THE INDUSTRIAL TRIBUNALS

CASE REF:	1616/10

CLAIMANT:			David Patience

RESPONDENT:		TBF Thompson

DECISION
The decision of the tribunal is that the claimant is entitled to unpaid wages of £1,480.00.

Constitution of Tribunal:
Chairman (sitting alone):		Mr P Kinney

Appearances:
The claimant appeared in person and represented himself.
The respondent was represented by Mr Crilly, Managing Director of the respondent company.

1.	This case is listed as the lead case of a number of cases brought against the same respondent.  They all arise out of the same set of facts.  

2.	The claimant is an employee of the respondent.  He started working for the respondent in 2001.  The respondent operates from four sites in Northern Ireland and is a private limited company.  It has approximately 150 employees spread across those four sites.  The claimant works on the Mallusk Site which has             55 – 60 employees.

3.	The respondent, in common with many other businesses, suffered a downturn in business in recent years.  Towards the end of 2009 financial concerns were such that the respondent appointed Grant Thornton as an adviser in December 2009 to develop a recovery plan.  Part of this plan involved the closing of a separate operation of the respondent’s in the Republic of Ireland and 35 redundancies were made.  Further savings were necessary in Northern Ireland.  The biggest cost of the respondent was wages.  A meeting of the staff was called on 14 January 2010.  The employees were warned of the possibility of redundancies and the respondent sought proposals from the employees as to methods or ideas to save costs.  The company also invited the employees to nominate employee representatives as there was no trade union recognition at the respondent.  Seven employee representatives were appointed, including two from the claimant’s depot.  

4.	There followed a series of meetings at which various options were considered.  One of the options considered was to attempt to reduce the wages cost.  A number of redundancies were identified and a number of employees were made redundant.  At the fourth meeting between the respondent and the employee representatives held on 16 February 2010, Mr Crilly was asked to put forward the company’s proposals for wages.  Mr Crilly agreed to e-mail the final pay proposal to the representatives by Friday 19 February 2010.  Mr Crilly provided to the employee representatives the company’s proposed action plan in advance of the next meeting.  The company proposed that rather than reduce the hourly rate of pay, the company would instead pay employees for 36 hours work and employees would actually work 40 hours.  The respondent felt this was, in Mr Crilly’s words, ‘the least worst option’ open to them.  The option was e-mailed to the employee representatives so that employees could be aware of the options.  

5.	At the fifth meeting on 22 February 2010, Mr Crilly, on behalf of the company, encouraged everyone to seek their own advice on the matter, but set out the options as he understood them.  He said that he understood that the company could dismiss employees and re-engage them on the new terms issued.  However, he said it was felt by the company that the dismissal of the whole workforce could upset employees who may feel that their record of employment was debased by being dismissed.  It was therefore proposed that the company impose the change on employees.  Mr Crilly then set out his understanding of the options open to each of the employees, in that they could:-

		(a)	accept the change;

		(b)	resign and claim constructive dismissal;

(c)	claim a breach of contract by a civil action where the contract had not been terminated or through an industrial tribunal if the contract had been terminated; and

(d)	claim unlawful deduction of wages through an industrial tribunal and again remain in employment while doing so.  

Mr Crilly also pointed out that it was necessary for an employee to lodge a grievance with the company before such a claim was lodged.  Whilst recognising the possibility for action, Mr Crilly acknowledged how difficult the situation was for everyone and hoped and no one would feel that such action was required.  

6.	Arrangements were also made to allow the Labour Relations Agency to meet with the employee representatives.  During this process the employee representatives also asked that the company would ultimately repay the lost wages.  A verbal undertaking was given to confirm that whilst the company could not formally make such a commitment there was support for this approach right up to the managing director level.  Mr McGowan, the Managing Director, confirmed that he supported the reinstatement of hours and the reimbursement of monies lost from 1 March 2010 subject to the profitability of the company on foot of audited accounts to 31 December 2010.  The employee representatives then consulted with the employees.  There were a number of individuals, including the claimant, who were not satisfied and were unhappy with the proposals.  However, the majority of the workforce accepted the proposals.  The new pay policy was implemented from the beginning of March 2010.  The claimant, along 35 other employees, raised a grievance on 11 March 2010.  All 36 employees were met and the grievance was rejected on 5 May 2010.  Twenty-eight people appealed the grievance outcome on 6 May 2010.  The appeal was heard and rejected by letter of 15 June 2010.

7.	The claimant has continued to work 40 hours per week and paid 36 hours.  His loss to the date of hearing is £1,480.00.  Eighteen employees presented claims to the industrial tribunal.  Nine of those claims were withdrawn before this case came to hearing.  

The law

8.	Under Article 45 of the Employment Rights (Northern Ireland) Order 1996 an employer shall not make a deduction from wages of a worker employed by him unless:-

(a)	the deduction is required or authorised to be made by virtue of a statutory provision or a relevant provision of the worker’s contract;

(b)	the worker has previously signified in writing his agreement or consent to the making of the deduction.

9.	The parties to a contract can vary the terms of the contract.  Where in an employment contract the proposed change is not to the employee’s benefit the employer must be able to show consent by the employee in some legally acceptable way.  Where there is no collective bargaining system in place the strict legal position is that each individual contract must be varied individually.  The essential question is whether or not the employee has acquiesced in the new terms.  In the case of Solectron Scotland  v  Roper [2004] IRLR 4, Mr Justice Elias said at Paragraph 30:-

“The fundament question is this : is the employee’s conduct, by continuing to work, only referable to his having accepted the new terms imposed by the employer?  That may sometimes be the case.  For example, if an employer varies the contractual terms by, for example, changing the wage or perhaps altering job duties and the employees go along with that without protest, then in those circumstances it may be possible to infer that they have by their conduct after a period of time accepted the change in terms and conditions.  If they reject the change they must either refuse to implement it or make it plain that by acceding to it, they are doing so without prejudice to their contractual rights.”

Conclusions of the tribunal 

10.	It is clear from the claimant and Mr Crilly that there has been and continues to be a good working relationship between the company and its employees.  Every effort has been made by the company to preserve as many jobs as possible and the unofficial commitment made to reimburse the employees remains in force should the company have sufficient funds to do so.  No trade union was recognised by the company and appropriate steps were taken by the respondent to seek the election of employee representatives.  Those employee representatives, through a series of meetings, were fully informed of options open and available and were invited to provide their own options.  Finally, when the option for reducing the number of hours paid was put forward by Mr Crilly, this was taken back by the employee representatives to the workforce and was accepted by a majority of the workforce.   

11.	It is, however, clear that though the respondent sought to change the claimant’s contract, the claimant did not acquiesce on those new terms.  He immediately made his position clear.  He lodged a grievance, appealed that grievance and then instituted tribunal proceedings.  In this case the respondent has reduced the claimant’s wages without either the express or implied consent of the employee.  The fact that the claimant has continued to work under protest cannot be construed as a consent to the proposed change in contract.  On this basis, therefore, the respondent has made an unauthorised deduction from the wages of the wages of the claimant as he was neither contractually entitled to make the reduction in question nor did the claimant previously signify in writing his agreement or consent to the making of the deduction.  

12.	I accept, in this case, that the respondent has attempted to deal with a very difficult industrial and economic situation by gaining the co-operation and consent of the entire workforce.  Indeed in the minutes of the meeting, referred to earlier, the respondent acknowledged that they had the option to dismiss employees and       re-engage them with new terms.  The company also acknowledged that individual employees had a number of options relating to the proposed change.  Mr Crilly, in the minutes of the meeting referred to, stated that the company realised they were asking staff to accept a breach of contract but that they were doing so in order to minimise redundancies, preserve employment and ultimately preserve the organisation.

The respondent was reluctant to dismiss employees and I am satisfied that at all times the respondent attempted to act in the best interest of both the company and the entire workforce.  In the event, a small number of employees remained dissatisfied at the efforts made to avoid redundancies and as they did not consent to the change in contract, their original terms and conditions apply and they are entitled to seek a decision of a tribunal confirming their position.  Having heard from the parties, I regard it as unfortunate that this situation has arisen and have some sympathy for the company who sought to find a solution that could be accepted by all, but regrettably failed to do so.  Had they not been reluctant to dismiss employees who refused to agree the variation and then deal with the issue of whether or not such a dismissal was fair, there may well have been a different outcome.  That, however, is not an issue before this tribunal.

13.	The claimant’s claim for unlawful deduction of wages, therefore, succeeds and the claimant is entitled to the sum of £1,480.00.

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

Chairman:

Date and place of hearing:	9 December 2010, Belfast

Date decision recorded in register and issued to parties: