Instructed by:
The University of Northumbria Student Law Office
Northumberland Road
Newcastle upon Tyne
NE1 8ST	

SUMMARY

(1)	ET’s decision that it was reasonable for the Claimant to present a claim 5 months after date of knowledge was not perverse.  Marley UK Ltd v Anderson [1994] ICR 295 and London Underground Limited v Noel [1999] IRLR 622 (CA) applied.

(2)	A failure to pay the Claimant at premium time rate for working during rest breaks constituted an unlawful deduction from what is properly payable as wages under the Claimant’s contract, contrary to ERA 1996 Part II.

HIS HONOUR JUDGE McMULLEN QC

1.	This case is about unlawful deductions from pay and the exercise of discretion in accepting an out of time claim.  The judgment represents the views of all three members.  We will refer to the parties as Applicant and Respondent.  

Introduction
2.	It is an appeal by the Respondent in those proceedings against the decision of an Employment Tribunal sitting at Newcastle upon Tyne, Chairman Mr PG Rennie, registered with Extended Reasons on 13 February 2004.  The Applicant was represented by a volunteer from Northumbria University Student Law Office who now instructs Ms Sophie Buckley of Counsel.  We pay tribute to the careful work done by the Law Office.  The Respondent was represented there by a solicitor and today by Mr Peter Edwards of Counsel.  The Applicant claimed that unlawful deductions had been made from his wages.  The Respondent contended that the application was out time and anyway denied the claim.

The issues
3.	The essential issues as defined by the Employment Tribunal were the jurisdiction issue that is the time point, and the substantive issue of whether or not what was done in this case fell within the protection of Section 13 of the Employment Rights Act.  The central issue on the time point was what was a reasonable time for the Applicant to present his claim and on the substantive issue what was properly payable by way of wages from which there was said to be an unlawful deduction.  The Tribunal decided the claim was in time and it succeeded on the substance.  The Respondent appeals against that decision.  

4.	Directions sending this appeal to a full hearing were given by His Honour Judge Pugsley and members at a Preliminary Hearing.  Some of the Chairman’s notes of the hearing below were sought and we are grateful to Mr Rennie for providing those as they have enabled one dispute on the appeal to be resolved by Mr Edwards.

The legislation
5.	The relevant provisions are the Employment Rights Act 1996 Sections 13(1)(a) and (13)(3): 
13     Right not to suffer unauthorised deductions
(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,
(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.”

6.	Wages are defined by Section 27(1)(a).
27     Meaning of “wages” etc
(1)   In this Part “wages”, in relation to a worker, means any sums payable to the worker in connection with his employment, including –
(a)     any fee, bonus, commission, holiday under his contract or otherwise,”

7.	A complaint may be made to an Employment Tribunal of a breach of the foregoing provisions. The time limit is three months from the last of a series of deductions – see Section 23(2) and (3).  Time however may be extended in accordance with Section 23(4) which provides 
“23     Complaints to [employment tribunals]
(4)     Where the [employment tribunal] is satisfied that it was not reasonably practicable for a complaint under this section to be presented before the end of the relevant period of three months, the tribunal may consider the complaint if it is presented within such further period as the tribunal considers reasonable.”

8.	The Tribunal directed itself by reference to those relevant provisions and to 12 authorities none of which has been cited to us as being relevant nor indeed was developed by the Tribunal.

The facts
9.	The Respondent provides the national system of mail delivery in the United Kingdom.  The Applicant was employed by it on 26 February 1990 as a postal delivery worker based in North Shields, covering part of Whitley Bay on North Tyneside.  Originally he worked six days a week from Monday to Friday, 5.15 am until 12.15 pm, and on Saturday from 5.15 until 10.15 am.  From 2 December 2002, at his own request, he moved to a five-day working week.  The Tribunal resolved one dispute against the Applicant that he had claims in respect of the period succeeding 2 December 2002.  That is because his claim was held to be (and there is no appeal against it) from 15 May 2000 to 2 December 2002 when he moved from six to five-day working.  The Tribunal went on to find as follows:
“(b) Throughout his employment, the applicant has been contractually entitled to a fixed basic hourly rate of pay which has increased on an annual basis.  Overtime may be available and at all relevant times that has been payable at the rate of time and a half irrespective of the day of the week and the length of the overtime: it was common ground between us that there has never been a minimum period of time before which there would arise the entitlement either to any payment at all or to a premium rate. Included in the applicant's hours of work has always been a paid meal break of certain duration and indeed times.  However, as a result of the volume of work and on occasions the need to cover an absent colleague, it was common practice within the delivery office for the applicant (and many of his colleagues) to be asked and to agree to work part of if not through the meal break. On such frequent occasions, the applicant (and others) did. not take their breaks at some later time but were offered the choice of either leaving work at the normal time with payments for overtime (at time and a half). for the relevant part of the meal break or time off in lieu which would usually mean leaving work early to the same extent as the time given up but at particularly busy times might mean arriving late or leaving early on the following day. Occasionally, again because of the demands upon services, a choice might not be offered: on those occasions, overtime payment had to be taken. It may very well be that the applicant usually, perhaps even invariably, chose and was allowed to take time off work on the same or the following day but that was his preference. 
(c) On 15 May 2000, as a result of extensive negotiations between the respondent and the Communication Workers' Union, there came into effect in relation to all employees including the applicant revised terms and conditions contained in a national agreement called the Way Forward Agreement together with a local agreement known as Fit to Deliver. These terms an conditions were placed before us at A8-70 but it was common ground that the only provision of importance in this case was at A32. It related to the duration of paid meal breaks. It sought to harmonise that on a national basis and it is likely that, so far as the applicant was concerned, it resulted in an increase in time off. It was common ground before us that as from 15 May 2000 all relevant employees (including the applicant) who worked either a six-day or a five-day week were entitled to a paid meal break of 40 minutes Monday to Friday and 30 minutes on Saturdays. The revision had no bearing or effect upon the practice whereby the applicant and others agreed to work at least part of their meal breaks in return for an early finish or overtime payments at premium rate. 

10.	The Tribunal noted that it was unfortunate that what had been designed by the collective bargaining parties as an increased entitlement was not made clear to any of the Applicant’s colleagues or to him, so that in his case as a six-day employee from 15 May 2000 to 2 December 2002 the Respondent’s local management continued to operate by way of duty sheets based upon the old system.  The effect of which was a genuine error was that the Applicant worked ten minutes more on each occasion rather than having those ten minutes by way of a break or relaxation period.  The genuine error was however the responsibility of the Respondent and the trade union did not notice it until April 2003.  Management decided to invite the employees including the Applicant to make claims for its mistake in accordance with the following timetable.  The claim was to be submitted.  Management was to deal with it and eventually a form of notification was given to the Applicant on 21 July 2003 that his claim would be met but not by way of a payment.  The practical effect of a worker working during his or her rest break was that for that period of time a premium rate will obtain of time and a half.  A choice was offered to take time off so that the workers could leave earlier.  The Applicant had hoped to be reimbursed but the final conclusion of the Respondent on 21 July was that this was to be rectified by methods other than a cash payment.  The Applicant was dissatisfied.  A meeting was called of the union members on 30 July 2003.  The Applicant decided that he would leave it in the hands of his union to negotiate with the management about what to do about this and when nothing was forthcoming after four weeks he went himself to the JobCentre, obtained an Originating Application and submitted it so that it was presented on 4 September 2003.  

11.	The Tribunal found that the Applicant could not reasonably practicably have presented his claim before he knew of the error which was which was to say 9 April 2003.  That was conceded by the Respondent.  The focus therefore was upon the secondary limitation period, for the primary three months had already elapsed by this time and essentially the time was between 9 April 2003 and 4 September 2003, almost five months.  The Tribunal upheld the Applicant’s claim that it was a reasonable period of time in which he did not need to present his claim and therefore resolved the jurisdictional issue in his favour.

12.	It went on to consider the substantive issue.  It did so in terms which include the following passage:
“….On the evidence placed before us, we were unable to accept this argument.  If the applicant had known that he was being required each day to work 10 minutes of his meal break, he would have had a choice (in addition to the option of refusal) to leave work 10 minutes early or to be paid overtime.  Even if he would have chosen the former, as Mr Springer contended, on every occasion on which he left work at 12.15 pm his working day should in fact have finished at 12.05 pm.  Accordingly, he did not simply lose 10 minutes relaxation time:  he worked 10 minutes longer than ought to have been the case and further than the period in respect of which he was paid.  In effect, during every week in which he attended work in that period of about 2.5 years, he worked 41 hours when he was paid for 40 hours.”

13.	It is accepted on behalf of the Applicant that there is an error in that last sentence.  The Applicant was paid for 40 hours.  He did not actually work since all his hours were within the envelope of the 40 hour week.  The issue was whether or not some of those hours should have been paid for at premium rate for they included, on this calculation, 6 x 10 minutes in every week during which the Applicant was entitled by the collective agreement to be on a break but was by the error required to work.  The Tribunal decided that that constituted a deduction from what was properly payable to him.  It then went on to determine that the amount to which he should be entitled was at the rate of time and a half.  Although he was offered a choice and he may usually have taken the choice of leaving early he was as a matter of law entitled to be paid at the rate of time and a half if he so claimed.

The Respondent’s case
14.	In a clear and engaging submission, Mr Edwards has argued three points.  First, on the jurisdiction issue a period of five months could not in the circumstances of this case be considered a reasonable period.  There must be some relationship to the primary limitation period of three months and it is perverse for the Tribunal to decide that five months was a reasonable time in which the Originating Application was not submitted.  Secondly, as a matter of construction, since the Applicant was indeed paid for 40 hours there could be no deduction from it.  It is not correct to include within the definition of wages (and thus to allow a deduction from it), a  period during which the Applicant should have been on rest break but worked instead. That is not aptly described as a deduction although it might be the basis of a contractual claim if the Respondent did not make such payment.  No contractual claim was made.  The Tribunal erred.  Thirdly, the Tribunal erred in allowing time and a half when the findings by the Tribunal indicated that the Applicant may not always have sought payment but would have gone early.  

15.	It is acknowledged that the Tribunal made an error in respect of the passage we have highlighted and that really betrays the thinking of the Tribunal that it was indeed looking at a period of over 40 hours. That affected its approach to the substantive issue and on the jurisdictional issue. Although no authority had been found indicating what criteria must be taken into account, it is logical to pay attention to the primary limitation period when considering what period thereafter is reasonable.  It is the period and not the actions of the employee which is relevant. A distinction should be drawn with the wide discretion granted to a Tribunal when considering discrimination claims where a just and equitable jurisdiction exists.  Where justice and equity are concerned all the circumstances are to be considered whereas a much narrower approach is required in this case.  

The Applicant’s case
16.	On behalf of the Applicant it is contended that the Tribunal made a decision which could not be categorised as perverse on the jurisdiction issue for it considered the relevant factors and made a decision of fact which was to decide what was a reasonable period.  The circumstances included the attempt by the Applicant to engage his union in discussions with the Respondent and the Respondent’s staggered approach to dealing with the claims on the substantive issue. The claim was correctly put and diagnosed by the Tribunal as being a claim for pay for time worked doting his rest breaks. The claim was for time and a half pay.  As to the third and relatively minor point of whether the Tribunal had correctly calculated the figure, the evidence was all one way: whenever a worker worked during the relaxation period he or she was entitled to be paid at time and a half and thus the Tribunal’s award of £1249.50 was correctly made.

The legal principles
17.	The legal principles have been succinctly set out in the two authorities which have been placed before us.  In London Underground Limited v Noel [1999] IRLR 622 CA Peter Gibson LJ said as follows:
“As for the tribunal’s invocation in paragraph 12 of its decision of good industrial relations practice, the like considerations if valid would have led to the conclusion that so long as an employer’s internal appeals procedure has not been exhausted, it is reasonably impracticable for an employee to present a complaint.  But that is not the law, this notwithstanding that there have been powerful calls over the years for a reconsideration of the legislative provisions (see MacDonald v South Cambridgeshire RDC [1973] IRLR 308 at 309, 19, and Bodha [1982] ICR at p.205).  The fact remains that the statutory test continues to be that of reasonable practicability, in contrast to the wider test of whether it is just and equitable to extend time to be found in the discrimination legislation (s.76(6) Sex Discrimination Act 1975, s.68(c) Race Relations Act 1976 and para.3(2) Sch. 3 Disability Discrimination Act 1995).
I would accept that if the test had been one of reasonableness, as distinct from reasonable practicability, the employee would be entitled to succeed.  The present case seems to be to be a very hard one and I have sympathy for the employee.  But time limits in employment cases are, in general, strictly enforced, and in reality the tribunal had not found a single fact which showed that it was not feasible for the employee to complain to the tribunal before 9 July 1997.”
18.	In Marley UK Ltd v Anderson [1994] ICR 295 EAT, Mummery P and Members made the following judgment dealing with time limits:
“In our judgment, the reasons given by the industrial tribunal for its decision on this point disclose an error o law which led the tribunal to concentrate on the length of the delay to the exclusion f a proper consideration of all the relevant circumstances in which that delay occurred.  We accept the submission made on behalf of the employee that the error of law took the form of a misdirection in accepting the employers’ submission that the decision in James W Cook & Co (Wivenhoe) Ltd v Tipper [1990] ICR 716 laid down any time limits as to what should and should not be regarded as a reasonable period.  That decision of the Court of Appeal did not lay down any time limits.  The correct position is that if the tribunal is satisfied, as it was here, that it was not reasonably practicable for the complaint to be presented before the end of the three months, the tribunal was then free to consider, having regard to all the relevant facts of the particular case whether the complaint was presented “within such further period as the tribunal considers reasonable””
19.	We bear in mind that time limits in Employment Tribunal are strict and strictly enforced.  We also bear in mind the different code applicable in the Employment Rights Act from the more generous approach under the anti-discrimination provisions.  The approach to this Act seems to us to be one of construction in the light of the evidence which was called before the Tribunal by live witnesses.
Conclusions
Time limits
20.	We prefer the arguments of the Applicant on each of the three points and have decided that the appeal should be dismissed.  Dealing first with jurisdiction, there is no authority which requires a relationship to be established between the primary limitation period and the discretionary extension.  The only authority which has which deals with this is Marley (above) and it will be seen that the President did not there attach such a relationship.  The periods of time were rather different from ours since the extension here is of about six weeks in circumstances where the primary limitation period expired without the Applicant knowing facts upon which he could found a claim.  Marley was an opportunity for the EAT to have set out the factors which ought to influence a Tribunal when it considers what is a reasonable period and yet it did not do so.  Indeed, Mummery P’s language is extremely wide.  The Tribunal is free to consider a range of matters.  We reject the contention that circumstances are to be narrowly construed.  The phrase used by Mummery P is “all the relevant facts of the particular case.” That is apt to include all of the circumstances whether they relate or example to knowledge, wrong doing and other personal factors of the Applicant.  We also bear in mind that the approach of Peter Gibson LJ, with whom the other Lords Justices agreed, shows considerable sympathy for a relaxed approach to the question of what is reasonable once the primary limitation period has expired.  

21.	Just to bring up to date Peter Gibson LJ’s reflections, the law does now build in recognition of the importance of workers seeking to resolve their differences with their employers without resort to an Employment Tribunal – see the measures brought into effect following the Employment Act 2002 by the Dispute Resolution Regulations 2004 on 1 October 2004 and the provisions corresponding to what might be described as conciliation pauses now in the 2004 Employment Tribunal Regulations.  Nevertheless, the distinction between the approach in discrimination on the one hand and employment rights on the other remains.  We have no doubt that it is for a Tribunal to consider all of the circumstances. As Peter Gibson LJ makes clear, it is in the public interest that parties try and resolve their disputes through internal procedures and encouragement should be given to do that.  

22.	What is striking about our case is that the problem arose out of a failure by management, not spotted by the local union either, to implement a national collective agreement.  It must also be borne in mind that this was a genuine error by the management and is to be placed in a different context from circumstances where there has been a serious act such as a dismissal or a deliberate deduction from wages.  In those circumstances there ought to be every hope that the matter could be resolved amicably without taking up an Employment Tribunal claim.  Thus the Tribunal stressed in its judgment that the Applicant had sought to utilise the source of the union for resolving this problem and only when it failed to make any progress by the end of August 2003 did he take action himself.  That it seems to us was a relevant consideration for the Tribunal.  It has not approached the decision as a single block of time but has analysed each period up to and including what Mr Edwards describes as the formal rejection of the Applicant’s claim on 21 July 2003.  In a very real sense therefore there were attempts to resolve the matter internally up until then and only on that date was it finally made clear to the Applicant this was going to go no further.  No point now arises about what happened at the union meeting on 30 July and so we with the Tribunal see that the real focus was upon the four weeks or so which fell after 30 July 2003.  

23.	The approach of the Tribunal could not be considered to be perverse when it held, after a good deal of hesitation, that it was still reasonable to wait four weeks before limitation expired.  It must be borne in mind not only are we dealing with a case of alleged perversity in exercising discretion for which the high threshold set in Crofton v Yeboah 2002 IRLR 635 para 12 per Mummery LJ must be crossed. As Mr Edwards correctly identifies, the discretion is not entirely enfettered and it must be exercised judicially. Given the language of the EAT in the Marley case it does seem that the Tribunal has a discretion wide enough to include consideration of all of the factors.  These, the Tribunal pointed out, included the genuine nature of mistake, the attempts to resolve the matter internally, the reliance the Applicant reasonably placed upon his trade union and the comparatively short period of time thereafter. In the absence of any authority we do not consider it is an error by a Tribunal to fail to set out its appreciation of the relationship between the primary limitation period and the discretionary extension, here three months plus five months.  They are all part of the circumstances and the factual decision-making which will go into the exercise of that discretion.  

Deduction from wages
24.	Notwithstanding the accepted error by the Employment Tribunal we hold that the decision which it had made was unarguably right: Dobie v Burns International UK [1984] ICR 812 CA.  There can be no doubt what the factual circumstances in this case were.  They were plain and simple.  The Applicant instead of being on a break worked ten minutes for six days a week for 2½ years. The Tribunal expressed that as “in effect” working an extra hour at the end of the week.  We have no doubt that it was fully aware that the practical impact on the Applicant was that he had spent time actually sorting letters for one hour a week when he should have been on relaxation and therefore the consequence id that he should have been paid or offered early leaving on each of those occasions.  The case properly regarded, as argued by Ms Buckley, is a claim for what was properly due to him.  The Tribunal found on overwhelming evidence that a person who worked during his break was entitled to premium pay and thus when the Applicant worked and was not paid he was entitled to say that a deduction has been unlawfully made from his wages. There is no error in the Tribunal’s approach.  

Quantification
25.	We then turn to the third issue which is the quantification of this claim.  We hope that we will not be criticised for taking this matter in the same short way as Mr Edwards did. Since this claim was for time and a half it appears to us that the Tribunal has made no error in its formulation of one hour a week for 2½ years.  

26.	We would very much like to thank both Counsel for their clear and succinct submissions to us today.  The appeal is dismissed.