THE INDUSTRIAL TRIBUNALS 

CASE REF:	1446/05

CLAIMANT:		James McGrath		

RESPONDENT:		University of Ulster		

DECISION

The decision of the tribunal is that:-

(i)	It is declared that the respondent has made an unauthorised deduction from the claimant’s wages.

(ii)	The respondent is ordered to pay £285.75 to the claimant.

(iii)	The respondent is ordered to pay the claimant £260.00 in respect of the claimant’s preparation time.

(iv)	The respondent’s application for a costs order is dismissed. 

Constitution of Tribunal:

Chairman:		Mr Travers		

Members:		Miss Graham
			Mr Gray
Appearances:

The claimant appeared in person and was not represented.

The respondent was represented by Mr Oliver McCullough, Human Resources Department, University of Ulster. 

REASONS

ISSUES

1.	This is a claim in respect of unauthorised deduction of wages arising from the respondent’s failure to pay the claimant five days outstanding holiday pay which was due upon the claimant’s retirement.  At the outset of the hearing, the respondent agreed that the claimant was entitled to be paid in respect of the five days. 

Accordingly, the task that remains to the tribunal is the calculation of the sum due to the claimant on the basis of the available information.
  
2.	During the course of the hearing the respondent sought an order that the claimant pay £250.00 in respect of the cost of the respondent’s representation at a hearing on 24 March.  The claimant invited the tribunal to make an order in respect of his time and disbursements in bringing his claim. 

Both the claimant’s and the respondent’s applications for costs fall to be determined by the tribunal.

FACTS

3.	The following findings represent the conclusions of the tribunal which have been reached on the balance of probabilities.  In making these findings, the tribunal has considered all the evidence and submissions presented by the parties.  The tribunal heard from the claimant, and also from Mr McCullough who appeared on behalf of the respondent.  Mr McCullough has had extensive involvement with this matter from the time that the dispute first arose. 

The claim

4.	The claimant was employed by the respondent as a technician.  He retired on 7 May 2005 at the respondent’s compulsory retirement age of 65.  At the date of his retirement, five days holiday pay was outstanding.  The respondent has yet to be paid the outstanding monies.

5.	At paragraph 6.4 of the claim form, the claimant states that his monthly gross wage was £1587.50.

6.	At the hearing on 26 October 2006, following questions from the tribunal, the parties agreed that the claimant was entitled to be paid in respect of five days holiday which had not been taken by him as at the date of his retirement. 

Costs / Preparation time order

7.	The claim form was presented to the tribunal on 25 October 2005.  The claimant asserted that he was due to be paid in respect of outstanding holiday pay, and that the respondent had failed, “to put on a stamp for the first week of May 05”. The respondent in the response form at paragraph 6.2 denied liability and in any event asserted that the claim had been presented out of time. 

8.	The respondent followed up this assertion with a letter dated 10 February 2006.  In the letter Mr McCullough stated, “There will be a pre-hearing review on this issue.  This and any subsequent hearing will involve the University in costs.  As it is clear your case is ill-founded, I view you continuing with this matter as vexatious in nature.  As such I will use this letter in evidence in seeking full costs of any such hearings from you.”

9.	The claimant wrote a lengthy reply to the respondent dated 27 February 2006.  The letter addressed matters relating to the claim generally but included a reminder to the respondent that the claimant had written a letter dated 15 August 2005 about the shortfall in his holiday pay.  In fact the respondent did not reply to this August 2005 letter until 20 October 2005.  The claimant presented his claim five days later.

10.	On 1 March 2006, Mr McCullough wrote to the claimant denying liability and stating, “I would point out that it is for you to convince the Tribunal that it is just and equitable that they deal with your case as it was submitted out of time.”  The tribunal notes that the test for an extension of time for an unauthorised deduction of wages claim was set out by the respondent inaccurately.  If the claimant had required an extension of time the test would have been one of reasonable practicability.  

11.	The issue as to whether or not the claim had been presented in time was considered by a tribunal on 24 March 2006.  On that occasion the tribunal found that the normal time limit for presenting the claim to the tribunal expired on 26 August 2005.  Further, the tribunal found that the claimant’s letter of 15 August 2006 constituted a grievance which served to extend the time for presentation of the claim to November 2005, pursuant to the provisions of The Employment (Northern Ireland) Order 2003 (Dispute Resolution) Regulations (Northern Ireland) 2004.  Consequently, the tribunal found that the claim had been presented in time.  The tribunal’s decision was recorded in the register and issued to the parties on 7 June 2006.

12.	The respondent employed a solicitor at the hearing on 24 March 2006.  Despite the fact that the respondent did not succeed in persuading the tribunal that the claim was presented out of time, the respondent has asked the tribunal to order that the claimant should pay the £250.00 cost of the respondent’s legal representation on that date.

13.	On 19 June 2006 the respondent wrote an open letter to the claimant.  As to the complaint about non-deduction of national insurance, the respondent reiterated its earlier assertion that it had complied with the relevant Inland Revenue guidelines.  In respect of the claim for unpaid holiday pay, the respondent offered to pay the claimant five days pay net of tax.  The respondent wrote, “Should you again refuse the above offer and go to Hearing, we will use this letter to ask the Tribunal that costs be awarded against you.  You should note that the over-reaching requirement is to address issues and to avoid unnecessary costs.  You have not provided any alternative information in relation to the events as laid out in this letter.  Not to provide any alternative to the case made above and to engage the Tribunal in deciding this matter will result in unnecessary costs to the Tribunal and the University.”

14.	The claimant on 26 June 2006 wrote a lengthy letter in reply.  The final paragraph of that letter states, “I will accept the offer in your letter on condition that if when I contact the DHSS office in Newcastle on Tyne in writing for written confirmation of the requirement for a stamp for the first week of May quoting your claim of exemption, that if they reply that the stamp has to go on that the university will put it on. I will supply the part due by me.”

15.	The matter was referred to the Labour Relations Agency [“LRA”] for conciliation.  No agreement was reached.  The LRA prepared a draft agreement that the respondent should pay the claimant the equivalent of five days pay net of tax and national insurance.  It was also provided that the respondent would honour any liability in respect of the employer’s national insurance contribution if the Inland Revenue confirmed that, contrary to it’s earlier guidance, the contribution was due.          

16.	 In what may have been a standard draft, the LRA included a clause relating to the confidentiality of the settlement.  The claimant objected to that clause.  This proved to be the stumbling block which prevented an agreement being reached.  Mr McCullough maintained that such a clause was merited and on behalf of the respondent adopted it as a condition of settlement. He sought to justify that position at the hearing. 

17.	The tribunal finds that, once the LRA had raised the question of a confidentiality clause, the respondent was not prepared to conclude the agreement through the LRA without the inclusion of a confidentiality clause.  The tribunal has listened carefully to Mr McCullough and finds that it was due to the respondent’s insistence on the confidentiality clause that no agreement was reached.  

18.	In an open letter dated 4 August 2006, the respondent stated that, “I understand from the Labour Relations Agency that you have rejected the terms of settlement they drew up.  The matter is listed for hearing.  I have offered to pay you the amount you claim you are owed.  I have taken all reasonable steps to dispose of this matter without the tribunal.  On this basis I must warn you that I will seek costs.”

19.	In drafting this letter, the respondent omitted specific reference to the confidentiality clause in the LRA terms of settlement.  The tribunal finds that this clause remained, from the respondent’s perspective, a condition of settlement of the claim.

20.	By letter dated 16 August 2006 the claimant dealt with a number of issues arising from the claim.  He also said this, “The University’s offer of the payment of the five days was rejected when put in writing, there was I understand a refusal to remove the confidentiality clause from the settlement document.”

21.	On 18 August 2006, the respondent wrote in reply, “I have read your letter carefully and see no further purpose in continuing correspondence.  You have accepted in your letter that your claim relates to five days annual leave.  We have offered to pay you that amount and you have rejected the offer.  I confirm that we will inform the tribunal of your position and explain matters to them.”

22.	This letter refers to an offer which the respondent had already made to pay in respect of five days annual leave.  The tribunal finds that, after the LRA became involved, the offers made by the respondent to settle on the basis of five days were in fact conditional on a confidentiality clause being included.  Having heard from Mr McCullough, the tribunal is satisfied that at no time following the LRA intervention did the respondent make an offer in writing which it intended to be without the condition of confidentiality as contained in the LRA draft. 

23.	If this had not been the respondent’s view, the respondent could have made it clear in it’s reply to the claimant’s letter of 16 August. In that letter, the claimant asserted that there had been a refusal to remove the confidentiality clause from the settlement document. 

24.	There was no impediment preventing the respondent from making a unilateral unconditional payment to the claimant at any time in respect of the unauthorised deduction of wages.  The fact that the respondent did not do so, is further evidence that the offer repeated to the claimant in correspondence was intended to be conditional on a confidentiality clause. 

25.	In addressing the tribunal, Mr McCullough sought to justify the respondent’s stance by implying that a confidentiality clause might restrain the claimant from disclosing information about other matters pertaining to the respondent’s affairs.  The tribunal finds it difficult to understand why a broad confidentiality clause might be deemed necessary by the respondent when proposing to settle a claim concerning five days holiday pay allegedly outstanding upon the compulsory retirement of the claimant on the grounds of age.  In any event the clause, as drafted in the LRA document which was shown to the tribunal, only required the claimant to maintain confidentiality concerning the settlement.  Such a clause would not have served to impose a broader obligation of confidentiality on the claimant. 

26.	On 22 August 2006, the claimant wrote to the tribunal and asserted that the offer of five days pay made through the LRA had a condition of confidentiality attached which he was unable to accept.  He asserted that the original LRA draft terms of settlement also included a clause that the offer was without admission of liability but he stated that this clause, unlike the confidentiality clause, was removed after he objected to it. 

27.	The tribunal is satisfied that after the LRA became involved, the claimant was reasonably under the apprehension that the respondent had not made an unconditional offer to pay in respect of the claimant’s five days outstanding leave.  Consequently, he prepared for the hearing on the basis that all factual matters might be in issue.  This involved an analysis of the claim and response forms and the other documents relating to the claim.  The claimant also had to prepare his presentation of the entire claim and his submissions in respect of costs.  The respondent had, from an early stage in correspondence, frequently threatened to make an application for costs against the claimant.  The tribunal is in no doubt that this made the claimant even more punctilious in his preparation.

28.	The tribunal has been assisted by an 80 page bundle of photocopied documents prepared by the claimant.  A chronological list of contents appears at the front of the bundle.  The claimant made a number of copies of the bundle for the use of the tribunal.     

29.	The respondent did not attend the tribunal with any witnesses or evidence necessary to rebut the claimant’s assertion that he was entitled to five days outstanding holiday pay. 

LAW

30.	The provisions of Part IV of the Employment Rights (Northern Ireland) Order 1996 forbid an employer from making unauthorised deductions from wages.  An employer is entitled to make deductions as required by statute.  In the event that a tribunal is satisfied that an unauthorised deduction has been made by an employer, the tribunal shall make a declaration to that effect and order the employer to pay to the worker the outstanding sum. 

31.	In determining this claim for unauthorised deduction of wages, the tribunal has no power to impose a condition of confidentiality in respect of its order.  The tribunal order will be a matter of public record.  Further, the tribunal has no power to impose a condition of confidentiality on the claimant in respect of his wider knowledge of the respondent’s affairs.

32.	The Industrial Tribunals (Constitution and Rules of Procedure) Regulations (Northern Ireland) 2005 at Schedule 1 permit the tribunal to make costs orders and preparation time orders in appropriate cases.

•	A costs order may be made where the receiving party has been legally represented – see rule 38(2) of Schedule 1. 

•	A costs order may be made, “where the paying party has in bringing proceedings … acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by the paying party has been misconceived” – see rule 40(2) of Schedule 1.

•	A preparation time order may be made where the receiving party has not been legally represented – see rule 42(2) of Schedule 1.

•	Preparation time means time spent “by the receiving party or his employees carrying out preparatory work directly relating to the proceedings … up to but not including time spent at any hearing” – see rule 42(3) of Schedule 1.

•	A preparation time order may be made, “where the paying party has in bringing the proceedings, acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by the paying party has been misconceived.” – see rule 44(3) of Schedule 1.

33.	The procedure for calculating the sum to be paid under a preparation time order is set out at rule 45 of Schedule 1.

“45(1) In order to calculate the amount of preparation time the tribunal or chairman shall make an assessment of the number of hours spent on preparation time on the basis of – 

(a)	information on time spent by the receiving party; and

(b)	the tribunal or chairman’s own assessment of what it or he considers to be a proportionate amount of time to spend on such preparatory work and with reference to, for example, matters such as the complexity of the proceedings, the number of witnesses and documentation required.

(2)	Once the tribunal or chairman has assessed the number of hours spent on preparation time in accordance with paragraph (1), it or he shall calculate the amount of the award to be paid to the receiving party by applying an hourly rate of [£26 for the year commencing 6 April 2006]

(3)	The tribunal or chairman may have regard to the paying party’s ability to pay when considering whether it or he shall make a preparation time order or how much that order should be.”

CONCLUSION

34.	It is declared that the respondent has made an unauthorised deduction from the claimant’s wages totalling £285.75.  The respondent is ordered to pay that sum to the claimant. 

35.	The figure of £285.75 has been calculated as follows:-

Gross monthly pay is £1,587.50 

£1,587.50 x 12  52 = £366.34 less 22% tax = £285.75

The claimant reached his 65th birthday on 7 May 2005.  The date of the unauthorised deduction was 26 May 2005.  No national insurance is due on payments made after the claimant’s 65th birthday.  Accordingly, only tax has been deducted from the figure for gross pay.

36.	The respondent’s application for a costs order in the sum of £250.00 is dismissed.  The application relates to the costs of the pre-hearing review on 24 March 2006.  On that occasion the tribunal found that the claim had been presented within time.  The claimant’s conduct cannot possibly be said to fall within the terms of rule 40(2) of Schedule 1 of the Industrial Tribunals (Constitution and Rules of Procedure) Regulations (Northern Ireland) 2005. In the circumstances, the respondent’s application for costs is hopeless and must fail.

37.	The tribunal makes a preparation time order in favour of the claimant in respect of 10 hours preparation.  At the prescribed rate of £26.00 per hour, the total sum ordered to be paid to the claimant is £260.00.  The order has been made for the reasons set out below. 

38.	By letter dated 19 June 2006 the respondent made an unconditional offer to pay the claimant five days pay net of tax.  The claimant accepted that offer in a letter dated 26 June 2006. 

39.	In accepting the offer, the claimant imposed what he described as a “condition” to the effect that if the respondent’s assertion about the non-payment of national insurance proved to be wrong, then the respondent should meet its obligations in that regard.  The “condition” did not in fact seek to alter the basis upon which the offer to settle had been made.  In making the offer, the respondent had asserted as fact that no payment was due in respect of national insurance.  All the claimant was doing was seeking reassurance that the respondent would in any event honour the basis of its offer, and that the respondent would not seek to avoid any statutory obligations in respect of the payment of national insurance.  

40.	The tribunal is satisfied that the exchange of the letters dated 19 June 2006 and 26 June 2006 represented an offer and an acceptance of that offer.  The reason why the agreement failed was because of the respondent’s subsequent insistence on a confidentiality clause. 

41.	The requirement for such a clause did not appear in the open offer made by the respondent on 19 June 2006.  This offer was accepted in substance by the claimant.  The question of confidentiality arose for the first time in the LRA draft agreement.  The tribunal, having heard from Mr McCullough, is satisfied that thereafter confidentiality remained a requirement of the respondent in it’s pre-hearing negotiations. 

42.	The respondent’s letters of 4 August and 18 August refer to an offer to pay in respect of five days outstanding holiday entitlement.  It is said by the respondent that the claimant has rejected this offer.  The letter of 4 August expressly refers to the LRA draft terms of settlement, while the letter of 18 August simply refers to an earlier offer.  The tribunal is satisfied that on both occasions the respondent was referring to the proposed agreement which included the confidentiality clause.  It was this offer which was rejected by the claimant.  

43.	If the respondent truly sought to make an unconditional offer to pay in respect of an unauthorised deduction of five days wages, there is no reason why at any time the money could not have been paid unilaterally by the respondent to the claimant in satisfaction of the claim.  The claimant would have been forced to withdraw his tribunal claim or face possible costs consequences at a final hearing. 

44.	By insisting on a confidentiality clause as a condition of the agreement, the respondent was seeking a relief which a tribunal has no power to order.  Once it was conceded that the claimant should be paid in respect of five days, there was nothing to be gained by insisting on confidentiality in the face of the claimant’s objection to such a clause.

45.	The tribunal is satisfied that the respondent acted unreasonably in persisting with its demand for a confidentiality clause as part of a negotiated settlement.  In the circumstances the tribunal considers that a preparation time order should be made in favour of the claimant.  

46.	The claimant suggested that, after June 2006, he had spent a total of 20 hours in preparation for the case.  The respondent on the other hand suggested that a total of five hours preparation should be allowed in respect of the claimant’s preparation since the commencement of the proceedings in October 2005. 

47.	The tribunal has listened with care to both parties.  It has also considered all the documents and issues arising in the case.  The tribunal has heard from the claimant and observed his demeanour.  The tribunal is satisfied that the claimant is a man who approached all aspects of the preparatory work for the case in his own careful and thorough manner.  In all the circumstances, the tribunal finds that it is appropriate and proportionate to make a preparation time order for 10 hours in respect of the work carried out after June 2006.  In making the assessment of the preparation time, the tribunal has not applied any punitive considerations against the respondent.     

48.	The tribunal emphasises that this decision should not be regarded as a precedent or template for other cases.  The making of a preparation time order is exceptional and far from a matter of routine. The preparation time order in this matter arises from the very particular facts of the case.

This is a relevant decision for the purposes of the Industrial Tribunal (Interest) Order (Northern Ireland) 1990.

Chairman:

Date and place of hearing: 26 October 2006, Belfast

Date decision recorded in register and issued to parties: