Appeal No.	 EAT/415/98

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On  1 May 1998

Before
HIS HONOUR JUDGE PETER CLARK
MRS R CHAPMAN
MR E HAMMOND OBE

MR P C STUBBINGS	APPELLANT

THE MINISTRY OF DEFENCE	RESPONDENT

Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING - EX PARTE

Revised

	APPEARANCES

For the Appellant	MR JOHN QUIGLEY
(Solicitor)
ELAAS	

	JUDGE PETER CLARK:	The question in this appeal is whether a Housing Allowance paid by the respondent to the appellant, an Inspector in the MOD Police, falls within the definition of “wages” under s. 27 of the Employment Rights Act 1996, so as to found the Industrial Tribunal’s jurisdiction to entertain the appellant’s complaint of unlawful deductions from his wages in respect of the amount of the allowance paid to him over past years of service.

	An Industrial Tribunal sitting at Plymouth on 6th January 1998 under the Chairmanship of Mr B E Walton held that the allowance was not within the statutory definition of wages and accordingly this head of complaint was dismissed. Against that decision, promulgated with extended reasons on 19th January 1998 the appellant now appeals.

	The factual position, as found by the Industrial Tribunal, was as follows.

	In the Civilian Police Force there was, for many years, the provision of accommodation in a police house. When no such free accommodation was provided sometimes there would be Local Authority accommodation which would be free of charge. In other cases, no doubt, the individual policeman had to find his own accommodation and incurred expenses. Accordingly it became an established practice that if no accommodation was provided there would be Rent Allowance or Housing Allowance in lieu.

	It seems that over the years members of the Police Force were encouraged to obtain their own accommodation in order to release Police houses and the expense of maintaining them. As the Police themselves became more mobile, the tribunal assumed that the requirement for living accommodation at the Police Station diminished. In these circumstances a Rent Allowance was paid when the individual officer actually paid rent and the Housing Allowance was paid in respect of the purchase of a property.

	A similar arrangement applied to the Ministry of Defence Police. Certainly when Mr Stubbings joined in about 1974.

	The tribunal found that the allowance was an amount calculated with regard to the rateable value, water rates and so forth, and was paid at a rate which varied according to the location. It was designated a discretionary payment but the tribunal was told that that was so as to give the Chief Constable, who exercised the discretion, a degree of leverage in encouraging Police officers to live within a reasonable travelling distance of their Permanent Station. In practice, it seems that the discretion was rarely exercised against an officer even when the officer lived up to 50 miles from his Permanent Station.

	The Housing Allowance is taxed by the Revenue as a benefit arising from employment, but is not included in pensionable pay. That suggested to the tribunal that it was regarded as something in addition to the ordinary remuneration of the officer. But the tribunal found that the officers regarded it as an essential part of their pay, and certainly it is regarded by Building Societies as income for the purpose of granting a mortgage.

	The tribunal found that the allowance was paid even if the officer was on long-term sick leave after his salary had been reduced to half rate or nil. It was only paid where there was a house being purchased or rent being paid. An officer living in the Section House, a Service Mess or an MOD Rent-free House was not entitled to claim the allowance.

	We were told today by Mr Stubbings that his permanent home is in Stafford where he was stationed from 1989 to 1993; since then he has moved his base on a number of occasions, first to Scotland, then to Bicester, then to Plymouth and finally to Portsmouth. In each of those locations he found accommodation and received the allowance appropriate to the particular area in which he was working.

	S. 27 of the 1996 Act provides, so far as is material:

	“(1) In this Part “wages”, in relation to a worker, means any sums payable to the worker in connection with his employment, including-
(a)	any fee, bonus, commission, holiday pay or other emolument referable to his employment, whether payable under his contract or otherwise.
	...
but excluding any payments within subsection (2).
	(2) Those payments are-
	...
(b)	any payment in respect of expenses incurred by the worker in carrying out his employment.”

The expression ‘expenses’ includes both ‘true’ expenses and expenses which contain an element of indirect remuneration. See London Borough of Southwark v O’Brien [1996] IRLR 420. For example, it would include reimbursement of actual hotel bills paid by an employee when away from home on his employer’s business, and a fixed rate lodging allowance where the actual cost to the employee is less than that flat rate allowance.

	In this case the tribunal reached the firm conclusion that the Housing Allowance paid to the appellant fell within the exception contained in s. 27(2)(b) of the Act; it was not wages; therefore the tribunal had no jurisdiction to entertain the appellant’s complaint of unlawful deductions in respect of sums paid by the respondent by way of that allowance.

	The appellant seeks to challenge that finding in law on the grounds set out in his Notice of Appeal. The case has been advanced on his behalf today by Mr Quigley who appears under the ELAAS pro bono scheme.

	The short point is that it is submitted that the Industrial Tribunal failed to consider properly or at all whether the Housing Allowance on the facts in this case could properly be said to be a payment in respect of expenses incurred by the worker in carrying out his employment.

	The Industrial Tribunal had no hesitation in finding that it did, and having considered the findings of fact, we see no reason to differ from that view. The background is that Police officers historically had been provided with accommodation for the better performance of their duties. Instead of such accommodation the time came when as an alternative officers were paid an allowance related to the cost of providing their own purchased or rented accommodation.

	In these circumstances it seems to us that this payment falls squarely within s. 27(2)(b). We can see no arguable error of law in the Industrial Tribunal’s approach. Accordingly the appeal must be dismissed at this stage.