Appeal No.	 EAT/511/00

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 4 October 2000

Before
THE HONOURABLE MR JUSTICE LINDSAY (PRESIDENT) 
MR P A L PARKER CBE
MR S M SPRINGER MBE

AUTOHOUSE TOTTENHAM LTD	APPELLANT

MR Y CONSTANTINOU	RESPONDENT

Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING

Revised

	APPEARANCES

For the Appellant	MR K P KYRIACOU
(of Counsel)	

MR JUSTICE LINDSAY (THE PRESIDENT)

1.	We have before us by way of a preliminary hearing the appeal of Autohouse Tottenham Ltd in the matter Autohouse Tottenham Ltd v Constantinou.  Today Mr Kyriacou has appeared in the matter on behalf of the Appellant, Autohouse.  It is necessary to say a little as to the background.

2.	On 29 November of last year Mr Constantinou lodged his IT1 claiming unpaid wages and holiday pay and his complaint was as to the period from 1 September - 12 November 1999.  In his IT1 under Heading 11, where it says: “Please give details of your complaint, he begins by saying: 

“My employer got into financial difficulties and asked us to work without pay.  This period lasted from  September 1st until I could no longer continue with this arrangement.  It was mutually agreed that I leave on November 12th in order to seek paid employment or benefits in order to secure the financial welfare of my wife and children….”

3.	That was opposed by an IT3 on 18 December 1999 and the Company’s case was also one recognising that the Company had got into severe financial difficulties.  In paragraph 7 of the IT3 it says:

“Everyone was told clearly that to stay on was a gamble on their behalf.  No guarantee of any future payment was given or implied.  
The only way for the firm to survive was to cut its expenses until the work came in and the losses incurred were reduced. I have every sympathy with Mr Constantinou’s plight but he was told the facts from the beginning.  It was his decision to stay on without pay.  If we thought that he would try and claim back pay at a later date, he would have been given his P45 immediately.  We did not want to run up any future liability”

 and there was mentioned that the firm having experienced severe financial difficulties.  

5.	Then on 24 February of this year there was a hearing at the Employment Tribunal with a 3 person panel and the decision was sent to the parties on 10 March.  It was the unanimous decision that the Respondent had made unauthorised deduction from the Applicant’s wages and the Respondents was ordered to pay the sum of £4,055 in respect of those deductions.

6.	On 21 April the Company, Autohouse, lodged a notice lodged a Notice of Appeal.  The findings of fact on the Tribunal’s behalf include these in Paragraph 5.  

“The Respondent Company got into financial difficulties and on 1 September 1999 Mr Ellinas [the director of the company] called for a meeting with his workforce at which he apologised for the fact that the Company were in financial difficulties and that some staff had not received their pay from the bank for August.”  

A little later in Paragraph 6:

“Mr Ellinas indicated that those of his employees who would remain loyal to the company and stay on through this time of financial need would receive reimbursement for their loss when times improved.”

Again, a little further down, it reads:

“ Mr Constantinou and others indicated that under the circumstances they would stay on.” 

In Paragraph 7:

“Although Mr Constantinou received his August salary in October, by 12 November he decided he could no longer continue to work for nothing and he decided that he would leave and he left on that day.”

7.	In argument, Mr Constantinou at the Tribunal argued a particular form of contract that itself suggested that the original agreement had been varied.  The original agreement is mentioned in Paragraph 4 as follows:
“Mr Constantinou commenced employment for the Respondent on 24 May 1999 as a repair estimator and it was agreed that his wages would be £420 a week.”

8.	Mr Constantinou’s argument suggested that that had been varied because he is recorded as arguing this (in the Tribunal’s Paragraph 9):

“Mr Constantinou argued that there had been an arrangement made that, although he would stay on and work for the Respondents after 1 September 1999, he would get paid whenever he decided to leave.”

That seems to be a variation of the basic agreement which suggests payment weekly rather than upon some event such as whenever he decided to leave.

9.	That particular form of contract as urged by Mr Constantinou was not accepted by the Tribunal.  They say “The Tribunal did not find that there was any agreement that payment of wages will be deferred until Mr Constantinou left.”  The Company’s alternative form of contract as argued for appears in Paragraph 10 where the Tribunal says this:

“Mr Ellinas, for the Respondent, submitted that Mr Constitanou had agreed to work for nothing and would only get paid if the company returned to profit and then by way of increase in wages.”

So, again, the argument was that the original contract had been departed from and it will be remembered that the IT1 itself tends to suggest an agreement to work without pay, at any rate for the time being.

10.	The Tribunal, in response to the Company’s argument, held this:
“As to the Respondents’ suggestion, although the Tribunal found that Mr Constantinou stayed on with the Respondents, the arrangement for payment of his wages was so uncertain that it would not be said that there had been an agreed variation in the contract of employment regarding payment of wages.  There was, therefore, no provision of the employment contract authorising a deduction from wages.”

11.	Unfortunately the Tribunal makes no findings as to what the arrangement for payment actually was nor in precisely what respects it was uncertain, nor in any detail why the arrangement failed to amount to a variation of the original contract, a point, of course, related to the fact that they do not describe in what respects it was uncertain. 

12.	The Courts often discourage reliance on the notion of uncertainty as a way of denying force to an arrangement otherwise made between parties.  One, of course, can not exclude uncertainty altogether but it is not encouraged to be relied upon and in dealings at an oral level between a worker and his employer where the employer is in financial difficulties and a conversation is held between a number of workers, one can perhaps tolerate uncertainty to a greater degree than one might, for example, in a professionally drawn conveyance or something of that nature.

13.	So the reliance upon uncertainty is unwelcome, at any rate without further explanation, and, beyond that, that last sentence of the passage we have just cited is unclear. The question whether the original agreement was varied is a different question to the question as to whether there had been an authorised deduction from wages.

14.	Moving forward, it is necessary for the purposes of argument, to distinguish between what one might call “ordinary” pay, accruing week by week, and as to the period from 1 September - 12 November 1999, on the one hand and “holiday pay” on the other hand.  Dealing first simply with ordinary pay, it would, we think, have to be accepted by the Appellant that if the agreed wages for the period 1 September 1999 - 12 November 1999 had been found still to be at the original rate of £420 a week, and if, therefore, £420 a week was properly payable to Mr Constantinou for that period then unless there had been shown to be a “relevant provision” within Section 13 to authorising a reduction therefrom, (and no such relevant provision was found) then £420 a week would have been payable.  However, Tribunal do not in terms find that the wages for that period should still has been £420 a week gross nor the lesser sum of £315 a week net.  They do not describe precisely what the arrangements were.  They say that the original contract was unvaried but then that, of course, depends on the uncertainty of the arrangement that they speak of, which, as we have mentioned before, is a thing that needs further explanation.

15.	There may here be an argument of law if only on Meek v City of Birmingham lines, the Tribunal does seem to find that there was some arrangement.  In order to find the arrangement was uncertain, they need to spell out in sufficient detail what it was and why it was uncertain in their view so that the losing party could assess whether there is any point law proper to take to an appeal, as the Meek v  City of Birmingham  case suggests. 

16.	So there may be an arguable point of law there that would justify the matter going forward as to ordinary pay for the period 1 September - 12 November 1999.  As to holiday pay the case needs to be divided between holiday pay already owing by the Company as at 1 September 1999 and the rest of the holiday pay.

17.	It seems to us that in respect of holiday pay already owing at 1 September 1999, there is no arguable point of law available to the Company and Mr Kyriacou accepts that in that respect there is no arguable case. So that we should not allow the case to go forward in respect of holiday period for the period down to 1 September 1999.  As to the rest of the holiday pay, the case is probably indistinguishable from the position as to ordinary pay that we have already mentioned as proper to go forward.  But there is a further point of difficulty that seems to justify the matter going further forward and that is this.  There is a passage in the homespun Notice of Appeal put in by the Company that says this at Paragraph 5:

“After finding that there was no case to answer on behalf of the Respondent of their own motion they [the Tribunal] adjourned the proceedings and on resuming applied S.13(b) of the 1996 Act without affording the Respondent sufficient notice and opportunity of addressing this point, and deprived the Respondent of the opportunity of calling a witness …”

namely an employee who had apparently been at the meeting at which it was alleged that a fresh arrangement was made that workers who accepted it should work for nothing for the time being.  He was apparently at the hearing ready to give evidence on the company’s behalf.

18.	This point Mr Kyriacou draws to our attention.  It is a point that needs to be investigated at the full hearing which, as we indicated we will permit.  It will be convenient if, even by then, the Chairman’s comments on this point and any evidence relating to it should be already available at the full hearing.

19.	So the proper course, as it seems to us, is that we should request that the Chairman provides notes of all evidence taken at the hearing and that he be also invited to comment on Paragraph 5 of the homespun Notice of Appeal and that should be done before the matter returns as a full hearing.  Chairman’s notes will be necessary not just as to the evidence, if any, touching Paragraph 5 of the Notice of Appeal but as to the issue of the arrangement made on or about 1 September 1999.  As the hearing was relatively short it will not be oppressive to ask the Chairman for notes of all evidence, which we thus do request. The full hearing as we have mentioned will only be on the issues that we have indicated may properly go forward, namely the issues excluding holiday pay already owing at 1 September 1999. Subject to any further points that Mr Kyriacou wishes to raise, that is the proposal that we make.