THE INDUSTRIAL TRIBUNALS

CASE REF:  00029/09

CLAIMANT:			David Beck

RESPONDENT:		Intercity Transport NI Ltd

DECISION
The decision of the tribunal is that the claimant’s claim in respect of unauthorised deduction from wages is dismissed.

Constitution of Tribunal:
Chairman (Sitting Alone):	Ms Bell

Appearances:
The claimant appeared in person.
The respondent was represented by Mr D Flannigan, BL, instructed by Stewarts, Solicitors.

The claimant complained in his claim that he had suffered an unauthorised deduction from his wages, the respondent not having paid him company sick pay in respect of a period of sickness absence by him after he broke his ankle on 27 July 2008, having previously been paid company sick pay by the respondent when he was sick and not having been informed of a change of company policy to cease paying company sick pay from February 2008.

The respondent in its response denied the claimant’s claim on the basis that the payment of company sick pay was discretionary as per its sick pay policy, the discretion having been exercised at this time due to the current economic climate and a serious downturn in business.  The respondent also relied on the exclusion in its policy on paying sick pay where the injury occurred during sporting activities.

ISSUES

 1.	The issues for the tribunal are:-

	(i)	Is the respondent contractually obliged to pay the claimant company sick pay?

	(ii)	If so, has the claimant suffered an unlawful deduction from wages?

EVIDENCE

 2.	The tribunal considered the claim, response, agreed bundle of documentation and heard oral evidence from the claimant, Mr Robert Boyle a former colleague of the claimant, Mrs Deborah Beck, wife of the claimant, and Mr Paul Barton the Managing Director of the respondent company.  

FINDINGS OF FACT

 3.	The claimant is employed by the respondent as a delivery driver.

 4.	On 27 July 2008 whilst helping a friend to unload a rowing boat from his work van the claimant broke his ankle.  The claimant was not intending to go fishing with his friend that day.  

 5.	The claimant on his return from hospital, at his wife’s request telephoned her brother-in-law Mr Paul Barton, to let him know that he had broken his ankle.  The claimant phoned Mr Barton on speaker phone and after informing him of his injury asked, “What’s the craic with the sick?”  Mr Barton replied “I’ll look after you son”, and a discussion followed about the claimant’s forthcoming holidays which were booked to run for four weeks from 4 August 2008.  The claimant gave evidence that he believed he arranged with Mr Barton to instead take the time off as sick leave rather than losing his holidays, whereas Mr Barton gave evidence that he believed the claimant indicated he could not afford to take the time off and receive only statutory sick pay and so confirmed that he would take his holidays.  In either case the claimant received pay at his normal rate for the four weeks booked for his holidays and thereafter was paid statutory sick pay only, whereupon he queried the non-payment of company sick pay with the respondent and was told it had not been paid to any employee since February 2008.  

 6.	Whilst off work with his broken ankle, the claimant went on a fishing trip with some friends and former colleagues including Mr Robert Boyle who works from the same building as the claimant and Mr Barton.  The claimant’s injury was the source of some amusement on the fishing trip and Mr Boyle subsequently relayed this to Mr Barton, which appears to have led to some confusion and the mistaken belief of the respondent that the claimant had actually broken his ankle whilst on a fishing trip.  

 7.	On return to work the claimant was unhappy at having used his holidays for a period of sickness and so the respondent returned the claimant’s four week holiday entitlement to him and paid him at the rate of statutory sick pay for three weeks to reimburse the company for payment they would not otherwise have made to the claimant during his absence.  

 8.	Clause 5 of the claimant’s signed contract of employment provides:-

		“DEDUCTIONS FROM MONEY DUE TO EMPLOYEE

	The company reserves the right to deduct from your pay under this contract or from any other sum owed by the company to you, any monies due from you to the company including but not limited to any outstanding loans, overpayments, advances, any excess holiday taken …”

	Clause 9 states:-

		“SICK PAY

		We operate the Statutory Sick Pay Scheme (SSP).  Sick pay in addition to SSP is in accordance with the company’s current Sick Pay Policy as set out in the Employee Booklet.”

	The Employee Booklet, which the claimant signed to acknowledge receipt of on 12 February 2001, provides that 

		“Sickness caused by misconduct, self inflicted injury, or sporting activities, will not be covered by company sick pay”, and that company sick pay “is a discretionary payment made by the company in addition to statutory sick pay.  Company sick pay is a benefit provided by the company and is not a legal entitlement.  Permanent staff who have completed 26 weeks of satisfactory service, are eligible …”

 9.	Due to a serious downturn in business at the beginning of 2008 Mr Barton and his business partner considered ways to protect the respondent company and implemented a reduction in the salaries of Mr Barton and the respondent’s Warehouse and Distribution Manager.  Mr Barton and his partner also took the decision not to exercise the discretion to pay any employee company sick pay until the financial performance of the business had improved satisfactorily.

THE LAW

10.	Article 45 of the Employment Rights (Northern Ireland) Order 1996 provides that an employer shall not make a deduction from wages of a worker employed by him save where authorised by statutory provision or relevant written contractual provision or agreed to in writing by the claimant before the event giving rise to the deduction.  A deduction occurs where a worker is on any occasion paid less than the total amount of wages properly payable to him.

11.	Under Article 46 of the 1996 Order certain deductions are however exempt, including where the purpose of the deduction is the reimbursement of the employer in respect of an overpayment of wages.

12.	Harvey on Industrial Relations and Employment Law, Division A, Contracts of Employment at paragraph 1051 sets out more fully the various case law tests adopted in deciding whether there has been a breach of contract by an employer because of the way they have exercised a discretion and how the “hitherto – dominant principle in Lavarack  v  Woods (that only that which is wholly obligatory under the contract can be recovered in damages, and that the awarding court must assume that the employer has chosen any option under the contract most favourable to itself)” has in effect by subsequent case law been made subject to the employer’s primary duty to exercise a discretion rationally.  

13.	Paragraphs 282 – 310 of Harvey discuss how terms maybe implied into a contract in a variety of ways including custom, whereby if a term is regularly adopted then it may be possible to assert that it has become customary and falls to be implied into every contract in that trade, or industry or area, but that the court will not lightly find a custom.  It states “the custom asserted must be (in the traditional phrase) “reasonable, notorious and certain”.

14.	An express contractual term may be varied, however for the new contractual term to be enforced it must be obvious and precise, that is, certain as to what the new term is.  

APPLYING THE LAW TO THE FACTS FOUND

15.	There is an express term in the claimant’s Employee Handbook providing for the respondent to pay at its discretion company sick pay in addition to statutory sick pay to a sick employee.  It also states that the payment of company sick pay is not a legal entitlement.  The tribunal must decide whether even though the provision is stated to be discretionary, whether it could be construed as a certain term of the claimant’s contract, either on the basis that the respondent has not properly exercised its discretionary power or as a result of the variation of the original expressed terms either impliedly by the respondent’s custom and practice or expressly by the agreement of Mr Barton by virtue of his comment “I’ll look after you son”.

16.	The tribunal is satisfied on the basis of the respondent’s evidence, including the wage cut taken by Mr Barton, that it had financial concerns and was taking genuine steps to protect its business for the future.  The tribunal finds that the discretion not to pay company sick pay was applied across the board in respect of all of the employees and was not exercised capriciously, irrationally, or perversely, but genuinely and rationally, and as such was properly exercised in good faith.  

17.	Although the claimant had received sick pay previously, the tribunal considers that there is insufficient evidence before it to satisfy it on a balance of probabilities that it was “reasonable, notorious and certain”, that company sick pay would be paid.  The tribunal in particular takes note that the claimant even stated in his evidence that he was uncertain at the time of his accident what the length of his sick pay entitlement might be.

18.	Original terms in a contract may be varied by agreement, the claimant gave evidence that he understood that Mr Barton intended to pay him company sick pay from the comment made by Mr Barton, “I’ll look after you son”.  For a contractual term to be enforced it must be obvious and precise.  The tribunal is not persuaded that Mr Barton’s comment clearly varied the claimant’s contractual term relating to sick pay resulting in an obvious and precise term that company sick pay would be paid to the claimant.  

19.	The tribunal is accordingly not satisfied that the claimant’s express discretionary contractual term should be construed as a certain term on the basis that the respondent has not properly exercised its discretionary power, or, as a result of a variation of the original express terms either impliedly by custom and practice or expressly as the result of the verbal assurance given by Mr Barton to the claimant.  As the respondent is not contractually obliged to pay the claimant company sick pay the tribunal accordingly does not find that the claimant has suffered an unlawful deduction from wages and dismisses the claimant’s claim.

Chairman:

Date and place of hearing:	8 December 2009, Belfast.

Date decision recorded in register and issued to parties: