Appeal No.	 EAT/144/01

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 11 March 2002
Judgment delivered on 19 April 2002

Before
HIS HONOUR JUDGE PETER CLARK
MRS D M PALMER
MR H SINGH

FORBOUYS LTD	APPELLANT

MRS M E RICH	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR ADRIAN CRAWFORD
(Solicitor)
DMH Solicitors
40 High Street
Crawley
West Sussex
RH10 1BW	
For the Respondent	MR NICHOLAS TOMS
(of Counsel)
Instructed By:
The Legal Dept
USDAW
Oakley
188 Wilmslow Road
Fallowfield
Manchester M14 6LJ	

JUDGE PETER CLARK:

1	By an originating application presented to the London South Employment Tribunal on 23 February 2000 the applicant, Mrs Rich, complained of (1) breach of contract (2) unlawful deductions from wages (3) breach of the Working Time Directive and (4) breach of the minimum wage legislation, naming as respondent her former employer, Forbouys Ltd.

2	The claims were resisted by the respondent, which counter-claimed for the costs of personal international calls made by the applicant using the respondent’s telephone, put at £363.

3	The matter came before a tribunal chaired by Mr John Warren on 11 September 2000.  Following deliberations in Chambers on 6 December 2000 the tribunal promulgated its reserved decision with extended reasons on 11 December.  For present purposes the relevant findings of the tribunal were that:

(1)	the applicant’s claim for unlawful deductions from wages in respect of unpaid overtime succeeded, as did

(2)	the respondent’s counter-claim in respect of the cost of the applicant’s private telephone calls to South Africa.

4	Quantification of both successful claim and counter-claim was put over for a remedies hearing, failing agreement between the parties.

5	Against the unlawful deduction finding the respondent now appeals; against the finding on the counter-claim the applicant cross-appeals.

Factual background

6	The applicant, who hails from South Africa, commenced employment with the respondent as a trainee manager on 5 June 1998 at a salary of £12,000 per annum gross.  That figure did not alter during her employment.  On 31 July 1998 she was appointed manager of their Hanley Lane branch and on 17 September 1998 she was transferred to their Guildford branch as manager.  The respondent provided the applicant with rent free living accommodation.

7	The express terms of her contract of employment as manager of the Guildford branch were, it is common ground, evidenced by an unsigned Agreement dated 17 September 1998 which provided, among other things:

By clause 3:  “The hours the Manager is required to work are such times including Sundays as may be necessary to ensure the efficient conduct of the business of said branch within the trading parameters of the business …”

By clause 5:  “The remuneration of the Manager shall be in accordance with the rates and terms set out by letter on branch appointment.  Overtime rates shall be payable only if the overtime is specifically authorised in writing by the Company or its authorised Representatives.  25% of said remuneration shall be deemed to be in respect of Sunday working.”

8	On 1 October 1998 the Working Time Regulations 1998 (WTR), implementing the Working Time Directive, came into force.

9	Immediately prior to that date, on 26 September 1998, the respondent issued a briefing document relating to WTR, requiring branch managers to keep a record of hours worked above or below the targeted hours for staff.  A manager’s targeted hours were 42 hours per week.

10	Between October 1998 and October 1999, the tribunal found, the applicant worked a total of 1725 hours in excess of her targeted 42 hour week.

11	On 15 November 1999 the applicant’s Area Manager, Chris Drew, wrote to her, noting that she continued to exceed her scheduled weekly hours on a regular basis; that there was no operational reason to exceed those hours and that if there was not an immediate reduction in her working hours that may force the Company to take the view that she lacked management or organisational skills.  She was required to adhere to her scheduled hours, “otherwise the Company may have to consider taking action against you”.

12	On 6 January 2000 the applicant gave one month’s written notice of resignation.  She cited as her reasons for leaving, in summary:

1  Absence of cover, so that she had had no leave since May 1998.

2  She was not prepared to work a 13 hour day.

3  She was expected to pay £160 for her phone calls, which she felt was insulting after all the hours she worked overtime without a “thank you” or compensation.

4  The failure to provide her with free accommodation prior to October 1998.

The Tribunal Decision

13	(1)  The overtime claim

The tribunal found that the respondent was well aware of the long hours worked by the applicant, and that Mr Drew’s letter of 15 November 1999 was “paying lip service to the position – they were content that the applicant should work the hours so as to keep their shop open”.

They found that the applicant was not excluded from the protection of WTR by the provisions of regulation 20 and went on to find that she should be given extra remuneration for all hours which she worked in excess of 48 hours a week.

(2)  The counter-claim

At paragraph 3 of their reasons the tribunal identify the dispute between the parties as follows:

“3  The Respondent counterclaims the sum of £363 for reimbursement of the cost of personal phone calls made by the Applicant to South Africa.  The Applicant denies she is liable for such amount arguing that she was given permission to make such calls.”

At paragraph 9(o) they found:

“The Applicant had been given permission to phone South Africa using the Respondent’s phone – the Applicant assumed that meant that the Respondent would be liable for the costs, there was no discussion as to costs.”

At paragraph 18 they express their finding on this part of the case thus:

“18  The Respondent’s counterclaim succeeds in principle.  It was not reasonable for the Applicant to assume the cost of overseas calls would be met by the Respondent.  We did not deal with the claim in detail, it may or may not amount to £347.86.  Such sum as is agreed can be taken into account when dealing with the other matters.”

The Appeal

14	The starting point, it seems to us, is what was the express term of the contract as to overtime payments.  Clause 5 is clear; overtime rates were payable only if the overtime was specifically authorised in writing.  There was no evidence before the tribunal that such written authorisation was ever given; on the contrary, the only documentation pointed in the opposite direction.

15	Is the position affected by the provisions of WTR?  In our judgment it is not.

16	Regulation 4(1) provides that absent the worker’s agreement to work more than 48 hours per week (no such consent having been given by the applicant in this case) a worker’s working time including overtime shall not exceed an average of 48 hours for each 7 day period.

17	There has been a good deal of argument, both here and below, as to whether the applicant was excluded from the protection of regulation 4(1) by the provisions of regulation 20.  It is unnecessary for us to decide that point.  Even assuming that she is entitled to rely on regulation 4(1) it does not assist her in her overtime claim, whether by way of unlawful deduction or breach of contract because:

(1)	regulation 4(1) says nothing about a worker’s entitlement to overtime payments

(2)	assuming that the respondent breached regulation 4 by requiring the applicant to work in excess of 48 hours per week and thereby was in breach of a statutorily implied term of the contract, such breach does not sound in damages and cannot form the basis for an unlawful deduction claim under section 13(3) Employment Rights Act 1996 (ERA).  Our reasons for so concluding are as follows:

(a)	the enforcement machinery provided for in WTR does not extend to a right to compensation for breach of regulation 4 per se.  Regulation 30(1) lists those breaches of specific provisions leading to an order for the payment of compensation.  Regulation 4 is not included in the list 

(b)	there is no claim here, either under section 45A ERA (inserted by regulation 31 WTR), action short of dismissal, or under section 101A ERA (inserted by regulation 32 WTR), unfair dismissal.

(c)	the position is analogous to that in Scally v Southern Health and Social Services Board [1991] IRLR 522, a case in the House of Lords cited by Gage J on the civil remedies available for breach of regulation 4 WTR in Barber v RJB Mining (UK) Ltd [1999] IRLR 308.  In Scally a question arose as to whether a breach by an employer of the duty imposed on him by section 4 of the Contracts of Employment and Redundancy Payments Act (Northern Ireland) 1965, in identical terms to what is now section 1 ERA, gave rise to a civil right of action sounding in damages.  The House of Lords held that it did not.  In Barber, Gage J held that a breach of regulation 4 gave rise to civil relief by way of a declaration.  No claim for damages was advanced in that case.  Injunctive relief was refused on ordinary principles.

(d)	it is important to appreciate the purpose of regulation 4 and the underlying Directive.  It is to protect the health and safety of workers.  The remedies for non-compliance are contained within sections 45A and 101A ERA.  Significantly, whilst the right to annual leave under regulation 13 may now be enforced under regulation 30(1)(a)(i) (by amendment affected by SI 2001/3256, from 25 October 2001) and regulation 14 provides for pay in lieu of untaken leave following termination of the employment, no such equivalent remedies are provided in relation to breach of regulation 4.

18	It follows, in our judgment, that the tribunal erred in finding that the applicant was legally entitled to overtime payments (see New Century Cleaning Co Ltd v Church [2000] IRLR 27), such that a failure by the respondent to make such payments amounted to an unlawful deduction from wages.

19	Consequently the appeal succeeds.  The tribunal’s declaration as to unlawful deduction in respect of overtime payments is set aside.  

The Cross Appeal

20	Mr Toms submits that the tribunal decision as to the counter-claim is flawed in that there is no finding as to any relevant contractual term entitling the respondent to recover the costs of overseas telephone calls; alternatively the tribunal has approached the case by deciding what is reasonable, not by reference to the relevant implied term of the contract.

21	Mr Crawford’s response is that the point now raised as to whether the tribunal had jurisdiction to consider this claim under the Extension of Jurisdiction Order 1994 was not taken below and ought not to be allowed for the first time on appeal.  See Glennie v Independent Magazines (UK) Ltd [1999] IRLR 719, and cases there cited.  Further, the tribunal was entitled to and did conclude that there was to be implied into the contract a term that if the applicant used the respondent’s telephone, with permission, for overseas calls she was to reimburse the costs of those calls.

22	In our judgment there is no indication that this tribunal approached the issue strictly as being one of contract.  They simply decided it on what they thought was a reasonable approach.  That is not correct.  The case must be remitted to a fresh tribunal for determination of the question what was the implied term of the contract of employment, if any, as to payment for overseas calls, given that permission to make such calls was granted by the respondent, applying the traditional “officious bystander” test.  The Moorcock [1889] 14 PD 64.

23	Accordingly the cross appeal is also allowed and the counter-claim remitted to a fresh tribunal for rehearing.