Appeal No.	 EAT/1333/96

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 19 June 1997

Before
HIS HONOUR JUDGE PETER CLARK
MR R JACKSON
MR A E R MANNERS

MR C FAIRHURST	APPELLANT

NORTHUMBERLAND COUNTY COUNCIL	RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	IN PERSON	
For the Respondents	MR M WALKER
(of Counsel)
Messrs Short Richardson & Forth
Solicitors
4 Mosley Street
Newcastle Upon Tyne
NE1 1SR	

	JUDGE PETER CLARK:     This is an appeal by the Applicant before the Newcastle Upon Tyne Industrial Tribunal, Chairman, Mr N.W. Garside sitting alone on 13 August 1996, against that Chairman’s refusal to allow an application to amend the Originating Application.

	This is the full hearing of the appeal, leave to proceed having been given by a division of this Appeal Tribunal presided over by Judge Butter QC at a Preliminary Hearing held on 21 February 1997.

Background

	The Appellant commenced employment with the Respondent as a contracts manager on 27 January 1992.  On 3 July 1995 he was suspended on full pay pending a disciplinary investigation.  On 25 July 1995 he submitted a sick note from his doctor.  He was said to have a bad back.

	On 4 October 1995 he was dismissed for gross misconduct.  He appealed internally.  His appeal was successful and on 29 March 1996 the appeal panel reinstated him on the same terms and conditions as before his dismissal.

	Meanwhile, on 9 March 1996 he had presented an Originating Application to the Central Office of Industrial Tribunals complaining of an unlawful deduction from his wages.  He was then represented by professional advisers, Acton Jennings.  Specifically, that claim related to 22 days holiday pay alleged to be due to him on termination of his employment on 4 October 1995, calculated at £1,658.46 gross.  The unlawful deduction was said to have occurred on 15 October 1995, when he received his final pay cheque, following dismissal, absent the holiday pay.

	The Chairman dismissed the holiday pay claim.  There is no appeal against that part of the Chairman’s decision.

The Application to Amend the Originating Application

	Following his reinstatement the Appellant received back-pay on 2 April 1996.  The calculation of that amount was set out in a further letter dated 3 April.

	By a letter dated 2 July 1996 from Acton Jennings, the Appellant applied to amend his Originating Application by adding two further claims of unlawful deductions.  The first read as follows:

“Arrears of salary
The Respondent has reduced the Applicant’s back pay to half salary from 25 December 1995 on the grounds that he was sick.  The Applicant was absent from work through suspension and then dismissal which was wrongful.  He contends that he ought to receive full pay throughout this period.  In any case, he would argue in the alternative, that if the Respondent as a matter of contract is correct in making the deduction, for one of the months (December) in which he received half pay, the Applicant found employment other than with the Council.  He contends that had he been allowed to work for the Respondent company he would have done so during that time and received a full salary.  Thus, he argues, even if the Respondent is correct in paying half salary for some of that period, which is denied, for the period when the Applicant worked he ought to receive a full salary from the Council subject to a deduction for other earnings.  The Applicant claims that there has been an unlawful deduction from wages in relation to this arrears of salary.”

	Secondly, he complained of an unlawful deduction in relation to payment of the essential car user allowance.

	The Chairman found that the primary limitation period for those claims expired on 1 July 1996, and that the deductions complained of were made on 2 April 1996.  Accordingly, the application for leave to amend received on 4 July was some three days or so beyond the primary limitation period of three months under the then Wages Act.

	The Respondent disputed those further claims in part on their merits at the hearing before the Chairman, but in addition contended that they were out of time and that leave to amend ought not to be granted.

The Chairman’s Decision

	It is important to observe that this was not an interlocutory hearing held simply to determine whether or not the Appellant should be granted leave to amend his Originating Application to add the further claims.  It was the substantive hearing of the original complaint relating to holiday pay, during which evidence was led and argument addressed in part on the two further claims.

	As to the claim for full pay from 25 December 1995 the Chairman found that the Appellant received full sick pay for five months, and thereafter half pay for five months in accordance with his contractual entitlement.  We can see no grounds for interfering with that finding.  Accordingly, as a matter of discretion the Chairman was entitled to refuse leave to amend in relation to that claim.

	As to the claim for the essential car user allowance he treated that as a payment of expenses, and expenses are expressly excluded from the definition of “wages” by what is now Section 27(2)(b) of the Employment Rights Act 1996.  That finding is entirely consistent with the Employment Appeal Tribunal decision in London Borough of Southwark v O’Brien [1996] IRLR 420, and again is not one which we can disturb.

	However, it is clear from the way in which the Chairman formulated the amendment as to arrears of salary at paragraph 3(1) of his reasons, and his subsequent findings, particularly at paragraph 15 of the reasons, that he failed to take into account the alternative basis on which the arrears of salary deduction was put, namely, that during December 1995 the Appellant was fit for work, and did work elsewhere (as the Chairman found) and that had he been in the Respondent’s employment at that time he would have received his full salary for December, because he would have been fit for work.  In that event he would have received his full salary for January 1996 by way of sick pay, instead of the half pay which he in fact received.  

	Mr Walker, on behalf of the Respondent, realistically concedes that claim in principle, although he makes no concession as to the quantum, if any, of that claim.  It is therefore in relation to the alternative sick pay amendment that we must consider the Chairman’s refusal to allow leave to amend.

	We have been referred to the Court of Appeal judgment in British Newspaper Printing Corporation (North) Ltd v Kelly [1989] IRLR 222 and Selkent Bus Co Ltd v Moore [1996] ICR 836, both of which cases approve and follow the test laid down by the National Industrial Relations Court in Cocking v Sandhurst Ltd [1974] ICR 650, namely, in determining whether or not to grant leave to amend what are the relative hardships to the parties if leave to amend is or is not granted.  It is pointed out in the cases that there is no statutory time limit on leave to amend.

	Thus, the Industrial Tribunal may take into account, as one of the relevant circumstances, whether the proposed amendment raises a new cause of action out of time, and if so, whether time should be extended under the proviso (here, contained in Section 23(4) of the 1996 Act).

	The Chairman in this case considered that question and decided not to extend time.  However, he does not appear to have gone further to weigh the relative hardship of refusing the amendment.  In failing to carry out that exercise he did, in our judgment, fall into error.

	We have been invited, having identified an error of law, to exercise our own discretion on the question of amendment under our powers contained in Section 35 of the Industrial Tribunals Act 1996, in circumstances where we think it inappropriate to remit the matter to the same Chairman.  In our judgment the hardship goes all one way.  If the amendment is refused the Appellant will be prevented from pursuing a claim, accepted by the Respondent as well-founded in principle, which at the most is some three to four days out of time.  If the amendment was refused, the Appellant could prosecute the same claim before the County Court.  We can see no hardship to the Respondent, which would in those circumstances be faced with precisely the same claim in a different forum.

	In these circumstances we shall allow the amendment, limited to the alternative claim for one half month’s sick pay.  Accordingly, the proposed amendment which we set out earlier, under the heading “Arrears of salary” will be allowed, subject to the deletion of the following words.  “The Respondent has reduced the Applicant’s back pay to half salary from 25 December 1995 on the grounds that he was sick.  The Applicant was absent from work through suspension and then dismissal which was wrongful.  He contends that he ought to receive full pay throughout this period”.  We shall also delete the words “In any case” and “in the alternative” and finally delete the words “even if the Respondent is correct in paying half salary for some of that period, which is denied”.  Otherwise, the form of amendment proposed and set out earlier in this judgment will stand.

	To this extent only the appeal will be allowed, and the case will be remitted to a fresh Industrial Tribunal to determine the amended claim for unlawful deduction from wages.