Hartley and Others v King Edward VI College

JurisdictionEngland & Wales
JudgeLord Clarke,Lady Hale,Lord Wilson,Lord Hughes,Lord Gill
Judgment Date24 May 2017
Neutral Citation[2017] UKSC 39
Date24 May 2017
CourtSupreme Court

[2017] UKSC 39

THE SUPREME COURT

Easter Term

On appeal from: [2015] EWCA Civ 455

before

Lady Hale, Deputy President

Lord Clarke

Lord Wilson

Lord Hughes

Lord Gill (Scotland)

Hartley and others
(Appellants)
and
King Edward VI College
(Respondent)

Appellants

Oliver Segal QC

Katharine Newton

(Instructed by Thompsons Solicitors)

Respondent

Thomas Linden QC

Ben Cooper

(Instructed by Blake Morgan LLP)

Heard on 1 February 2017

Lord Clarke

( with whomLady Hale, Lord Wilson, Lord HughesandLord Gillagree)

Introduction
1

I can take the underlying facts from the agreed statement of facts and issues. The appellants are employed as teachers at the respondent's sixth form college. They have brought this action and pursued this appeal supported by their union, the NASUWT. Their contracts of employment incorporate terms relating to working time from a collective agreement entitled Conditions of Service Handbook for Teaching Staff in Sixth Form Colleges. It is known as the Red Book. When sixth form teachers whose contracts of employment incorporate the Red Book go on strike their employer can withhold their pay. The issue in these proceedings and in this appeal is how much the employer can deduct for each day of strike action.

2

On 30 November 2011 the appellants participated in a full day of lawful strike action. On or about 31 January 2012, the respondent made deductions from their pay at the rate of 1/260 of their annual pay. The figure of 260 was arrived at by taking 365 days, less weekends, that is by taking the total number of weekdays in the calendar year. The appellants say that the appropriate deduction was 1/365 of their annual pay, pursuant to section 2 of the Apportionment Act 1870 ("the Act"). The contracts of employment in secondary education, that is at schools rather than sixth form colleges, include an express term contained in the relevant agreement, which is known as the Burgundy Book, that when teachers are on strike their employers are entitled to deduct salary at the rate of 1/365 of their annual pay.

3

The Act is entitled "An Act for the better apportionment of rents and other periodical payments". Section 2 is entitled "Rents, &c to accrue from day to day and be apportionable in respect of time" and provides as follows:

"All rents, annuities, dividends, and other periodical payments in the nature of income (whether reserved or made payable under an instrument in writing or otherwise) shall, like interest on money lent, be considered as accruing from day to day, and shall be apportionable in respect of time accordingly."

4

Section 5 is entitled "Interpretation of terms" and includes the following:

"In the construction of this Act —

The word 'annuities' includes salaries and pensions."

Section 7 states in the heading that the Act is not to apply where stipulation is made to the contrary and provides:

"The provisions of this Act shall not extend to any case in which it is or shall be expressly stipulated that no apportionment shall take place."

The proceedings
5

On 24 April 2013, the appellants commenced proceedings in the Birmingham County Court alleging that the respondent was in breach of contract and claiming monies owed pursuant to section 2 of the Act to the extent that the deductions from their pay exceeded 1/365 of their annual wage entitlement in respect of each strike day. On 17 June 2013, between the issue of proceedings and the trial of this action Jay J handed down judgment in the High Court in Amey v Peter Symonds College [2013] EWHC 2788 (QB); [2014] IRLR 206, which determined the same issue in favour of the defendant, which was another sixth form college, by reference to the same generic contractual terms and on the basis of very similar, if not identical, facts. Jay J held that while "accruing from day to day" in section 2 must be construed as referring to calendar days, section 7 applied to disapply section 2 because the claimant's contract necessarily implied that his pay was tied to his directed time work. [For the definition of "directed time" see paras 14 and 16 below.] The claimant, who was not a member of NASUWT, did not appeal to the Court of Appeal.

6

The respondent in the present case applied for summary judgment on the basis that the County Court would be bound by the Amey judgment. The appellants agreed that that was so but resisted summary judgment on the basis that they wanted to seek determination of the point of principle by the Court of Appeal and could only do so if a "final" determination were entered in favour of the respondent, from which it could apply to the Court of Appeal for permission to appeal pursuant to CPR Part 52 and Practice Direction 52A. As a result, the parties agreed a consent order which was approved by DDJ Viney and referred to in para 2 of the consent order dated 27 February 2014. Pursuant to that order the respondent withdrew its application for summary judgment and, the parties having agreed the material facts, the appellants consented to final judgment being entered in favour of the respondent on the basis that the Amey judgment was binding, but without prejudice to the appellants' right to argue on appeal that Amey was wrongly decided and/or that their case should be decided differently on the basis of the agreed facts.

7

On 1 July 2014 HHJ McKenna gave the appellants permission to appeal directly to the Court of Appeal pursuant to CPR Part 52.14, in circumstances in which Aikens LJ had indicated that the Court of Appeal was minded to accept jurisdiction to hear the proposed appeal on that basis because it raised an important point of principle. The appeal was heard by Elias, Tomlinson and Sales LJJ on 19 March 2015. By a judgment handed down on 14 May 2015 given by Elias LJ, with which Tomlinson and Sales LJJ agreed, the Court of Appeal dismissed the appeal [2015] ICR 1143. The Court of Appeal refused permission to appeal to this Court but permission was granted by Lady Hale, Lord Wilson and Lord Reed on 25 February 2016.

The issues
8

The central question in this appeal is how much the respondent as the appellants' employer can withhold from their pay for each day of strike action. In order to answer that question, a number of further questions potentially arise in order to decide whether the Act applies to the facts of this case. As stated in the statement of facts and issues (albeit in a different order), they are (a) whether the appellants' contracts of employment provide expressly or by necessary implication for their salary to be paid to them pro rata in respect of divisible obligations to perform work on each day of directed time so that the Act has no application to this case; (b) what is meant by "accruing from day to day" in section 2 of the Act; and (c) what is the correct construction of section 7 of the Act.

Discussion
9

Question (a) seems to me to reflect a new point which the respondent sought to raise in this appeal which was not taken in the courts below. As formulated (so far as I can see correctly) by the appellants, the argument that the Act does not apply in this case has three steps as follows. (1) The Act was made to address mischiefs which arise in the context of periodic payments which are entire indivisible payments. (2) The contracts in this case provide impliedly for the appellants to be paid periodically in respect only of the work they do in directed time. (3) Therefore the periodic payments were impliedly divisible.

10

The appellant objected to the new point being taken for the first time in this Court. We heard argument on the point without ruling on the objection. Having heard argument and considered the point I would hold that it fails. Although the point was not argued in the Court of Appeal, that point or a very similar one was considered in the judgment of Elias LJ between paras 23 and 32. In particular he considered the decision of the Court of Appeal in Item Software (UK) Ltd v Fassihi [2004] EWCA Civ 1244; [2005] ICR 450, where an employee who was also a director of a company was paid a salary monthly in arrears. His contract was terminated on 26 June for misconduct. One of the issues was whether he was entitled to his salary for the period during which he worked in June before termination. The Court of Appeal accepted that at common law the employee could not recover anything because his salary did not accrue until the end of the month, but held that the Act applied. It held, as Elias LJ put it in para 31 in this case, that since, by virtue of the Act, salary accrued day by day the employee was entitled to his salary until his dismissal, even where it was for misconduct. Holman J, with whose judgment Arden LJ expressly agreed, said that since the Act is a remedial Act, and since the common law rule works an injustice, the Act should not be restrictively interpreted. Elias LJ concluded that "this would suggest that [the Act] will now be readily applied to all employment contracts where the common law principles pertaining to entire contracts and substantial performance would operate". Elias LJ further concluded in para 32 that it followed that the Act does, in principle, apply to the contracts of these teachers. As he put it, their pay is deemed to accrue daily. He added that that was also the view of Scott J in Sim v Rotherham Metropolitan Borough Council [1986] ICR 897, although the point was not directly argued in that case (see further para 22 below). Elias LJ also noted that none of the parties sought to contend otherwise in the Court of Appeal.

11

Thus the first of the three steps in para 9 above was satisfied because the Act was indeed intended to address mischiefs which arise in the context of periodic payments which are entire indivisible payments. However, for the reasons given below, steps (2) and (3), namely that the contracts in this case provide...

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