Hutchings v Islington London Borough Council
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE EVANS,LORD JUSTICE PILL,LORD JUSTICE WARD |
| Judgment Date | 28 April 1998 |
| Judgment citation (vLex) | [1998] EWCA Civ J0428-8 |
| Docket Number | CCRTF 97/0715/C |
| Court | Court of Appeal (Civil Division) |
| Date | 28 April 1998 |
[1998] EWCA Civ J0428-8
Lord Justice Evanslord
Justice Pilllord
Justice Ward
CCRTF 97/0715/C
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON COUNTY COURT
(HIS HONOUR JUDGE GREEN QC)
Royal Courts of Justice
Strand,
London, WC2A 2LL
MR JONATHAN HOWARD (instructed by Messrs O H Parsons) appeared for the Appellant (Plaintiff).
MR TIMOTHY BRENNAN and MRS PATRICIA HAITINK (instructed by the London Borough of Islington) appeared for the Respondent (Defendant).
The appellant is Patrick Hutchings, now aged 54. He was employed by the Council, the respondents, as a caretaker, from 1979 until 1995 and from 1989 he was a Caretaking Superintendent. In 27 March 1995, he was informed by letter that the Council had authorised his premature retirement by reasons (sic) of redundancy. The letter continued :—
"Your last day of service will be 31st March 1995. You will be paid twelve weeks in lieu of notice to which you are entitled by law. This is being paid to you as compensation for the immediate termination of your contract of employment".
He has since been paid a pension under the Local Government Superannuation Scheme. He has also received (1) a payment in lieu of notice in respect of the twelve-week period, and (2) a payment of holiday pay which was due to him when he retired.
He alleges in these proceedings (1) that the amount of his salary at retirement has been under-calculated for the purposes of the Superannuation Scheme; (2) that the payment in lieu of notice should take account of the same, higher, salary figure, and (3) that he was entitled to a greater figure in respect of holiday pay.
The dispute as to the amount of salary arises as follows. He was required by the terms of his employment to occupy a resident caretaker's flat which is a property owned by the Council themselves. He did not live there rent-free, but he was granted a 35 per cent reduction in the amount of rent that he paid, together with a similar reduction in his monthly payments for water and for Council tax. These three items, for rent, water and council tax, were together called his emolument charge, and he alleges that the total reduction was treated as part of his salary for the purpose of computing the amount which he was required to pay as his contribution to the Scheme.
This 35 per cent figure was not taken into account as part of his salary for the purpose of calculating his pension entitlement or the payment in lieu of notice. He submits that it should have been, and he claims (1) a declaration that the amount of his monthly pension should be greater than it is, and (2) judgment for the balance of the sum which he says is due in respect of the twelve-week notice period.
The dispute with regard to holiday pay is separate. A payment for 30 days was due. The Council has paid 30 times his daily rate of salary, calculated as 1/365th of the annual figure. The appellant submits that he is entitled to receive 30 times the amount which he received for each working day, which is 1/260th of the annual amount (52 weeks at 5 days each week : the calculation makes no allowance for public holidays), or alternatively, a total of six weeks or 42 days at the daily figure of 1/365th, because the 30-day leave entitlement represented six working weeks and therefore a further 12 non-working days representing weekends, for which he would also have been paid, should be included also.
I shall deal shortly with the claim for additional holiday pay. The judge dismissed it, and so would I. The entitlement was to receive 30 days' pay. Naturally, the notional days would be working days. The number of days cannot be increased, in my judgment, by adding a number of non-working days, for which he would also have been paid. The correct daily rate is 1/365th of the annual salary, not 1/260th or some other proportion based on the number of working days during which the annual salary would have been earned.
This is borne out by the decision of the Employment Appeal Tribunal in Thames Water Utilities v. Reynolds [1996] IRLR 186, and in addition, on the special facts of this case, by the fact that Mr Hutchings was a resident caretaker and which makes it difficult for him to contend that his annual salary took no account of weekends.
Should the salary figure include the 35% emoluments (rent etc.) discount?
There is no doubt what the figures were, when Mr Hutchings retired. He was paid an annual salary on a monthly basis, together with allowances, from which was deducted the monthly emolument charge which represented 65% of the figure which would otherwise have been charged for rent, water and council tax. The balance of that figure, namely, the 35 per cent reduction, was never paid to him, although he alleges that it was added to his salary for the purposes of calculating the amount of his own pension contributions as an employee.
Whether that additional amount should be included in the payment made in lieu of notice depends, in my judgment, on what was agreed as the basis on which he accepted the offer of early retirement. The agreement was on the terms
set out in the Council's letter, referred to above. The undertaking was to pay "twelve weeks in lieu of notice" without specifying whether this was limited to salary or also included the amount by which his rent etc. was reduced.
In fact, he continued to occupy the same flat, although he was no longer required to do so, and from the date of his retirement he paid the full amount of rent.
The judge held that the Council's undertaking on the true construction of the letter was to pay the amount of his salary, not his salary together with what the judge called "fringe benefits", meaning the 35 per cent rent etc. allowance in question.
I agree with the judge on this question of construction. The rent reduction was linked with the appellant's occupation of the flat, and the requirement that he should live there ceased when the contract came to an end. The Council's undertaking was to "pay twelve weeks" and the natural meaning of these words is that the payments of salary would become due in respect of that period.
I therefore would hold that the judge was correct to dismiss the claim in this respect also.
The calculation of salary for the purposes of pension entitlement raises a different issue. This depends on the terms of employment and of the Scheme. And there is a preliminary issue, because the judge held that he had no jurisdiction, sitting in the County Court, to entertain this claim.
Terms
The terms of employment were set out in Particulars dated 20.3.92. Under the heading "Pension", the employee was given an option to join, or to remain a member of, the Local Government Superannuation Scheme, and this provision was followed by :—
"The position with regard to Local Government Superannuation benefits is set out in the Council's Superannuation Scheme. An explanatory booklet is available for reference in your department and advice on the Local Government scheme can also be sought from the Superannuation Section of the Finance Department …..".
The statutory Scheme is set out in The Local Government Superannuation Regulations 1986 (1986 S.I. No. 24 : these were later amended, in November 1995). Part E specifies the amount of benefits to which pensioners are entitled, e.g. :—
"E.2 (1) …. when a person ceases to hold a local government employment he becomes entitled in relation to that employment to an annual retirement pension ….
E.3 (1) ….. the annual rate of a person's retirement pension is one eightieth of his pensionable remuneration multiplied by the length in years of his reckonable service."
"Pensionable remuneration" is defined in regulation E.22 :—
"E22 (1) …… a person's pensionable remuneration in relation to a local government employment is his remuneration for so much of the relevant period as he is entitled to reckon as reckonable service in relation to that employment".
Part N is headed "Decisions and Appeals". First, by way of general introduction, it should be said that, although it is a national Scheme, the responsibility for making payments and, to a certain extent as set out in the Regulations, for administering the Scheme rests upon the local authority concerned. So, by regulation N.1, "any question concerning the rights or liabilities under these regulations …. shall be decided in the first instance by the body concerned", and by regulation N.5 :-
"(1) Any question whether a person is entitled to a benefit under these regulations is to be decided by the body who last employed the person in respect of whose employment the question arises",
and by regulation N.6 :—
"(1) Where a person is entitled to a benefit which is or may become payable out of their superannuation fund, an administering authority are to decide the amount of the benefit".
Regulation N.7 requires the body concerned, as soon as is reasonably practicable after deciding any question, to notify their decision to the persons concerned, and the written notification has to include
"(2)(c)…. a conspicuous statement directing the person's attention —
(i) …..
(ii) to his right under regulation N8 to serve notice of appeal on the Secretary of State."
Regulation N8 provides :—
"(1) where the body concerned have decided …. any such question …. and written notice of appeal is served on the Secretary of State the question shall …. be determined by him and his determination shall be final".
In summary, therefore, the Regulations provide a comprehensive Scheme, under which all questions...
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