Appeal No. UKEAT/0547/11/MAA

EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX

		At the Tribunal
		On 9 March 2012

Before
HIS HONOUR JEFFREY BURKE QC
(SITTING ALONE)

KENT COUNTY COUNCIL	APPELLANT

MR R D KNOWLES	RESPONDENT

Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING - APPELLANT ONLY

	APPEARANCES

For the Appellant	MR JAMES ARNOLD
(of Counsel)
Instructed by:
Kent County Council
Legal & Democratic Services
Sessions House
County Hall
Maidstone
Kent
ME14 1XQ

SUMMARY
UNFAIR DISMISSAL

The Appellant authority suspended the Claimant after receiving information from the police that he had been involved in dishonesty which had serious financial and reputational consequences for them.  There was no contractual right to suspend without pay.  The Claimant was not in custody but was available for work.  The Employment Tribunal upheld his claim for arrears of salary which the Appellant did not pay during the period between his suspension and his subsequent dismissal.  There had not yet been any trial; the Appellant did not seek to prove that the Claimant had committed the misconduct for which he had been suspended and then dismissed.

On appeal, held that:
(1)	It was not reasonably arguable that the Claimant’s salary was not properly payable within s13(3) of the Employment Rights Act 1996, in the absence of any contractual right to suspend without pay or
(2)	That the Claimant by conduct, which was alleged but not proved, had put himself in a position in which he was unable to work or
(3)	That the Claimant had given no consideration for his salary; he was ready and able to work as required Burns v Santander [2011] IRLR 639 distinguished.

HIS HONOUR JEFFREY BURKE QC
Introduction
1.	This is the preliminary hearing of the appeal of Kent County Council, whom I will call “Kent”, against the Judgment of Employment Judge Milton, sitting in Ashford sent to the parties on 29 June 2011.  By that Judgment the Employment Judge found that Kent were liable to pay to the Claimant arrears of salary for a period from 8 January to 20 May 2011, during which period, although he was their employee, he had had been suspended and they had not paid him.

The facts
2.	The Claimant was employed by Kent from March 2007 in a senior capacity as an energy purchasing manager at a starting salary of somewhat less than £60,000 per year.  At the beginning of January 2011 Kent received information from the police that the Claimant had been acting fraudulently in the course of his work for Kent and had been misappropriating monies.  I am told that the monies which he was misappropriating were not Kent’s monies but British Gas’ monies; but I accept that that misappropriation, if it occurred, would have ha financial and reputational consequences for Kent; and Kent not only were entitled to but plainly had to take seriously the complaint which they had received from the police.  The details do not matter beyond that for present purposes.  The sums said to be involved were very large indeed.

3.	On 5 January the Claimant was arrested while at work.  He was not remanded in custody.  Whether he was simply allowed to go after arrest or was put on police bail the papers do not tell me; and it does not matter.  Because he was not remanded in custody he was, at least physically, available for work.  However, on that same day he was sent a letter by Kent pursuant to which he was suspended on full pay for 28 days, subject to subsequent extension, to allow an internal investigation to take place.  On 7 January Kent wrote to the Claimant again, setting out more detail of what they described as “extremely serious allegations what potentially constitute gross misconduct”.  Towards the close of the letter Kent said this:

“Given the serious nature and magnitude of the allegations, I am withholding your pay with effect from Thursday 6 January 2011.  Should the investigation or any subsequent disciplinary hearing conclude that there is no case to answer, then you will receive the backdated pay.”

4.	On 19 May there was a disciplinary hearing, which the Claimant did not attend.  That hearing concluded that Mr Knowles had, in effect, diverted over £200 million into an account which appeared to be in his name or available to him; he was summarily dismissed.  If there was an appeal against that disciplinary conclusion, I have not seen any papers relating to it; and it does not matter.  The police, I am told (and I imagine the Employment Judge was also told) have prosecuted Mr Knowles; but before the Employment Judge and before me, no conclusion to that prosecution had been reached; I am told that the trial is due to start in the next few weeks and is fixed to take two weeks.

5.	The Claimant has commenced two sets of proceedings.  He has commenced an unfair dismissal claim, which is not before me and was not before the Employment Judge.  In the proceedings with which I am concerned he claimed payment of the salary withheld by Kent between 6 January 2011 and the date of his dismissal, together with some expenses as to which the Employment Judge ruled against him and which are irrelevant for present purposes.  In their response Kent relied on section E of a document called “Kent Scheme 2010”, which includes what I am told (and it does not seem to be in dispute) are accepted to be provisions incorporated into Mr Knowles’ contract of employment.  Section E of that document provides as follows:

“E  Suspension
1.  It may not be necessary to suspend an employee for the duration of the investigation.  This is not a sanction in itself and is a neutral act.  The decision to suspend must be made by the Managing Director or delegated senior officer in consultation with Personnel, and only made when alternative working arrangements are not practicable.
2.  Suspension may need to continue beyond the period of the investigation.  However, it must be for a fixed period of time, with regular formal review, confirmed in writing to the employee who will retain the pay he would have received if at work during the period of suspension.  Either their line manager or another nominated officer should also provide the employee with sufficient support and communication through this period including any conditions that apply to the suspension.”

6.	Kent asserted that, on a proper construction of paragraph E2, since the Claimant had not been at work during his suspension, he was not entitled to any pay.  At the hearing before the Employment Judge, Kent relied on Clause E2 and on a second argument based on the wording of section 13(3) of the Employment Rights Act 1996.  The Employment Judge rejected both arguments; they have been renewed before me by Mr Arnold, on behalf of Kent, who has put his points succinctly and with ability.  I shall deal with his points in the order in which they are presented by Mr Arnold in his skeleton argument.  

7.	The starting point is the section of the 1996 Act to which I have just referred:

“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, 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.
(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.”

8.	“Wages” is defined by section 27 of the 1996 Act, but there is no doubt that the sums claimed by the Claimant were wages, and it is not necessary to look further at that section.

9.	The argument put forward on behalf of Kent takes as its point of departure the words “properly payable” in section 13(3).  Mr Arnold submits that the salary claimed by the Claimant and withheld by Kent was not properly payable; those words, he contends, involve the existence of some legal entitlement in the Claimant to receive the money sought; but the Claimant had no such entitlement because he had been arrested and suspended on suspicion of serious fraud, a situation that had been brought about entirely by his own actions.

10.	In support of that Mr Arnold relies, firstly, upon the decision of the Employment Appeal Tribunal, HHJ Peter Clark presiding, in Burns v Santander UK PLC [2011] IRLR 639.  Mr Burns was employed by Santander as a branch manager, but he was arrested and charged with 13 criminal offences, including a physical assault on a prostitute and a sexual assault on a girl.  He was remanded in custody for five‑and‑a‑half months until, after a trial, he was found guilty of two of the charges and was, after a period of bail, given a suspended sentence of imprisonment.  Santander did not pay him any salary while he was in custody.  When he got bail pending sentence he was suspended on full pay, which he received; after the sentence, he was dismissed.  He claimed that he had been unfairly dismissed and that his salary payable while he was in custody had been unlawfully deducted.  The Employment Tribunal found that he was ready and willing to work but was unable to do so because he was in custody, that his inability to work was avoidable, and that he had, by behaving in such a way that he became remanded in custody, disabled himself from attending work and from giving consideration for the salary he had claimed, therefore there had been no unlawful deduction.

11.	The Claimant appealed, founding his submission on the proposition in Harvey’s Industrial Relations and Employment Law that a person who is ready and willing to perform his work but is unable to do so by reason of sickness, injury or other unavoidable impediment may still be able to claim his wages, but not if he deliberately refuses to work.  The Employment Appeal Tribunal held that the tribunal had been entitled to find that the Claimant’s remand in custody was an avoidable impediment because he had conducted himself in such a way that he was deprived of his freedom and therefore of his ability to attend work.  Mr Arnold submits that, adopting the approach of the Employment Tribunal in Burns, approved by the Employment Appeal Tribunal, the Claimant in the present circumstances was not ready and willing to work; having been suspended, he was unable to work by reason of an avoidable impediment, which was that he had put himself into a position in which he was arrested for fraud and suspended from work, and, further, it is said that he had contributed by his own actions to that state of affairs.

12.	I do not regard that argument as having any reasonable prospect of success.  I start, as did the Employment Judge, with the familiar principle that an employee who is alleged to be guilty of serious misconduct can be suspended by his employers on full pay, subject to any argument that he had thereby been deprived of his right to earn monies, the amount of which depends upon the work he does (for instance, in a commission case), but that a suspension without pay is a breach of contract on the employer’s part unless the relevant contractual terms provide otherwise.  Virtually everyone who works in the field of employment law will have seen many cases in which an employee is believed by his employer to have committed serious misconduct against the employer, and is suspended on full pay by the employer as a result pending investigation and disciplinary process.  The ACAS Code of Practice on disciplinary and grievance procedures in 2009 refers to suspension on pay; it does not refer to suspension without pay.

13.	If Mr Arnold’s argument were to be correct, it would be open to any employer, when they have in pursuance of their disciplinary procedure and the Code of Practice suspended an employee because of suspicions of misconduct, especially if the misconduct is one which affects them directly and is such that they do not want him back in the workplace at all, to say, “Well, although we are obliged to pay you under your contract, having suspended you for misconduct you are no longer in a position in which you can work.  It is your conduct that has caused you to be in that position.  Your inability to work is not inevitable; it arises from your own conduct”, which is what Kent have said in this case.

14.	That, it seems to me, would be rendering the distinction between suspension with pay and suspension without pay an unrecognised nonsense.  The fact that an employee who is suspended has been arrested and even charged does not remove from him, in my judgment, any legal right to pay which otherwise he would have had, so long as he was able and willing to work.  If he is remanded in custody, as in Burns, then of course it is open to a Tribunal to find that he has acted in such a way as to render it impossible for him to work; but the Claimant in this case was not remanded in custody.  The principle put forward by Mr Arnold would apply, it would seem, equally not only to a suspended employee who has been arrested, charged and bailed but also to an employee who, having been arrested, is not charged at all, or to an employee whose gross misconduct is such that the employers do not want him to work for them any more, but whose misconduct (which at the stage we are talking about is only alleged misconduct) does not rebound directly upon the employer at all; for instance, if an employee is found to have been, to take an example, dealing in drugs over the weekend.

15.	I am not so naïve as to be wholly persuaded by a floodgates approach such as that which I have just outlined, but when properly analysed it can, in my judgment, be seen that Mr Arnold’s submissions, ably as they were put, do not have any real merit.  The argument depends at its first premise upon the proposition that the Claimant in this case was not ready and willing to perform his contract because he had been suspended.  That is a fallacious proposition; it is fallacious because an employee may be entirely ready and willing to perform his contract and entirely unwilling not to perform his contract when he is absent from work by reason of suspension.  The fact that an employee has been suspended by his employer because of suspected misconduct, even if that suspected misconduct is misconduct which goes to the heart of the employer’s operations, is not inconsistent with that employee’s willingness to work.

16.	The second premise, that the Claimant is unable to work by avoidable impediment because he has put himself into a position where he has been arrested, charged and suspended, is equally suspect, in my judgment.  An employee who is arrested and charged with fraud or any other offence has not necessarily put himself into a position in which he is unable to work by avoidable impediment.  He may very well wholly deny the misconduct, as indeed the Claimant in this case does.  He may be very willing to work.  The reason why he is not working during the period of suspension is the fact that he has been suspended.  He may be wholly innocent; his arrest may be based on false information maliciously provided to the police.  Of such a person it could not be said that he had willingly put himself into a position where he was arrested and suspended; he may have done nothing at all to deserve either arrest or suspicion at the time of an employee’s suspension for misconduct, and at the time of his dismissal for such misconduct, if dismissal follows.

17.	There has been no objective proof that the employee was or was not guilty of the misconduct alleged.  The employer is able to dismiss on the basis that he reasonably believes that there has been such misconduct.  He has to hold a reasonable investigation in order to discover whether he does reasonably have that belief.  The purpose of suspension is, as it was in this case, to permit investigation of the misconduct and then, if appropriate, to permit disciplinary proceedings; but to suggest that a person who has been arrested and charged with a serious criminal offence and then suspended is unable to work by avoidable impediment, i.e. an impediment which he has himself produced, in my judgment, is illogical, and I am not persuaded by it.  At this stage, even now, whether the Claimant was or was not guilty of what was alleged against him has not been proved.  Of course Kent believe, and no doubt deeply believe, that he has acted as is alleged against him in the criminal proceedings, as they believed he had acted when they dismissed him, and as they thought he might have acted when they started the disciplinary investigation; but at the hearing before the Employment Judge it was not proved, and no attempt to prove it was made, that he had by his own actions caused his inability to go to work.  What was proved was that he had been prevented from going to work by the suspension.

18.	The third premise advanced by Mr Arnold in his skeleton argument and today is that the employee had contributed in whole or in part to his arrest and suspension, but my response to that is the same as that which I have just been putting forward in relation to the second premise: that no attempt was made to prove that he had contributed in whole or in part to his arrest or suspension.  As I have said, Kent no doubt deeply believe that he did, but it has not been proved that he did; and, in my judgment, the suggestion that his salary was not properly payable under the words of section 13(3), which in any event is more appropriate to a case in which part of a salary has been paid but not all of it, does not have any arguable merit.

19.	I turn therefore to the second ground, which I can summarise in this way: it is that the Claimant did not give consideration for the payment of his salary while he was suspended.  That argument is founded on Burns and on an earlier decision of the Court of Appeal which bears on the properly payable point too, namely New Century Cleaning Co v Church [2000] IRLR 27.  In that case the Court of Appeal allowed, by a majority, an appeal against the decision of the Employment Appeal Tribunal, which had upheld the decision of the Employment Tribunal, in favour of the Claimant, Mr Church.  The employers ran a window‑cleaning business; their employees were divided into teams, each led by a leading hand.  Jobs were offered at a price to the leading hand, who then agreed between the members of his team how that price would be distributed between them.  The employers reduced the price of all jobs offered to the leading hand by 10 per cent; so there was, in the pot from which the members of each team drew their pay, 10 per cent less than before, and Mr Church claimed, as a representative claimant on behalf of himself and 40‑odd of his colleagues, that the difference constituted an unlawful deduction from his wages.  The Court of Appeal held that the reduction effected by the employer was not a deduction from the wage payable to the employees but was a change in the way in which one of the components necessary to the calculation of the wage was arrived at.  The claim had been put under section 13(3) because the wages had not been wholly unpaid and no formal deduction had been made; the men had simply received less than they claimed to be due to them.  At the beginning of his Judgment at paragraphs 43 and 44 Morritt LJ said:

“Thus the question, in terms of s.13(3), is what was the wage properly payable to Mr Church on the first pay day thereafter?  The word ‘payable’ clearly connotes some legal entitlement.  The adverb ‘properly’ is also consistent with a legal requirement, but is not necessarily limited to a contractual entitlement.  […]
44. The only legal entitlement on which Mr Church relies is his contract of employment.  For Mr Church to have a contractual entitlement to a wage calculated in accordance with the formula, it is necessary for him to establish two propositions; first, that his employer was not entitled unilaterally to reduce b; second, that a% was sufficiently certain to have contractual force.  In my view Mr Church fails to establish either of them.”

20.	He went on to conclude that, because the amount due to each employee was dependent on the agreement reached between him and the leading hand, there was no obligation on the employer to maintain the amount available to the team at any particular level, and therefore the amount claimed was not properly payable.  I have already referred to Mr Arnold’s submission, which I accept, that the words “properly payable” invoke some legal entitlement.  

21.	I am of course bound by that decision if its ratio applies to this case; but in my judgment it does not in reality provide any succour to Mr Arnold or to Kent.  There is no difficulty on the facts of this case in identifying what was properly payable, subject to Kent’s argument; it was the salary which Kent were obliged under the contract of employment to pay to the Claimant.  There was no intervening contractual arrangement such as that which affected the application of section 13 in Church.  Furthermore, Church does not support in any way the argument that, once suspended as the Claimant was, there was no longer any obligation to pay salary because the Claimant was unable to give consideration for such payment, which is the proposition which Mr Arnold seeks to make good.

22.	The true position, in my judgment, was that the Claimant was certainly not shown to be unready or unwilling to do his job; that if Kent had removed the suspension and called him back (and I accept that that is a hypothetical situation because Kent would never have done so) he would have had to have gone back to work; and by being ready and willing to go back to work he was giving as much consideration as it was open to him to give for his salary.  The sufficiency of that consideration was not a matter for the court or the Tribunal; he was still under an obligation consistent with the terms of his contract of employment to do whatever was required of him by Kent.

23.	I turn therefore, finally, in this long Judgment on a preliminary hearing – but this is a very unusual case, and I hope it is thought that a detailed examination of the merits of the arguments is justified – to Mr Arnold’s third submission, which is based on paragraph 2 of section E of the terms and conditions document which I described earlier.  It is argued that the  following words gave to Kent the right to withhold pay during the suspension period, and then, should it turn out that the misconduct was not proved or that there was no case to answer, pay would be paid on a back-dated basis:

“Suspension may need to continue beyond the period of the investigation.  However, it must be for a fixed period of time, with regular formal review, confirmed in writing to the employee who will retain the pay he would have received if at work during the period of suspension.”

24.	Mr Arnold submits that that is the proper construction of those words, or at least that, at this stage, that construction is a reasonably arguable construction.  I respectfully agree with the Employment Judge that the material words cannot bear the interpretation which Mr Arnold seeks to derive from them.  They are words of a standard or familiar type in the context of a contract of employment, and their meaning is clear: it is that a suspended employee retains the right to the pay he would have received if he had been working during the period of his suspension.  In other words, the contractual provision is that somebody who is suspended is suspended on pay and not without pay.

Conclusion
25.	I therefore have come to the conclusion that this appeal has no reasonable prospect of success.  Kent may well feel that the law should not provide that a person in the position of this Claimant should receive salary during a period of suspension when, as they believe, but has not yet been proved and may never be proved, he was guilty of very serious misconduct which affected them seriously; and I have considerable sympathy with that view, which they hold on behalf of those who live in Kent for whom they are responsible; but I cannot be diverted from what, in my judgment, is the correct approach to the law by any such sentiment.

26.	  However, as the Employment Judge pointed out in perhaps a slightly more subtle way than I am about to, Kent are not without remedy.  The Employment Judge made the point that enforcement of the Judgment he gave against Kent might not be a straightforward matter; and that point was well made.  Kent, I am told, have not yet started proceedings against the Claimant and are waiting to see what happens at the trial, but if they then do start proceedings in the light of a conviction, it would be difficult to see how any obligation in relation to pay could be enforced without it having to be set off against any sum found due to Kent from the Claimant.  However, that is not a matter for me, and I say no more than the reasons I have set out that, in my judgment, this appeal has no reasonable prospects of success and must therefore be dismissed.