Appeal No. UKEAT/0618/07/DA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 10 March 2008

Before
HIS HONOUR JUDGE McMULLEN QC
MR D NORMAN
MISS S M WILSON CBE

MR P MILES	APPELLANT

LINKAGE COMMUNITY TRUST LIMITED	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR O SEGAL
(of Counsel)
Instructed by:
Messrs Thompsons Solicitors
City Gates East
Toll House Hill
Nottingham 
NG1 5FS	
For the Respondent	Mr C BOURNE
(of Counsel)
Instructed by:
Messrs Bridge McFarland Solicitors
3-9 Tentercroft Street
Lincoln 
LN5 7DB	

SUMMARY
Working Time Regulations
Under WTR Reg 30(4), an Employment Tribunal did not err when it upheld the Claimant’s case for breach of Reg 24 on loss of compensatory time yet awarded no compensation. It considered relevant factors and the employer’s default. The period of time of the default runs from the date of the actual refusal of the employer to permit the exercise of the right, and does not begin on the day the employee takes up employment on that working pattern.

HIS HONOUR JUDGE McMULLEN QC

1.	 This case is about compensation for breach of the Working Time Regulations.  The judgment represents the views of all three members.  We will refer to the parties as the Claimant and the Respondent.

Introduction
2.	It is an appeal by the Claimant in those proceedings against the reserved judgment of an Employment Tribunal chaired by Employment Judge Walker sitting over four days at Nottingham, including a day in chambers, registered with reasons on 16 October 2007.  The Claimant is today represented by Mr Oliver Segal where different Counsel appeared at the Employment Tribunal; the Respondent by Mr Colin Bourne of Counsel.

3.	The Claimant claimed a breach of the Working Time Regulations 1998 which the Respondent conceded on the fourth day of the proceedings.  The essential issue was thus to determine compensation for that breach.  The Tribunal decided there should be none.  The Claimant appealed.  Directions sending this appeal to a full hearing were given in chambers by Wilkie J.  

The legislation
4.	Obligations were imposed by the European Union, first by a directive in 1993 and then consolidated in a directive in 2003.  The obligation was transposed into domestic law by the Working Time Regulations 1998 which provide, so far as is relevant to the issue in this case, as follows: 
“Daily rest  
10. (1) An adult worker is entitled to a rest period of not less than eleven consecutive hours in each 24-hour period during which he works for his employer.
 21.  Subject to regulation 24, regulations 6(1), (2) and (7), 10(1), 11(1) and (2) and 12(1) do not apply in relation to a worker - 
(c) where the worker's activities involve the need for continuity of service or production, as may be the case in relation to - 
(i) services relating to the reception, treatment or care provided by hospitals or similar establishments, residential institutions and prisons;
Compensatory rest  
24.  Where the application of any provision of these Regulations is excluded by regulation 21 … and a worker is accordingly required by his employer to work during a period which would otherwise be a rest period or rest break - 
(a) his employer shall wherever possible allow him to take an equivalent period of compensatory rest, and
(b) in exceptional cases in which it is not possible, for objective reasons, to grant such a period of rest, his employer shall afford him such protection as may be appropriate in order to safeguard the worker's health and safety.
Remedies     
30.  - (1) A worker may present a complaint to an employment tribunal that his employer - 
(a) has refused to permit him to exercise any right he has under - 
(i) regulation 10(1) …; or
(ii) regulation 24, in so far as it applies where regulation 10(1) … is modified or excluded…
 (2) An employment tribunal shall not consider a complaint under this regulation unless it is presented - 
(a) before the end of the period of three months …beginning with the date on which it is alleged that the exercise of the right should have been permitted (or in the case of a rest period or leave extending over more than one day, the date on which it should have been permitted to begin) or, as the case may be, the payment should have been made;
(b) within such further period as the tribunal considers reasonable in a case where it is satisfied that it was not reasonably practicable for the complaint to be presented before the end of that period of three or, as the case may be, six months.
(3) Where an employment tribunal finds a complaint under paragraph (1)(a) well-founded, the tribunal - 
(a) shall make a declaration to that effect, and
(b) may make an award of compensation to be paid by the employer to the worker.
(4) The amount of the compensation shall be such as the tribunal considers just and equitable in all the circumstances having regard to - 
(a) the employer's default in refusing to permit the worker to exercise his right, and
(b) any loss sustained by the worker which is attributable to the matters complained of.

5.	As the 2003 Directive was a consolidation and we have been shown no earlier provision which is said to conflict with it, we cite the provision in the 2003 Directive and assume that the Regulations transpose it.  It says this: 
“Article 3, Daily Rest: Member states should take the measures necessary to ensure that every worker is entitled to a minimum daily rest period of 11 consecutive hours per 24 hour period.”

The facts
6.	The Respondent provides specialist education in care homes.  It employs 571 people.  Mr Miles worked on a shift pattern which is unusual and complicated, but which essentially provided for him to be at work on the premises for long periods of time of almost 48 hours, during which time he slept in.

7.	His original complaint was that, during the periods when he was required to be at the care home and either disturbed during his sleep, or sleeping, he should be paid.  The claim was modified in different respects and it is fair to say that the focus of the Claimant, his fellow workers, his trade union official and the employers was on the provisions of the Regulations insofar as they generated a right to be paid.

8.	The working pattern of the Claimant was described as follows: 
“3.3 The Claimant was employed as a Houseparent and therefore worked in accordance with the Respondent’s residential shift pattern which is calculated by reference to a 12 month cycle.  The Claimant’s contract of employment refers to the following shift pattern: 

Week 1
Monday:		9:00am to 11:00pm with break of 2 hours (plus sleep-in)
Tuesday:		7.30am to 11:00pm with break of 2 hours (plus sleep-in)
Wednesday:	7.30 am to 9.30am
Thursday:	Off
Friday:		9.00am to 11:00pm with break of 2 hours (plus sleep-in) 
Saturday:	8.00am to 11.00pm with break of 2 hours (plus sleep-in)
Sunday:		8.00am to 11.00pm with break of 2 hours (plus sleep-in)

Week 2
Monday:		7.30am to 9.30am
Tuesday:		Off
Wednesday:	7.30am to 11.00pm with break of 2 hours (plus sleep-in)
Thursday:	7.30am to 11.00pm with break of 2 hours (plus sleep-in)
Friday:		7.30am to 9.30am
Saturday:	Off
Sunday:		Off”

9.	The Respondent conceded that the sleep‑in time constituted working time following analysis of the directive in two European Court judgments: Jaeger [2003] IRLR 804 and SIMAP [2000] IRLR 845.

10.	The broad effect, perhaps over‑simplified, is the Respondent was in breach of the Regulations for not according the Claimant a period of 11 consecutive hours off after working a shift, but aggregated it to the end of his very long shift.  It is not in dispute that the working pattern above constituted a failure to comply with regulation 10 and its derogations as provided for in regulations 21 and 24.  Thus the sole issue was compensation.

11.	The Tribunal came to the conclusion that the justice and equity of the claim called for an award of nil, or as it put it, making no award of compensation.   The Claimant had no pecuniary loss and it is accepted there is no scope in these regulations for injury to feelings. No issue arises before us as to the correctness of the Tribunal’s approach. 

12.	The Tribunal set its mind solely upon the employer’s default and there is no dispute that is the central issue in this case.  The Tribunal answered it in the following paragraphs.  

“5.1 Mr Midgley asked us to take account of the fact that the employer’s default certainly, he says, began from 31 May 2006.  We are of the view that we have to find a different date for when the default began.  By reference to paragraph 5.3 of our previous judgment where we found that a letter dated 7 April 2006 was in fact what we might call “the initiatory grievance” which brought into play his right to complain in relation to the Working Time Regulations.  That default, therefore, continued until he left the Respondent’s employment on 1 January 2007, a period of some 8 months. 

5.2 However, we believe we should also take in account the degree of default.  We have the situation here where this shift pattern was in place for perhaps some years prior to it becoming an issue in these proceedings.  As we have set out in our previous judgment our findings in relation to the shift system, we do not repeat them here.  However, we do conclude from those findings that there was no culpable default on the part of the employer.  It is apparent that from the point of Mr Miles’ grievance throughout that his main thrust was, in fact, not being paid for those hours in which his claim has been unsuccessful.  However, from an early time he did have the assistance of an experienced trade union representative.  The employers themselves took legal advice.  None of them appeared to have raised this issue of the failure to give compensatory rest and it really only emerged when this case came to this Tribunal.  Our previous judgment will demonstrate, we hope, the complexity of these Regulations and frankly we do not criticise any employer who was not able to interpret them and apply them accurately.  There is no doubt from our previous findings that there was no lack of faith or goodwill on the part of the employer here.  We, therefore, are of the view that there was not a culpable employer, as it were, seeking to do down or undermine Mr Miles, or indeed his colleagues in this respect.”  
On that basis no money was forthcoming at the end of this long endeavour of the Claimant and his trade union.

The Claimant’s case
13.	On behalf of the Claimant it is contended that the Employment Tribunal wrongly construed the regulations and made a decision which was perverse.  The Tribunal wrongly focused on an additional adjective which does not occur in the regulations by adding “culpable” to “default” and by considering as relevant the fact that the Respondent had legal advice and had not correctly understood the legal position set out in those judgments of the European Court as long ago as 2003.

14.	The Tribunal wrongly considered the motivation of the Respondent when the Tribunal held that there was no lack of what we hold to be good faith, or of goodwill, on the part of the Respondent, and held that the Respondent was not culpable.

15.	In a new argument which we gave permission for Mr Segal to advance today, for exceptional reasons which we cited, it is contended that the Tribunal’s attention was wrongly trained upon the period from 7 April 2006 to 1 January 2007. The correct period began at the date of the default which was when the shift pattern was presented to the Claimant upon his commencing employment with the Respondent on 1 January 2003.  The difference is between on the one hand eight months as found by the Tribunal, and 48 months as now argued by Mr Segal.
  
16.	The Tribunal failed to give sufficient attention to the scale of the default. Over a considerable period of time, whether it be eight or 48 months is not significant for this purpose, the Respondent was in breach of these regulations and failed to give, at the end of each relevant shift, the appropriate time off work.

The Respondent’s case
17.	On behalf of the Respondent it is contended that the Tribunal made findings within its discretion and decided, in a way which was open to it, to award no compensation.  There is no absolute right to compensation.  The Tribunal exercised its discretion correctly.

18.	As a matter of construction, the period of default began when the grievance was presented, as held by the Employment Tribunal, and any earlier period did not trigger the default of the Respondent.

The legal principles
19.	The legal principles to be applied to emerge from the following authorities.  In MacCartney v Oversley House Management UKEAT/0500/05, HHJ Richardson and members  said this: 
“34.	As we have said, there are within Part III of WTR various exemptions, qualified and unqualified, which modify the obligation under Reg 12(1); but no such provision was relied on before the Tribunal.  Since it is plain that by the very method of work imposed on her, OHM refused to allow her to exercise her right to rest breaks, the appeal on this ground must be allowed, and a declaration made that Mrs MacCartney in relation to rest breaks is well founded.
61.	Again we record that it was not argued below that OHM’s obligation under reg 10 was excluded or modified by any provision of Part III of the WTR.  Accordingly, the Tribunal’s decision as to rest periods cannot stand, and there will be substituted a decision that Mrs MacCartney’s claim under Regulation 10(1) of the WTR is well founded.  The question of remedy will be remitted to the Tribunal.”  

20.	From that it is submitted by Mr Segal that the date for the commencement of the default is the date when the work pattern was imposed.  On behalf of the Respondent it is contended that that paragraph does not solve the problem in this case because there is no indication as to whether a complaint was made at the outset.  
21.	In Susie Radin Ltd v GMB & Ors [2004] IRLR 400, a claim for a protective award under sections 188 and 189 of the Trade Union and Labour Relations (Consolidation) Act 1992, the Court of Appeal ruled that the regime there was penal and not compensatory. This might be relevant to the proceedings in the present case.  Peter Gibson LJ cautioned against the read-across from one piece of domestic legislation to another, particularly when considering European obligations.

22.	In Skiggs v South West Trains Ltd [2005] IRLR 459, a claim was considered in relation to a trade union representative who had been refused the opportunity to attend a meeting.  He was told that he would not be permitted to take part in any meetings while investigations were ongoing into disciplinary action against him.  The EAT examined analogous provisions and concluded that the Employment Tribunal had erred in respect of an award in his case and said this in the judgment given by Mr Commissioner Howell QC.  

“15.
On this part of the case we have been persuaded that the Tribunal misdirected itself and took too narrow a view of the scope of its power to award compensation for what it found to be an unreasonable infringement by the employer of the Applicant’s rights under section 168.  Section 172, the material parts of which were accurately set out by the tribunal at the beginning of the passage just quoted, empowers the tribunal to make an award of compensation in such a case and requires it to have regard not only to ‘any loss sustained by the employee’ but also to the employer’s default in failing to permit him to take time off.  This formulation also appears elsewhere in the employment legislation in the same or closely similar terms, in provisions for compensation for such matters as refusal to permit time off for public duties, to care for dependants, to carry out duties as an occupational pension scheme trustee, and so forth (cf ss. 51, 57B, 60 Employment Rights Act 1996); and is materially different from that of a provision such as s.123 of the Employment Rights Act 1996, where the ‘compensatory award’ is directed to be such amount as the tribunal considers just and equitable having regard simply to the loss sustained.  The difference was accurately pointed up in the recent decision of the EAT in Hardy v Polk (Leeds) Ltd [2004] IRLR 420 where at paragraph 34.3 of the judgment Burton P said, in relation to section 123:
‘The statute does not say that the award will be such an amount as the tribunal considers just and equitable by reference to the conduct of the employer.’
The statute before us of course does just that.  
16.	
That s. 172 also requires the tribunal to have regard to any loss the employee can show he has suffered also differentiates it from the provisions for group protective awards under s.189 of the 1992 Act on failure to consult about collective redundancies, where there is no mention of compensation for loss at all (cf Susie Radin Ltd v GMB and others [2004] IRLR 400, per Peter Gibson LJ at paragraphs 34, 45), but does not mean that under s.172 some financial loss or other special injury is the only thing to which regard is to be had in assessing compensation as the tribunal in the present case appear to have assumed.”

23.	Finally in Virgo Fidelis Senior School v Boyle [2002] IRLR 268 the EAT, Ansell HHJ and Members, considered a complaint of whistle blowing.  The EAT considered that the scope of the provision for compensation in that regime was wider than simply compensation for pecuniary loss. 

Discussion and conclusions
24.	With those authorities in mind we turn to consider the arguments.  The first relates to the time when the default occurs.  Mr Bourne contends that the dictionary definition applies in this case because a refusal means the act of refusing, a denial or a rejection of something demanded or offered.  Until the Claimant made his grievance and exercised his right, there was no refusal as required by regulations 30(1) and 30(4).

25.	Mr Segal contends that where there is a mandatory regime by statute it remains in place at all times and when the Claimant was required to work subject to that regime he had been denied the entitlement as given to him under the Working Time Regulations to, as it is put simply, a period of daily rest.

26.	We see force in both of those points but on balance prefer the argument of Mr Bourne.  The language used in regulations 30(1) and 30(4) does require two positive steps to be taken.  One is exercise of the right and the other is refusal of permission to do so.  Mr Segal acknowledges that literally that is the correct interpretation but argues that it is not consonant with the purpose of the directive, which is for the UK to see to it, under EU health and safety obligations, that workers have adequate rest time.
27.	He contends that, purposively construed, regulation 30 entitles the Claimant to count the refusal of permission from the date when he submitted to the regime, that is on the date he started work.  However, these regulations do proceed from the language which we have cited and there is nothing that gives us any guidance in the Directive. It was open to Parliament to have expressed the refusal to permit in neutral terms such as “a failure” or “the non-availability of the right”. We consider this requires answers to two questions.  Did the Claimant exercise the right? Did the Respondent refuse him permission to do so?  And in those circumstances it is correct to say that the obligation is triggered when there has been an actual refusal by an employer.  The definition of refusal fits perfectly with that approach. 

28.	There are other indicators pointing in that direction.  In other parts of the employment protection legislation there is scope to deal with what might be described as continuing acts. that is, subjecting the worker to a regime which continues over a period of time; failure to promote; a constant discrimination against women by way of a glass ceiling; and so on. Where there is a series of acts, limitation does not begin to run against a Claimant until the last of the relevant acts: see for example wages protection under Part 1 of the Employment Rights Act 1996.  Neither of those additional routes is available to a person complaining under the Regulations.

29.	In this case time ran from the refusal to permit the Claimant to exercise his right to have a rest period.  That was unarguably done on 8 April 2006 when his grievance was effectively rejected, and so the default as found by the Tribunal, taking the form of a refusal to permit the worker to exercise his right to time off, took place from that time onwards. No jurisdiction issue as to time for presenting the claim was raised at the Employment Tribunal.

30.	If we are wrong, and the Tribunal was wrong in taking that period, it has to be said that was the time frame put before the Employment Tribunal. It is only because we have allowed this new point to be taken that it arises. We hold that the Tribunal would have reached the same conclusion, even if it had gone back for four years.  That is because of its approach to the second issue which is the default of the Respondent.  Both Counsel agree that the starting point is compensation for something the Claimant has suffered.  With actual loss under regulation 30(4)(b) out of the picture in this case, nevertheless both Counsel accept that the issue is one of compensation.  Compensation for what?

31.	Compensation is a form of reparation, making good to the Claimant.  It is different from a sanction placed upon the employer to punish it or to coerce it.  In respect of a failure to consult under TULRCA, the sanction is undoubtedly penal, see Susie Radin.  There is there no reference at all to compensating the Claimant for any loss he or she has suffered.  On the other hand, there are examples where loss is to be considered together with the default or the seriousness of the default of the Respondent, adopting as we do the analogues cited in Skiggs.

32.	In this case, therefore, the issues for the Tribunal to consider when it looked at the default of the Respondent were these.  First, the period of time during which there had been a default. Secondly, the degree of default ie how outrageous or offensive its behaviour was in failing to meet the Claimant’s grievance on and after 7 April. Thirdly, the amount of the default in terms of the number of hours required to work and to be given off as rest periods.

33.	As to time, we have held that the Tribunal was correct to take the eight month period.  This was the period over which there was a default.  During that time the Respondent could have been considered to have been at fault for it had been alerted to the Claimant’s claim through his trade union and failed to adjust the pattern in the way that they had sought.  The Tribunal sought an explanation from the Respondent, to use the terms of Peter Gibson LJ in Susie Radin: “mitigation of the degree to which it was at fault or the degree to which it was in default of the regulations.”  Here it considered at least five topics.  One is that the Respondent took legal advice.  In light of the authorities which we have been shown from the European Court, that advice was incorrect.  Nevertheless the Tribunal held these regulations were complex.  They are, as the Employment Tribunal showed in its previous judgment.  That was at least a matter which it could consider as part of the mitigation of the Respondent.

34.	The Tribunal also held that there was no lack of good faith or of goodwill on the part of the Respondent.  Those too are matters to be considered.  It also considered whether the Respondent was “a culpable employer, as it were”. We reject Mr Segal’s criticism as wrong in syntax and substance. The use of “as it were” shows the Employment Tribunal did not test the default by reference to culpability in its literal sense, or only to culpability. It was one factor. If the Respondent had flagrantly imposed these excessive hours on the Claimant in disregard of plain legal advice or substantive claims by the Claimant that would be different, but it did not.  The union did not raise compensatory rest until the Employment Tribunal hearing.

35.	What is missing from these two paragraphs in the Tribunal’s judgment, argues Mr Segal, is a reflection of the circumstances which led it to hold in the Claimant’s favour in the first place.  In our judgment, that is a jejune submission.  Of course the Tribunal was aware of the scale of the default because it had found in the Claimant’s favour.  Then it would be relevant to know whether the Claimant had been required to work only a slight period in excess or whether his entitlement to a period of rest had only briefly been violated.  Those are factors to consider under regulation 30(4)(a).  But the Tribunal was well aware of those for it had upheld the Claimant’s claim.

36.	The Tribunal was at pains to point out that it had a discretion.  Counsel agree that regulation 30(4) regulates the exercise of discretion both when an award is to be made and when the Tribunal decides it is not to make an award.  In other words although at first sight regulation 30(3)(b) does not have any controlling or influential features as appear in regulation 30(4) we agree it would be absurd if the Tribunal did not consider the matters in regulation 30(4).  So, we hold that even when making no award the provisions of regulation 30(4) will apply to that decision too.  

37.	The regulations envisage that there can be a breach of the worker’s right with no remedy beyond a declaration.  The declaration is mandatory and it is contrasted with the discretion to award compensation or not.  Within the award of compensation there are further discretions according to the factors set out in regulation 30(4). There is no further guidance in respect of what the default is and how it is to be measured.  This Tribunal has considered the matters which were put before it and come to conclusions to which we hold it was entitled.

Result
38.	At the outset, it was indicated by both Counsel that if we were to uphold the Claimant’s appeal we should substitute a judgment and decide the value of the compensation to be awarded to him.  With that submission in mind, although not necessary for our decision, we have considered what amount we would make if the Tribunal were wrong.  It is surprising for a Tribunal to make no award once it has upheld the Claimant’s right, and there are passages in the employment legislation where once a finding has been made a Tribunal is obliged to make or reduce an award of compensation.  If a finding has been made that the Claimant contributed to his dismissal then the Tribunal must make a reduction according to its discretion: see for example section 123(6).  Here an Employment Tribunal is not obliged to make an award at all.

39.	Left to ourselves, if we had held the Tribunal was wrong on default or in the exercise of its discretion, and the discretion fell to us to exercise, we would have said some compensation was due, but we would have sent it back to the Employment Tribunal to assess, since we simply do not have the material. All we can say is that this certainly demonstrates that when a discretion is in play a different Employment Tribunal or Appeal Tribunal may have taken a different view.  The question is whether the Employment Tribunal considered the exercise of its discretion in a way which was wrong in principle or paid attention to factors to which it ought not to have paid attention or did not consider a relevant factor. The Employment Tribunal here is to be acquitted of those charges.  

40.	We would very much like to thank both Counsel for their assistance.  The appeal is dismissed. Permission to appeal refused [reasons not transcribed].