Delaney v Staples (trading as De Montfort Recruitment)

JurisdictionEngland & Wales
JudgeLORD JUSTICE NICHOLLS,LORD JUSTICE RALPH GIBSON,THE MASTER OF THE ROLLS
Judgment Date20 December 1991
Judgment citation (vLex)[1990] EWCA Civ J1220-5
Docket Number90/1069
CourtCourt of Appeal (Civil Division)
Date20 December 1991
Mary Delaney
Appellant
and
MR. R. J. Staples trading as De Montfort Recruitment

[1990] EWCA Civ J1220-5

Before:

The Master of the Rolls

(Lord Donaldson)

Lord Justice Ralph Gibson

Lord Justice Nicholls

90/1069

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL

(MR. JUSTICE WOOD)

Royal Courts of Justice

MR. ROBIN ALLEN and MR. MARTIN WESTGATE (instructed by the Leicester Rights Centre) appeared for the Appellant.

THE RESPONDENT was not represented and did not appear.

LORD JUSTICE NICHOLLS
1

This appeal raises two points on the correct interpretation of the Wages Act 1986. In 1988 Miss Mary Delaney was employed as a recruitment consultant by a recruitment agency in Leicester known as De Montfort Recruitment. This was the trading style of Mr. Robert Staples. She was employed from 11th February 1988 until she was summarily dismissed seven months later, on 9th September. At that time she was owed £18 in respect of unpaid commission and £37.50 holiday pay. She was not paid these sums. She was handed a cheque for £82, and told that this was in lieu of notice. Subsequently Mr. Staples stopped payment of the cheque. He asserted that Miss Delaney had taken away confidential information, and that he would have been entitled to dismiss her summarily. Miss Delaney then made an application to an industrial tribunal in respect of non-payment of these sums: £55.50 for commission and holiday pay, and £82 for pay in lieu of notice. She claimed that in withholding these sums Mr. Staples had acted in contravention of the Wages Act.

2

These simple facts, involving small sums of money, give rise to two points of law of general application. Both points have been the subject of conflicting decisions of Employment Appeal Tribunals. In the present case, on 15th February 1989 the industrial tribunal at Leicester ordered Mr. Staples to pay Miss Delaney the sum of £55.50, but decided that it had no jurisdiction to entertain her complaint regarding the sum of £82. On appeal, on 5th February 1990 the Employment Appeal Tribunal presided over by the President, Wood J., held that the industrial tribunal had no jurisdiction to entertain either claim. Both of the matters of which Miss Delaney complained fell outside the ambit of the Act. Accordingly, her complaint was dismissed. Miss Delaney has now appealed from that decision.

3

Is mere non-payment a deduction?

4

The most convenient way of setting out the first question which arises is to refer at once to section 1(1) of the Act:

"(1) 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."

5

This subsection prohibits the making of an unauthorised deduction from wages. It envisages that an employee is owed wages, and that from those wages an employer has made and retained a 'deduction'. By way of contrast, it can be said, is a case where an employer simply refuses or fails to pay an employee's wages. Such a case is not one in which an employer has made a deduction from an employee's wages: it is a case of non-payment. In Alsop v. Star Vehicle Contracts Ltd. [1990] I.C.R. 378, 381, the Employment Appeal Tribunal considered this point:

"The Act is designed to give jurisdiction to industrial tribunals to decide whether deductions made are legal. It is not designed to give jurisdiction to a tribunal to decide cases based in contract which heretofore had been the subject of claims within the county court jurisdiction. It is an Act which is designed to deal with 'deductions,' not with 'non-payments.' How then is a tribunal to approach a case where the employee appears and claims that he has not been paid 'wages' as defined in section 7?

The initial question must be to decide why the payment has not been made. Evidence of this may come orally from the parties or from the written documents. The employer's case may be: 'Under the contract I don't owe,' or 'I don't owe the amount claimed,' or 'I owe £X but I claim that he (the employee) owes me £Y,' or 'I won't pay for any or no other reason.' Clearly there can be an infinite variation of fact. If the answer is the first, second or the last of those possibilities, then it is almost certainly a case of non-payment and the industrial tribunal have no jurisdiction; nor would they have jurisdiction if it is simply a contractual issue of whether any sum is due. It is only if there is proved to be (a) an amount admitted or found due as 'wages' (section 7) of £X, and (b) an amount which the employer claims is due from the employee of £Y and (c) the employer seeks to recover that amount by deducting it from wages which would otherwise be due, that the tribunal have jurisdiction. The issue is legality of the deduction."

6

The present case is of the 'non-payment' type. Holiday pay and commission are wages as defined in the Act: see section 7(1)(a). Under these two heads Miss Delaney, when dismissed, was owed £55.50. She should have been paid this sum. Her employer failed to do so. Thus, it is said, the case is outside the jurisdiction of the industrial tribunal. That was the view of the Employment Appeal Tribunal.

7

I turn to the scheme of the Act. Part I of the Act, which came into force on 1st January 1987, replaced the old Truck Acts. Stated very broadly, the object of the Act was to see that workers receive their wages in full at the time they are due. Employers may not make deductions save in specified circumstances. Part I consists of eleven sections, and is headed "protection of workers in relation to payment of wages". Section 1 contains two prohibitions. The first is in subsection (1), quoted above. The second is in subsection (2). This is a prohibition against an employer receiving a payment from an employee in terms corresponding to those contained in subsection (1) in respect of deductions. It precludes an employer from circumventing subsection (1) by the simple device of paying the wages in full without deduction but then receiving a repayment from the employee. Subsection (5) contains a list of deductions from wages to which the statutory prohibition does not apply. Sections 2 to 4 contain special provisions regarding a particular type of deduction from the wages of a particular class of workers, namely, deductions from the wages of a worker in retail employment on account of cash shortages or stock deficiencies. Section 5 enables workers to present complaints to an industrial tribunal in respect of contraventions of sections 1 to 3. Section 6(1) provides that the remedy of a worker "in respect of any contravention" of the relevant statutory prohibitions "shall be by way of complaint under section 5 and not otherwise". Section 6(3) precludes "contracting out" of its provisions. Section 7 contains a definition of wages, to which I shall have to return. Section 8, subsections (1) and (2), also contain definitions. A "worker" is defined in wide terms. In short, a worker is an individual who has entered into or works (or worked) under a contract of service, a contract of apprenticeship, or any other contract whereby he undertakes to do or perform personally any work or services. Excepted are cases where the status of the party for whom the work or services are being done or performed is that of a client or customer of any profession or business undertaking carried on by the individual. Section 8(3) reads:

"Where the total amount of any wages that are paid on any occasion by an employer to any worker employed by him is less than the total amount of the wages that are properly payable by him to the worker on that occasion (after deductions) then, except in so far as the deficiency is attributable to an error of computation, 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

I need not refer to the remaining sections in Part I.

9

As I see it, the answer to the first question raised by this appeal depends on the proper construction of section 8(3). As to that, whatever might be the position in the absence of section 8(3), I think that the observations in the above extract from the decision in the Alsop case cannot, in their entirety, survive the presence of section 8(3). Section 8(3) must have been intended to widen the ambit of the Act, because it is a deeming provision, extending the scope of the expression "deduction": "Where the…amount of any wages that are paid…is less than the total amount of the wages…properly payable…the amount of the deficiency shall be treated for the purposes of this Part as a deduction…" This subsection provides, in express terms, that wages which are properly payable but not paid are to be treated, to the extent of the non-payment, as within the scope of the expression "deduction". Non-payment of the amount properly payable is to be treated as a deduction. The only exception is for a deficiency attributable to an error of computation.

10

The Act is, indeed, concerned with unauthorised deductions. But section 8(3) makes plain that, leaving aside errors of computation, any shortfall in payment of the amount of wages properly payable is to be treated as a deduction. That being so, a dispute, on whatever ground, as to the amount of wages properly payable cannot have the effect of taking the case outside section 8(3). It is for the industrial tribunal to determine that dispute, as a necessary preliminary to...

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