[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Scott v. Strathclyde Fire Board [2004] UKEAT 0050_03_2604 (26 April 2004) URL: http://www.bailii.org/uk/cases/UKEAT/2004/0050_03_2604.html Cite as: [2004] UKEAT 50_3_2604, [2004] UKEAT 0050_03_2604

[New search] [Printable RTF version] [Help]

APPEARANCES

 

 

For the Appellant	Mr A O'Neill, Queen's Counsel Instructed by- Messrs Thompsons Solicitors Berkeley House 285 Bath Street GLASGOW G2 4HQ
For the Respondents	Mr B Napier, Queen's Counsel Instructed by- Strathclyde Fire Board Legal Services Section Risk Management Unit Strathclyde Fire Brigade Bothwell Road HAMILTON ML3 OEA

SUMMARY REDUNDANCY

Employment Tribunal correct to follow Sunderland [1993] ICR 392 and SIP Industries [1994] ICR 473 in concluding that the unlawful deduction jurisdiction is ousted by s14(5) of ERA 1996 where the deduction was made on account of an employee's participation in a strike. Wood P's interpolation of the word lawful before deduction in Ayres [1992] ICR 175 was not only unnecessary but misconstrued the statute and was rightly not followed in Sunderland and SIP.


 


THE HONOURABLE MR JUSTICE BURTON (PRESIDENT):

1. This has been the hearing of an appeal by the applicant, James Scott, against the decision of the Employment Tribunal held in Glasgow on 2 May 2003 dismissing the claim by the applicant for unlawful deductions against the respondent, the Strathclyde Fire Board. The parties were represented below by leading Counsel, Mr O'Neill, Q.C., for the applicant and Mr Napier Q.C., for the respondent, and they have again been so represented before us today. The decision was on, effectively, a preliminary issue, it being a preliminary hearing before the Tribunal, and the point before us has been argued on the basis simply of law.
2. The circumstances have thus not been required to be gone into, nor the allegation of the applicant, that, in respect of a period when he was involved in strike action as a fireman, the respondent made a deduction from his pay on that account and he is entitled to complain as to the quantum of the deduction. The case for the respondent, which was upheld by the Tribunal, was that the Employment Tribunal had no jurisdiction to hear this case by virtue of s14(5) of the Employment Rights Act 1996.
3. There are three previous decisions of the Employment Appeal Tribunal in respect of claims for unlawful deduction of this kind. The respondent in this case simply contends that, because the wages were deducted "on account of" the applicant taking part in strike action, the Tribunal has no jurisdiction, but the claim must be brought in the Sheriff's Court. The respondent has its fallback defence, which has not been required to be addressed, which was that, in any event, the deduction was correctly calculated.
4. The Employment Tribunal considered those three previous decisions in reaching its concise decision, and we shall be referring to them ourselves.
5. The first in point of time was Home Office v Ayres [1992] ICR 175 a decision of the Employment Appeal Tribunal presided over by Wood P. That case was addressing s1(5) of the Wages Act 1986, which is the predecessor of s14 of the 1996 Act, although not the same subsection as was equivalent to the present s14(5). Wood P's conclusion, which is sought to be relied upon before us today by the appellant, was such that the Tribunal was found to have jurisdiction to hear the unlawful deduction claim in that case.
6. The second of the three EAT decisions was that in Sunderland Polytechnic v Evans [1993] ICR 392 in which, very shortly after the decision in Ayres, the Employment Appeal Tribunal, again presided over by Wood P, changed its mind, and reached the conclusion, in the light this time of a claim relating to the equivalent subsection of s1(5) which is now being addressed before us, that the Employment Tribunal did not have jurisdiction.
7. The third decision of the EAT was SIP Industrial Products Ltd v Swinn [1994] ICR 473, which was presided over by Mummery P, and, after considering the decisions, the one way and the other way, of Wood P in Ayres and Sunderland, he followed Sunderland rather than Ayres, and concluded that there was no jurisdiction. Neither party has drawn our attention to any decision of the Courts since then, and it is to be assumed that SIP Industries has in fact been followed since, insofar as the matter has been addressed.
8. The normal approach of the Employment Appeal Tribunal, like most appellate courts where there is no authority of a higher court, is to follow the most recent decision, particularly where, in that recent decision, earlier decisions to the contrary were considered and departed from, and one might add, here, particularly, where one of the earlier decisions – and there are of course, in our case, not simply one but the two most recent decisions going contrary to the earlier decision – was in fact given by a Judge who had reconsidered his own previous decision and departed from it.
9. But that approach is certainly not necessarily always the final word, and the applicant, the appellant before us, represented by Mr O'Neill, Q.C., has sought to persuade us not to follow that course, but to reject the conclusions of both Sunderland and SIP and effectively to return to the reasoning of Ayres. That submission was put forward essentially on two bases: (i) that the decision in Ayres was right and the later decisions wrong or (ii) that all three decisions were made under the Wages Act 1986, and that a different decision should now be reached by reference to the Employment Rights Act 1996.
10. The Wages Act 1986 was the statute by which jurisdiction was given to the employment tribunals to deal with what are colloquially called unlawful deductions. Unlawful deductions from wages are very broadly interpreted, and it is plain from such cases as the decision in the House of Lords in Delaney v Staples [1992] 1 AC 687 that deductions are not simply sums that are specifically expressly deducted by an employer, but include, in general terms, any inadequate payment of wages: any payment which does not comply with the contractual entitlement of the employee, and is less than he is lawfully entitled to.
11. That said, s1(1) of the Wages Act 1986, read as follows:-

"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."

12. There was exemption to the general ambit of s1(1) of the 1986 Act by reference to s1(5) which read as follows in material part:-

"Nothing in this section applies-

(a) to any deduction from a worker's wages made by his employer, or any payment received from a worker by his employer, where the purpose of the deduction or payment is the reimbursement of the employer in respect of -

(i) any overpayment of wages, or

(ii) any overpayment in respect of expenses incurred by the worker in carrying out his employment,

made (for any reason) by the employer to the worker:

(e) to any deduction from a worker's wages made by his employer, or any payment received from a worker by his employer, where the worker has taken part in a strike or other industrial action and the deduction is made, or the payment has been required by the employer on account of the worker's having taken part in that strike or other action."

13. The Employment Rights Act 1996 was a consolidating statute, which drew into it much of the existing employment protection legislation, including the Wages Act 1986, and s1(1), and its relevant sub-sub-sections, was re-enacted as s13 of the 1996 Act which reads as follows:-

"(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."

As can be seen that is no different from the original provision.

14. It would appear that there was a new provision in s13(3) which, if we have understood it correctly, enshrines in statutory form the case law, as it had come to be understood, by reference inter alia to Delaney v Staples as to the width of meaning of the word deduction, and it reads as follows:-

"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."

15. What were exemptions from the provision of s1(1), contained in s1(5) of the 1986 Act, are now separately provided for in s14 of the 1996 Act, and, for our purposes, the only relevant subsection is s14(5) which reads very simply as follows:-

"Section 13 does not apply to a deduction from a worker's wages made by his employer where the worker has taken part in a strike or other industrial action and the deduction is made by the employer on account of the worker's having taken part in that strike or other action."

16. Ayres related to a claim falling within s1(5)(a) of the 1986 Act, which we have read. Wood P found that the Tribunal had jurisdiction, and, in order to achieve what he saw to be the purpose of the Act, he concluded that it was appropriate and necessary to read in to the section, in section 1(5), between the words "any" and "deduction" the word "lawful", he said as follows in his judgment at page 179:-

"The case for the applicant, put at its simplest, is that Parliament could not have intended that an employer should be able to make deductions in respect of overpayment of wages unless the deduction was a "lawful" deduction, and the reimbursement was of moneys to which the employer was "lawfully" entitled. By this is meant that the employer could succeed in their recovery in a court of law. Thus where there is a clear mistake which is obvious to both sides this Act provides a quick and simple remedy to an employer, but where there is an issue as to the entitlement to the moneys deducted, that issue must be tried in the industrial tribunal. In the present case it had been and the applicant had succeeded.

There are a number of considerations which in our judgment point in favour of the case for the applicant – we assume that the alleged overpayment was made under a mistake of fact. (a) The preamble to the Act reads – "An Act to make fresh provisions with respect to the protection of workers in relation to the payment of wages." If an employer is entitled to make deductions for reimbursement of overpayment of wages without being faced with any inquiry as to that entitlement in law, it would allow an arbitrary and excessive deduction to be made. Thereafter the employer would stand back and wait to be sued. This would leave an employee without his money, which could be substantial, for a lengthy period. This result would seem contrary to the intention of the preamble. There is a potential for grave injustice. After all the mistake was that of the employer.

Pausing for a moment, of course, what Wood P does not there refer to is the availability of the remedy in what is, in Scotland, the Sheriff's Court, and, in England, the County Court or High Court.

(b) In view of the provisions of section 6(1) of the Act, an employee suing in the county court might be met with a defence under that subsection. We appreciate that it can be argued that the employee was relying on his contract and not on section 1 of the Act, but this would tend to complicate matters. (c) The definition section – section 8 – caters for the calculation of wages due for the purposes of "deduction" and it seems to us that the phrase – "wages that are properly payable" requires an industrial tribunal to apply common law principles. We see no reason why the issue of an overpayment and the right to repayment or reimbursement should not also be the subject of inquiry by an industrial tribunal under the principles of general law … (d) The remaining sub-paragraphs of section 1(5)(a) clearly impose upon an industrial tribunal the duty to examine the lawfulness of each deduction before that paragraph can properly be given effect. Thus, looking at the purpose of this part of the Act, we take the view that the true intent of Parliament is best achieved by reading section 1(5)(a) as if the word "lawful" were inserted in the opening phrase – "to any (lawful) deduction" – and before the word "reimbursement.""

17. In Sunderland, as we have indicated, Wood P, presiding over an Employment Appeal Tribunal differently constituted, changed his mind. He was faced with a number of submissions made by Mr Patrick Elias Q.C., on behalf of the employers, one of which was plainly addressed to meet what Wood P had found as the purpose of the statute; and he had to that end been referred to Hansard in order to show that, at any rate so far as s1(5)(e) is concerned (which was the relevant subsection in that case, and the equivalent subsection to that before us), by reference to statements of Ministers, at any rate, in Parliament during the relevant debate, it was said to be the clear purpose of Parliament that there should be just such an exemption as was eventually enshrined in s1(5)(e), and carried now through to s14(5), as part of the intention of excluding from consideration by an employment tribunal the nature and consequences of industrial action and strikes. The decision of Wood P is very short, and recites that there was a number of submissions by Mr Elias Q.C., and then recites Hansard and concludes that "these passages clearly support the submissions placed before us by Mr Elias. It follows from what we have said above that some of the reasoning of the appeal tribunal in Home Office v Ayres [1992] ICR 175 can no longer stand".
18. There was, however, a thorough reconsideration, as it seems to us, of the position in SIP Industrial Products Ltd v Swinn in the decision of Mummery P, to which we have referred, and he did not expressly refer to Hansard, although, obviously, he had read the quotations from Hansard which had been made by Wood P in Sunderland. He reached his conclusion that Sunderland should be preferred to Ayres, and, indeed, that Ayres should not be followed, in the following terms, at pages 477 to 478:-

"The appeal tribunal have reached the conclusion that the appeal must be allowed on the short ground, not specifically argued before the industrial tribunal, that they had no jurisdiction to entertain the employee's complaint. The position is briefly as follows. (1) Prima facie the industrial tribunal had jurisdiction to hear a complaint that the employers had made a deduction from the employee's wages in contravention of section 1(1) of the Act of 1986: see section 5(1)(a). If, however, the deduction fell within one of the six categories set out in section 1(5), the industrial tribunal had no jurisdiction to hear a complaint about such a deduction. In the six cases listed in section 1(5)(a) to (f), the restriction contained in section 1(1) against deductions does not apply and, if it does not apply, it cannot be contravened so as to entitle the worker to present a complaint to the industrial tribunal. In cases where section 1(1) is disapplied the appropriate procedure is not to make a complaint about the deduction to an industrial tribunal but to institute appropriate proceedings in the civil courts for alleged breach of contract and recovery of the sum deducted.

(2) Section 1(5)(a) to (f) covers cases of the kind described whether the deduction is lawful or unlawful. Section 1(5) disapplies the provisions of section 1(1) in cases where there is "any deduction," lawful or unlawful, falling within any of the specified categories. In those cases the industrial tribunal have no jurisdiction to inquire into or determine the issue of lawfulness or unlawfulness of the deduction: see Sunderland Polytechnic v Evans [1993] ICR 392, which did not follow an earlier decision of the appeal tribunal in Ayres …. The industrial tribunal in the present case could not have been aware of the decision in Sunderland Polytechnic v Evans, since it was not reported until after the decision of the industrial tribunal.

(3) The wording of section 1(5)(a)(ii) is wide enough to take this deduction out of the jurisdiction of the industrial tribunal.

And then he deals with the particular character of that sub-paragraph relating to overpayment.

(4) The purpose of the deduction thus falls within the wide words of section 1(5)(a)(ii).

And the conclusion is that the dispute is a common law contractual dispute which can be resolved by civil proceedings in the High Court or in the County Court.

19. It is plainly not any part of the decision of SIP Products that the High Court or County Court, or, in Scotland, the Sheriff Court or the Court of Session, is in any way better qualified to decide the matter than an employment tribunal. The decision is simply predicated upon a construction of the statute which does not lead to an ouster of any remedy at all, because there is the alternative remedy available. It is necessary no doubt, because it would have been specifically addressed by any applicant, to emphasise that the consequence of the decision is not to deprive the applicant of any remedy at all. This is not based on any comparison of the efficiency or efficacy of the various courts or tribunals.
20. Against that background, we have, as we have indicated, not rested our decision on the fact that there is a majority of two to one in relation to the previous decisions, nor that the two decisions which go the way of the respondent and support the decision of this Employment Tribunal are the more recent ones, although those two factors of themselves would, in any event, been heavily persuasive. We see however no reason to conclude that the decisions in Sunderland or SIP are wrong, and we agree with them.
21. First, so far as the construction of the sections are concerned, and Wood P's insertion of the word "lawful" into the statute, we do not agree that that is either appropriate or necessary. As we have indicated, it appears to us, plainly, that the reference to Hansard was in order to comfort Wood P in departing from his own earlier conclusion about what the purpose of Parliament had been, and it may well be that in that case it was, given the apparent approach being taken by the Court that the construction of the statute was ambiguous, that resort to Parliamentary statements was appropriate. Mr O'Neill QC, before us, has drawn our attention to more recent cases in which there has been a good deal of jurisprudential consideration as to which particular bits of Parliamentary discussions should or should not be of assistance, and in what regard they should be of assistance, but, of course, the issue as to reliance on Hansard does not arise at all if the construction is not ambiguous, and we are entirely satisfied that the construction of s14(5) is not a difficult or ambiguous one at all. It may be that because Wood P seemingly strained to find a way round the section, by reference to his conception of the purpose of the statute, ambiguity was created in his own mind, at least for the purposes of the Ayres decision, albeit resolved in Sunderland; but, so far as we are concerned, and looking at it without benefit of Hansard, we are entirely satisfied that the construction is not ambiguous at all. Indeed, we find the suggested inclusion of the word "lawful", positively unacceptable.
22. If the word "lawful" is inserted into s14(5) it would read as follows:-

"Section 13 does not apply to a [lawful] deduction from a worker's wages made by his employer etc."

If, however, the deduction is lawful, then it would not be an unlawful deduction for the purposes of s13 at all and, would, therefore, not fall foul of s13 or fall within its ambit, and would certainly not need the exemption provided by s14(5). The exemption is only required if what is being looked at, is, as Mummery P indicated in his judgment in SIP, a deduction, "lawful or unlawful", or, indeed, a deduction which was to be assumed, for the purposes of the application of an exemption at the preliminary issue stage, to be unlawful. The purpose of the exemption is to remove consideration of such unlawful deduction from the ambit of the Employment Tribunal, where the circumstances bring it within s14(5). It is in those circumstances wholly unnecessary, and, indeed, contrary to the clear intention of the statute, to read in the word "lawful". If the section, s14, is an exemptive section, it must be an exemption from something that otherwise falls within the generality of the provision from which it is an exception.

23. Why was there such an exemption? Well, that does not in those circumstances matter for us, but it has been the subject of some consideration and we refer to it. This is a matter for Parliament, and it would appear that the purpose of s14(5), consistent with authority in relation to other aspects of employment legislation, enshrined or exemplified in Gallagher v Wragg [1977] ICR 174 and Courtaulds Northern Spinning Ltd v Moosa [1984] ICR 218, is that Parliament intends "to prevent [employment] tribunals from going into the merits or demerits of collective industrial action" (per Browne-Wilkinson P in Courtaulds at 224-5).
24. Mr O'Neill QC submitted to us that, so far the facts of this case are concerned, an enquiry by the Employment Tribunal could have been carried out into this deduction, notwithstanding that it was plainly made on account of the applicant's participation in industrial action, without going into the merits or demerits or the nature or extent, or, indeed, duration of the industrial action in question.

25. That may be so, although we are not necessarily persuaded of that fact without knowing the full facts of the case. But this is of course not a decision which depends upon the particular facts of a given case, but upon a construction of the statute; and what s14(5) does is to remove this question from the ambit of the employment tribunal. One can entirely see, that, in the ordinary case, or the majority of cases, in order to resolve the issue whether there was an appropriate deduction - if appropriate is the right word – made by an employer in respect of an employee who had taken part in industrial action, questions will inevitably arise as to the extent of the action, its nature and its duration, how far the particular employee was involved in it, whether he or she was only involved for two or three hours and not the whole day, or whether some part of what he or she was doing may not be described as strike but could be described as something short of a strike. The whole of that area, is, as we see it, plainly ruled out by s14(5) once the employer shows, as is common ground in this case, that the deduction was made on account of the participation of the employee. It does not leave the employee without remedy, because that matter can, and will no doubt, be adjudicated in a non-statutory format, in Scotland in a Sheriff's Court.

25. Consequently we are wholly persuaded that the decision of Sunderland and SIP should be preferred to that in Ayres, and that the statute should not be construed in any way other than in simple and straightforward form, without insertion of any words into it.
26. The second way in which Mr O'Neill sought to persuade us to allow his appeal, was, as we have earlier indicated, by reference to his submission that this was a decision on the 1996 Act and not on the 1986 Act to which the three earlier decisions applied. We are not persuaded by this argument either.
27. First, the only way in there is any difference between s14(5) of the 1996 Act and s1(5) of the 1986 Act, is in the use of the word "a deduction" in s14(5), rather than "any deduction" in s1(5). S14(5) now reads:-

"Section 13 does not apply to a deduction from a worker's wages."

Whereas section 1(5) said:-

"Nothing in this action applies…

(f) to any deduction from a worker's wages."

28. We do not see that there is any difference of meaning at all in those two formulations, and they appear to us probably to result from the fact that s1(5) is constructed with an initial introductory sentence followed by a whole series of examples following on from and forming part of that sentence, whereas s14(5) is a self-standing sentence.
29. But Mr O'Neill QC has sought to suggest that something else can be read into the difference in wording, and, clearly, if he is right that there is some meaning to be ascribed to the change between "a" and "any", then that would need to be considered. We are, however, completely unpersuaded that the construction or explanation that he puts forward has any bearing on that change of word. He submits that the purpose of using the words "a deduction" in s14(5) (as opposed to "any deduction") is to limit the effect of the exemption to something that is really a deduction, as opposed to something that is simply a deficiency, or a mathematical inaccuracy, in the calculation of wages. On this basis, all kinds of deductions fall within s13, both by reference to Delaney v Staples and now to the statutory phraseology of s13(3), whereas he says that some deductions, ones which, but for Delaney v Staples and s13(3), might not have been thought to be deductions, are not the subject matter of s14(5); so that this clear exemption provision is actually an exemption provision for a "straightforward" deduction, but is not an exemption provision in respect of something which does not look like a deduction, but becomes one by virtue of case law and s13(3).
30. We are, I am afraid, wholly unpersuaded by this conclusion. First, it makes no sense. It is not good statutory draughtsmanship, if that is what is intended, and if it had been intended that s14(5) would only provide an exemption in respect of certain deductions but not others, it would have said so, rather than this being mysteriously the unheralded result of the change of the word "any" to "a".
31. Secondly, we have already referred to s13(3) of the Act. That subsection specifically sets out a definition of "deduction" not simply for the purpose of s13, but for the purposes of "this Part", which is Part 2 of the Act, which includes not only s13 but also s14.
32. There is, therefore, in our judgment, no material change between s14(5) and s1(5). However, that very fact appears to us to be a further indicator against the submissions now put forward by Mr O'Neill QC. In his submissions, Mr Napier QC has referred to the authorities which suggest that a consolidating Act is not intended to change the law, and he refers to Beswick v Beswick [1968] AC 58 as supporting what he calls such strong presumption. Mr O'Neill QC joined issue on that, but though it is plainly possible for a consolidating Act to change the law if there were any sign that it had done so – here there is none.
33. However, there is another concept which can be called in aid here, and that is the concept of iteration, referred to by Mummery LJ in the case of Foley v Post Office [2000] ICR 1283 at 1288E, and that is that where a consolidating statute is enacted subsequent to case law, and does not take the opportunity either to incorporate the case law or to put it right, then it is to be assumed that the law is to remain unchanged. Thus, if it was intended by the legislature that in s14(5) the word "deduction" should be limited to "lawful deduction", the passage of the 1996 Act, so shortly after the apparent dissonance between the Ayres and SIP and Sunderland decisions, was the perfect opportunity in which to clarify, if Mr O'Neill QC be right, or change, on his alternative basis, the law. That opportunity was not taken, and, in our judgment, it was not taken because there is no doubt at all that the word "lawful" was not, and was not intended to be, in s14(5).

35. In those circumstances this appeal is dismissed.