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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Whitmore v Inland Revenue [2003] UKEAT 0727_02_0104 (1 April 2003) URL: http://www.bailii.org/uk/cases/UKEAT/2003/0727_02_0104.html Cite as: [2003] UKEAT 727_2_104, [2003] UKEAT 0727_02_0104

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APPEARANCES

 

For the Appellant	MISS DAPHNE ROMNEY (of Counsel) (Free Representation Unit)
For the Respondent	MS WENDY OUTHWAITE (of Counsel) Instructed By: The Commissioners of Inland Revenue Solicitors Office Somerset House London WC2R 1LB


 


JUDGE J BURKE QC:

1. Mrs Whitmore was employed by the Inland Revenue as a typist from 1990. In that post she was entitled to be paid, in addition to her basic salary, typing proficiency payments, if she carried out typing to or achieved in other respects a particular standard. Unfortunately, she developed physical systems in her neck and arm and hand and also depression which symptoms were either caused or exacerbated by her work; for present purposes it does not matter which. As a result she was off work for substantial periods from 1995.
2. The Inland Revenue concluded that, as a result of her condition, she could no longer type or at least carry out typing duties to the required standard; and in 1997 she was transferred to a different post as a Revenue assistant. In her new position she was no longer paid the typing proficiency payments which she claimed that she would have received had she remained in her original position. It is clear from a letter written by the Inland Revenue to Mrs Whitmore on 29 March 1999 that, under the Inland Revenue's procedures, a typist moved compulsorily to clerical duties (and it was to clerical duties that Mrs Whitmore was moved) would retain the typing proficiency payments which she had received before her move, but that a voluntary move from typing to clerical duties would result in the loss of such payments.
3. It has been accepted by Mrs Outhwaite, who has appeared before us on behalf of the Inland Revenue, that the entitlement of a typist who had been compulsorily moved to clerical duties to a continuation of the typing proficiency payments would be contractual.
4. Mrs Whitmore believed that she had been compulsorily transferred to her new post and complained that she should have had, but was no longer receiving, the typing proficiency payments from the date of her transfer.
5. The Inland Revenue operated a scheme, pursuant to which compensation was payable on a "no fault" basis, to employees who suffered from certain work-related disorders, including disorders of the type experienced by Mrs Whitmore. Through her trade union she made a claim for compensation under that scheme. She was represented in that claim by well known solicitors; and her claim was settled under the scheme for a payment in the region of £8,000, which payment included sums in respect of loss of salary and future pension rights.
6. However, Mrs Whitmore asserted that that settlement had not included her claim in respect of typing proficiency payments and that she continued to be entitled to but was not receiving those payments. In their letter of 29 March 1999, to which we have already referred, the Inland Revenue said that Mrs Whitmore's change of post was voluntary and that, therefore, she was not entitled to any such payments after that change. They went on to say that, in any event, the settlement of her claim included compensation in respect of any such payments. Mrs Whitmore did not accept this response and continued to assert that she should be receiving the typing proficiency payments but was not receiving them. Her symptoms alas returned or became worse. She was again off work for a lengthy period; and she was eventually granted ill-health retirement with effect from the beginning of May 2001.
7. On 27 March 2001 Mrs Whitmore presented an Originating Application to the Employment Tribunal in which she set out, in box 1, page 1 of form IT1, in answer to the question "1. Please give the type of complaint you want the tribunal to decide", the words "breach of contract". In box 11, which asked her to give details of her complaint, she said that the typing proficiency payments had not been paid to her, as she believed they should have been, from the date of her transfer in 1997, that she disputed the Inland Revenue's assertion that her change of position was voluntary and that that change was not voluntary but had occurred under duress. In an annexed document headed "Synopsis", she gave more details of her assertion that the change of post was not voluntary and asserted that the compensation figure was, as she had said in correspondence and, indeed, as she said she understood from her solicitors, exclusive of her outstanding claim for the typing proficiency payments.
8. The Inland Revenue in their Notice of Appearance, entirely appropriately, set out their response to the claim in considerable detail. They put forward a detailed history of Mrs Whitmore's symptoms and of what led to her change of her position which they maintained was a voluntary change. In a letter to the Tribunal dated 23 November 2001, the Inland Revenue solicitors sought to amend their Notice of Appearance by adding an assertion that the compensation payment included an element in respect of the typing proficiency payments and that there had therefore been accord and satisfaction in respect of Mrs Whitmore's claim. Whether the Tribunal ever formally permitted that amendment is not clear; but for present purposes it does not matter.
9. The Tribunal did not however, proceed to a hearing of Mrs Whitmore's claim on its merits. When the claim came before the Tribunal, sitting in Birmingham and chaired by Mr Goodier on 13 May 2002, the parties were prepared for a full hearing; but the Chairman took the point that Mrs Whitmore's claim was put forward as a breach of contract claim in respect of which the Tribunal only had jurisdiction pursuant to Article 7(a) of the Employment Tribunal Extension of Jurisdiction (England and Wales) Order 1994 if the application had been presented within the period of three months beginning with the effective date of termination of the contract of employment giving rise to the claim. Because Mrs Whitmore's Originating Application was presented on 27 March 2001, but her employment did not end until 1 May 2001, the Tribunal concluded, following the decision of the Court of Appeal in Capek v Lincolnshire County Council, which was already reported at the time in [2000] IRLR 590, but which the Tribunal only had, in an excerpt from the Times, that the Tribunal had no jurisdiction to entertain Mrs Whitmore's application which was premature and therefore had no alternative but to dismiss it. We should say that we have not seen the Times report of Capek and do not know how correct a picture of the full decision it presented.
10. The Tribunal said in their Decision, at paragraph 3, that they had considered whether the complaint could properly have been viewed as being one under Part II of the Employment Rights Act 1996, in effect a claim for what is called in employment law circles wrongful deduction, but concluded that, to use their words, "It was plainly and unambiguously expressed as being for breach of contract alone".
11. Mrs Whitmore now appeals against that decision of the Tribunal. She also applied for a review of that decision; and the Tribunal heard her application on an inter partes basis on 16 September 2002. On that occasion the Tribunal rejected the application for a review, substantially for the same reasons as those put forward in their original Decision, although their reasons were more expansively set out.
12. The present appeal is, however, an appeal against the Tribunal's original decision and not an appeal against the rejection of Mrs Whitmore's application for a review. Despite that, we have been taken by both Ms Romney of Counsel, instructed by the FRU on behalf of Mrs Whitmore, and by Mrs Outhwaite of Counsel on behalf of the Inland Revenue, to the decision on review which we are told we can legitimately look at but are not obliged to look at.
13. Section 13(1) of the Employment Rights Act 1996 provides as follows:

"(1) 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 ... "

Section 23(1)(a) of the Act provides:

"(1) A worker may present a complaint to an employment tribunal-

(a) that his employer has made a deduction from his wages in contravention of section 13."

Section 23(2) provides:

"(2) An employment tribunal shall not consider a complaint under this section unless it is presented before the end of the period of three months beginning with-

(a) in the case of a complaint relating to a deduction by the employer, the date of payment of the wages from which the deduction was made ... "

And subsection (3) provides:

"(3) Where a complaint is brought under this section in respect of-

(a) a series of deductions or payments ... "

the references in subsection (2) to the deduction or payment are to the last deduction or payment in the series or to the last of the payments so received."

14. If Mrs Whitmore's claim was a claim in respect of wrongful deduction under Part II of the Employment Rights Act, it was at least plainly arguable that it related to a series of such deductions and therefore that her claim was in time, because it was presented before the end of the period of three months beginning with the last deduction which, on the face of it, would have been on 1 May 2001, the date on which her employment finally came to an end; and it has not been suggested before us today that there is any jurisdictional difficulty or difficulty arising out of a time bar in the way of Mrs Whitmore, if she has ever made a complaint under Part II of the Employment Rights Act.
15. It would, therefore, have been open to the Tribunal to find that they had jurisdiction in respect of a claim under Part II of the Employment Rights Act, if such a claim was before them. However, they came to the contrary conclusion that the claim which was before them could not be viewed as constituting or including a claim under that Part of the 1996 Act.
16. Ms Romney puts Mrs Whitmore's appeal against that conclusion forward on two separate grounds. The first ground is that the Tribunal erred in treating this claim as one which was not, or did not include, a claim for wrongful deduction. Alternatively, Ms Romney submits that the Tribunal erred in not permitting Mrs Whitmore to amend her Originating Application so as to include such a claim. We have only heard argument on the first of those two grounds.
17. In Capek v Lincolnshire County Council, (see above) the Employment Tribunal in that case, taking the jurisdiction point of its own motion, rejected the employee's claim that the employers had failed to pay full salary during a period of suspension, and arrears allegedly due as a result of the employer's failure to carry out a re-grading evaluation, on the same basis as that put forward by the Tribunal in the present case, that is to say, that the claim was presented prematurely before the termination of the relevant contract of employment and, therefore, the Tribunal was without jurisdiction by reason of the terms of Article 7(a) of the 1994 Order.
18. The Employment Appeal Tribunal allowed Mr Capek's appeal; but the Court of Appeal held the Tribunal's decision on that issue had been correct. Mummery LJ, with whom Laws and Pill LJJ agreed, firstly, at paragraphs 31 to 45 of his judgment, rejected the reasons given by the Employment Appeal Tribunal for allowing Mr Capek's appeal on the basis that those reasons involved an approach to the construction and application of Article 7(a) which did not find favour with the Court of Appeal; and those reasons are not put forward in support of Mrs Whitmore's case before us. At paragraph 34, Mummery LJ described that result as "not a satisfactory state of affairs" which meant that Mr Capek could only pursue his claim in the County Court, particularly because the premature presentation of the complaint had not in any way prejudiced the employers. However, having thus allowed the employer's appeal against the EAT's decision on the Article 7(a) issue, the Court of Appeal went on to consider Mr Capek's cross-appeal, pursuant to which he argued that his claim fell within Part II of the Employment Rights Act, and concluded that the Tribunal had not properly considered whether Mr Capek's breach of contract claims were in substance claims which the Tribunal had jurisdiction to entertain under that part of the 1996 Act. At paragraph 50, Mummery LJ said:

"In my judgment, this point was not adequately considered by the employment tribunal. In the extended reasons of 10 October 1994 the tribunal rejected Mr Capek's fresh application to add a Wages Act claim to his five existing applications (see paragraph 1 of the extended reasons). But the possibility that his existing breach of contract claims were in substance claims which the tribunal had jurisdiction to entertain under the Wages Act was not considered. Not surprisingly in view of the way in which Mr Capek himself described his claims, the tribunal treated his characterisation of all the relevant complaints as related to breaches of contract, without considering whether the breaches of contract were of a kind which involved unauthorised deductions from wages which it had jurisdiction to entertain."

In paragraph 51, the judgment continued:

"Having rejected jurisdiction under the 1994 Order, save in respect of an unsuccessful claim for payment of an office allowance made in the application presented in time on 24 July 1995, the tribunal ought to have considered whether it had jurisdiction under the Wages Act. I do not criticise the tribunal for not having done so. Mr Capek was conducting his case in person. He was unable to give as much assistance to the tribunal as a legal representative would probably have been able to give. The fact is, however, that this aspect of the case has not been properly investigated. Mr Capek raised the point as Ground No. 2 in his appeal to the Employment Appeal Tribunal, but the appeal tribunal was in his favour on the 1994 Order issue, so that this ground was only dealt with briefly and was not as fully explored in argument as it would have been if a contrary conclusion had been reached on the 1994 Order. ... As I am of the view that the council is correct on the 1994 Order, it is now necessary for the employment tribunal to investigate the factual and legal position as to alleged deductions from wages.

I would therefore give permission for and allow Mr Capek's cross-appeal on this point and remit this aspect of his claim for investigation and consideration by the tribunal."

19. It is necessary, before moving on to the present case, to refer to paragraph 48 of Mummery LJ's judgment in which he explained the nature of a deduction from wages or a wrongful deduction claim in these terms:

"A 'deduction' from wages occurs when the worker is paid on any occasion less by his employer than the total amount of wages 'properly payable' by the employer to the worker on that occasion: s.8(3) Wages Act 1986, now s.13(3) of the 1996 Act. The amount of the deficiency is treated as a deduction made by the employer from the worker's wages on that occasion. A worker may present a complaint to the tribunal that his employer has made a deduction from his wages in contravention of s.1(1), now s.13(1) of the 1996 Act. The resolution of the issue of what is 'properly payable' may involve a decision by the tribunal on the contractual rights and duties of the parties to a contract of employment affecting entitlement to wages such as entitlement to overtime or to regrading. Non-payment of wages properly payable by the employer may be a breach of contract which the tribunal has jurisdiction to entertain independently of the jurisdiction conferred by the 1994 Order."

That paragraph appears to us to reproduce what the Court of Appeal had earlier said in Delaney v Staples [1991] IRLR 112, in a passage which is not affected by the subsequent decision of the House of Lords in that case on other issues.

20. Mrs Outhwaite has referred us to a further decision of the Employment Appeal Tribunal in Miller Bros & F P Butler Ltd v Johnston [2002] ICR 744, in which the employee made a claim under the 1994 Order in respect of a sum which the employers had agreed to pay to him after his employment had ended. A jurisdiction point thus arose which was decided in the employee's favour, the Employment Appeal Tribunal allowed the employers appeal. The decision of the Employment Appeal Tribunal on the relevant words of Article 3(c) of the 1994 Order appears to us to have been one which plainly and obviously had to be reached, as it was. At paragraph 26, the EAT said:

"Further, Mr Moore pointed out that the jurisdiction of the employment tribunal in matters of contract was plainly both limited, and intended by Parliament to be so limited. Only a restricted range of contractual claims fall within its jurisdiction. Not only is there no persuasive reason to regard the legislative purpose, identified in Capek, as requiring a more generous interpretation of the vital phrase in this case, but, if anything, the reverse is the case. Jurisdiction in contract is in any event shared by the county court or High Court. The width of the jurisdiction does not exclude any party from his or her rights. Where there is a general absence of jurisdiction in a particular body, and such jurisdiction as there is is conferred only to avoid the inconvenience of the duality of proceedings in cases where it naturally arises, there is more good reason for a restrictive than there is for a liberal interpretation of the provision conferring that jurisdiction."

We agree entirely with what the Employment Appeal Tribunal said in that paragraph, and we agree that one must not strive to find jurisdiction by an artifice where such jurisdiction does not exist.

21. Ms Romney submitted that in this case the Tribunal had erred in concluding that Mrs Whitmore's claim, as set out in her Originating Application, could not properly be viewed as including a wrongful deduction claim. She contended that, although in box 1 Mrs Whitmore used the words "breach of contract", when she set out the details of her complaint, in box 11 and in the attached synopsis, she made it clear that she was identifying, as a failure to pay wages on the part of the Inland Revenue, their failure to pay typing proficiency payments from January 1997, that she regarded these payments as part of her contractual entitlement, that she had been compulsorily moved from her position as typist to that of Revenue assistant and that she should have been paid, but had not been paid those payments which she claimed and that she was putting forward the failure to pay the typing proficiency payments as a failure on the part of the employers, the Inland Revenue, to provide to her payments which were due to her.
22. It is significant, in our judgment, that the Inland Revenue concede that, if Mrs Whitmore had been compulsorily transferred, she would have had a contractual entitlement to those payments, as they must, of course, appreciated when they saw her Originating Application. While Ms Romney accepts that the nature of an employer's response to an Originating Application cannot of itself change the nature of the Originating Application; but the way in which an employer responds to an Originating Application may indicate how the employers at least saw the thrust of the complaint made against them; and Ms Romney submits that in their Notice of Appearance the Inland Revenue responded directly to the central thrust of Mrs Whitmore's complaint, namely that she had been compulsorily transferred from one post to another, by setting out in considerable detail the facts on which they based their case that she had not been compulsorily transferred but had voluntarily transferred.
23. Ms Romney submits that the Tribunal erred in coming to the conclusion that they did in that either they concentrated too much on the label attached to the claim in box 1, albeit that they disclaimed doing so or, as indicated in paragraph 11 of the extended reasons for their decision on the review, in that they applied the test of what a lawyer would see the claim as being or (although she did not put it this way in words, in effect she put it this way) they were simply plainly wrong, because on any sensible approach to the words of the Originating Application, it was clear that the complaint included a complaint that Mrs Whitmore was entitled under her contract to be paid the payments which she claimed.
24. Mrs Outhwaite accepts, as Ms Romney had pointed out, that there is an overlap between breach of contract claims and unlawful deduction claims and that many claims will consist of both. She submits, however, that the two causes of action are not identical and, Parliament having created different jurisdictional rules in respect of the two causes of action, care must be taken to acknowledge and give effect to the difference between them and to avoid, in order to circumvent problems such as those in which Mrs Whitmore finds herself, a solution which might be pragmatic but which would be wrong in law, pursuant to which all claims of breach of contract are treated as wrongful deduction claims and the purpose and affect of the jurisdictional restrictions contained within the 1994 Order would thus be negated. She submits that, while many breach of contract claims may also amount to wrongful deduction claims, many are not capable of being wrongful deduction claims.
25. We agree with Mrs Outhwaite's submissions in general terms. We accept that the two causes of action or heads of claim are different and that there may be many situations in which a breach of contract claim could not, on any view, be said to be also a wrongful deduction claim. One example might be a claim that, because an employer had failed to carry out a re-grading exercise which on the employee's case would or could have resulted in his being entitled to a greater remuneration, the employee had not received what, had there been no breach of contract he would have received. Such a claim would appear to be only capable of being put as a claim for damages for breach of contract. There could be no claim in debt in those circumstances. Many other examples can be easily imagined.
26. However, in cases in which the employee asserts that he or she should have been paid monies to which he or she was contractually entitled, the claim can be put both in debt as a claim for monies due, ie because those monies due had not been paid that has been a wrongful deduction, or series of deductions and in damages as monies lost by reason of the employer's breach of contract in failing to pay, ie a claim there has been a breach or series of breaches of contract falling within the 1994 Order.
27. Mrs Outhwaite submits that here, in effect, Mrs Whitmore's claim was that she was forced into her transfer (which, of course, the Inland Revenue hotly dispute) and as a result she lost the disputed payments and that that is a breach of contract claim and nothing else. We respectfully disagree. While in this case, unlike the Tribunal in Capek, the Tribunal did expressly consider whether there was an alternative claim under Part II of the Employment Rights Act 1996, the Tribunal in our judgment came to a conclusion which was plainly wrong in law. Any fair reading of Mrs Whitmore's Originating Application, when one reads it as a whole including the synopsis, can only tell the reader, or at least a reader who knows the interstices of employment law and understands the dynamics that pass between an employer and employee, that Mrs Whitmore was asserting that she was contractually entitled to the payments which she sought but had not received.
28. The question which the Tribunal needed to pose and to answer was "Is this in substance a claim, not only for breach of contract but also a claim for unlawful deduction of wages"? Had the Tribunal properly directed itself to the answer to that question it could only, in our judgment, have answered in the affirmative. The reason for the Tribunal's error is not readily ascertainable. It may be that they concentrated too much on the label; it may be that they applied a wrong test. Perhaps they simply took a view of the content and effect of the Originating Application which was not one which coincided with the reality of the words that that document contains. We must be careful, particularly since it is possible that the Tribunal's decision in this respect was one of fact, not to intervene merely because we disagree with the conclusion expressed by the Tribunal. But insofar as it was a decision on fact, we have no doubt that they came to a conclusion which no reasonable Tribunal could reach. If it was a conclusion as to law, we have no doubt that they misdirected themselves and came to a conclusion which was wrong. Either way, we are plainly of the view that the claim here did contain a claim for wrongful deduction and that the Tribunal erred in law in dismissing Mrs Whitmore's claim on the basis that it consisted only of a claim under the 1994 Order, as to which admittedly there was no jurisdiction.
29. Accordingly, we allow this appeal. We have not heard the parties on what the appropriate course is but it seems to us, unless we are diverted from this course by further argument, that the proper course is to remit Mrs Whitmore's claim for hearing as a claim under Part II of the Employment Rights Act 1996 to a differently constituted tribunal.