Hartley and Others v King Edward VI College

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Elias,Lord Justice Tomlinson,Lord Justice Sales
Judgment Date14 May 2015
Neutral Citation[2015] EWCA Civ 455
Docket NumberCase No: B2/2014/2346

[2015] EWCA Civ 455

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM BIRMINGHAM CIVIL JUSTICE

CENTRE

DEPUTY DISTRICT JUDGE VINEY

3YL01661

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Justice Elias

Lord Justice Tomlinson

and

Lord Justice Sales

Case No: B2/2014/2346

Between:
(1) Peter James Hartley
(2) Jeremy George Panko
(3) Stewart Monk
Appellants/Claimants
and
King Edward VI College
Defendant/Respondent

Oliver Segal QC and Katherine Newton (instructed by Thompsons LLP) for the Appellants

Jane McNeill QC and Ben Cooper (instructed by Blake Morgan LLP) for the Defendant

Hearing dates: 19 March 2015

Lord Justice Elias
1

When teachers go on strike their employer can withhold their pay. But how much can the employer withhold? That is the issue in this case.

2

The three appellants are all employed as teachers at the respondent College. On 30 November 2011 they took strike action. In consequence, the College deducted from their monthly salary what the College considered was the value of the service which the teachers had failed to provide on that day. This was calculated as 1/260 of the annual salary. That fraction was based on the premise that the teachers' working days were Monday to Friday and that all work days should be included, even those which do not have to be worked because of holidays. So the formula is 5 working days a week x 52 weeks a year = 260 working days a year.

3

The appellants accept that they are not entitled to be paid for the strike day but submit that the College has deducted too much. They say that the proper amount referable to the day on strike was 1/365 of the annual salary. They submit that this is the effect of the Apportionment Act 1870 which should have been applied by the College given the nature of the teacher's contract.

4

The sums at stake for the individual teachers are small, but this appeal is important to the sector overall. It has been estimated that the cost to the sector of a finding in the appellants' favour would be about £300,000 per strike day.

5

Unusually, this appeal is from a judgment entered in the College's favour by an order of the County Court following an agreed draft consent order. The parties agreed that the judgment of Jay J in the High Court in Amey v Peter Symonds College [2013] EWHC 2788; [2014] IRLR 206 was binding upon the County Court. On very similar facts the judge held that the appropriate deduction was 1/260. The appellants say that he was wrong.

The terms of employment.

6

The appellants' contracts incorporate terms from the relevant collective agreement, entitled the "Conditions of Service Handbook for Teaching Staff at Sixth Form Colleges" (known as The Red Book). This draws a distinction between directed and undirected time. Directed time is the period when teachers are required to be at school. It amounts to 1265 hours per annum, during 195 scheduled days of which 190 are days when the teacher may be required to teach. They cannot be required to work on Sundays or Bank Holidays. But it is recognised that in addition to the tasks performed during directed time, teachers have to work in their own time in order to prepare lessons, mark papers, write reports and carry out a range of other teaching and administrative tasks. This work is termed "undirected time" since it is carried out by the teacher outside of the normal term time hours and is not quantified.

7

There is inevitably a correlation between directed and undirected time; the more directed hours a teacher performs the more this generates preparation, marking, report writing and so forth. However, the amount of undirected time done will vary from teacher to teacher; and there is no control over when that work is done; it may be all or any of the evenings and weekends and during the holidays. The relevant rule simply provides that teachers should work for "such reasonable additional hours as may be needed to discharge their duties effectively."

8

The pay of part-time teachers is referable to directed time. They are required to be available for work for 'the percentage of the maximum 1265 hours of directed time corresponding to the percentage of full time pay they receive'. So if they are paid 50% of a full-time annual salary, they are required to work 632.5 hours of directed time.

9

A teacher may be requested to work additional working days. One of the ways of recompensing them is to pay a daily rate which is fixed at 1/195 of the annual pay.

The basis of deduction.

10

There are two distinct legal routes by which the employer may seek to claim the right to withhold a day's pay from striking workers. First, the employer may be entitled to damages for the employee's breach of the contract of employment in refusing to work and may be entitled to withhold a sum equivalent to his entitlement to damages by way of equitable set-off: Sim v Rotherham MBC [1986] ICR 897. Second, the employer may rely upon the principle that the employee is not entitled to be paid if he is not ready and willing to perform the work which he was employed to do: Miles v Wakefield MBC [1987] 1 AC 539 HL.

11

In this appeal the employer sought to rely upon the Miles basis for deduction. The claimant in Miles was not willing to perform the work which he was properly required to perform on a Saturday. He therefore could not recover the 'remuneration attributable to that work' (Lord Oliver, 570D-E).

12

Although that case identifies the principle which justified the withholding of pay, it did not resolve the issue arising here, namely how much can lawfully be withheld.

13

Strictly the withholding of pay is not a deduction, although it is often colloquially so described. A deduction presupposes a withholding of money earned. Here there is no deduction from monies earned, and nor is it a question of setting off a sum by way of damages, as in Sim. Rather the pay for the strike day is never earned and cannot be claimed. There is only a deduction in the sense that the employer is withholding — because it has not been earned — pay which would otherwise have been earned had the work been performed. The issue is what that sum should be.

The Apportionment Act 1870

14

The preamble to the Act reveals the purpose of why the Act was passed:

"Whereas rents and some other periodical payments are not at common law apportionable (like interest on money lent) in respect of time, and for remedy of some of the mischiefs and inconveniences thereby arising divers statutes have been passed:

And whereas it is expedient to make provision for the remedy of all such mischiefs and inconveniences…."

15

A classic example of the application of the Act is where a landlord dies between rent days. The tenant would be under a duty to pay the rent on the next appropriate day. But for this Act, the payment would all go to the successor in title. The effect of the Act is to apportion the rent between the deceased's estate and the successor.

16

Section 2 of the Act provides that:

"All rents, annuities, dividends and other periodical payments in the nature of income…shall, like interest on money lent, be considered as accruing from day to day, and shall be apportionable in respect of time accordingly."

This establishes the principle that monies are apportioned on the basis that the payment accrues daily. A further question, critical in this case, is whether the daily accrual necessarily requires that the money must be treated as accruing at a regular and equal rate each day (which I shall call "the principle of equal daily accrual"), or whether the rate of accrual depends upon the terms of the underlying agreement.

17

Section 3 of the Act provides that where a person is entitled to an apportioned part, there is no acceleration of the time of payment:

"The apportioned part of any such rent, annuity or dividend, or other payment shall be payable or recoverable in the case of a continuing rent, annuity or other such payment when the entire portion of which such apportioned part shall become due and payable, and not before, and in the case of a rent, annuity, or other such payment determined by re-entry, death, or otherwise when the next entire portion of the same would have been payable if the same had not so determined, and not before."

18

Section 5 defines annuities and dividends as follows:

"The word "annuities" includes salaries and pensions.

The word "dividends" includes (besides dividends strictly so called) all payments made by the name of dividend, bonus, or otherwise out of the revenue of trading or other public companies, divisible between all or any of the members of such respective companies, whether such payments shall be usually made or declared at any fixed times or otherwise; and all such divisible revenue shall, for the purposes of this Act, be deemed to have accrued by equal daily increment during and within the period for or in respect of which the payment of the same revenue shall be declared or expressed to be made."

19

The inclusion of salaries in the definition of "annuities" makes the Act applicable to at least a class of employment cases where work is provided and the worker is paid periodically.

20

Section 7 allows for contracting out of the Act in certain circumstances:

"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."

An important issue is what amounts to an "express stipulation."

21

The appellants' submissions rely on the argument that the Apportionment Act applies and imposes the principle of equal daily accrual thereby requiring pay to be treated as...

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