Appeal No. UKEAT/0547/05/DZM

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 15 November 2005

Before
HIS HONOUR JUDGE McMULLEN QC
MR I EZEKIEL
MR D WELCH

J P GARRETT ELECTRICAL LTD	APPELLANT

CRAIG COTTON 	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR DUNCAN ROY
(of Counsel)
Instructed by:
Martin Cray & Co
Solicitors
177 Edward Street
Brighton
East Sussex BN2 0JB	
For the Respondent	MR P JONES
(Solicitor)
Messrs Richard Thorne & Co
6 Marlborough Place
Brighton
BN1 1UB

SUMMARY

National Minimum Wage

Employment Tribunal correctly construed the relevant clause in a contract of employment as entitling the Claimant to be paid at the rate of the NMW, albeit, as an apprentice, he was excluded from the statutory right.  Appellant had not produced evidence on appeal, as directed, to show a different conclusion.

HIS HONOUR JUDGE McMULLEN QC

1.	This case is about the construction of a contract regulating the rate of pay applicable to an apprentice in the electrical construction industry.  The Judgment represents the views of all three members.  We will refer to the parties as the Claimant and the Respondent.  

Introduction
2.	It is an appeal by the Respondent in those proceedings against the Judgment of an Employment Tribunal sitting at Brighton, Chairman Mr M J Daly, registered with Reasons on 25 November 2004, almost a year ago following a two day hearing.  The Claimant was represented by his father and the Respondent was represented by his wife, a director of the business.
  
3.	The Claimant made a number of claims as to which the tribunal’s Judgment was as follows:
“1.	The Claimant’s claim for unfair dismissal under the provisions of Section 104 of the Employment Rights Act 1996 is dismissed.  The reason or the principal reason for the Claimant’s dismissal being redundancy.  
2.	The Tribunal finds that there has been a shortfall in the payment of arrears of the National Minimum Wage and directs that there has therefore been an unlawful deduction from the Claimant’s wages contrary to the provisions of Section 13 of the Employment Act 1996 and orders that the Respondent shall pay to the Claimant the sum of £148.00p.
3.	The Tribunal finds that from the 1 February 2004 to 27 April 2004 the Claimant was contractually entitled to be paid in accordance with the National Minimum Wage 1988 rather than in accordance with the exception in respect of apprentices under Regulation 12(2) of the National Minimum Wage Regulations 1999.  It is declared therefore that there has been an unlawful deduction from the Claimants wages contrary to the provisions of Section 13 of the Employment Rights Act and it is ordered that the Respondent shall pay to the Claimant the sum of £674.05 in respect thereof.
4.	There will be no order as to costs”.

4.	The subject matter of today’s appeal is paragraph 3 above.  The case has had a very long procedural history (see Woodward v Abbey National Plc/ J P Garrett Electrical Limited v Cotton [2005] IRLR 782), the upshot of which was that the Respondent’s late lodging of a Notice of Appeal at the EAT against the Employment Tribunal Judgment was allowed to be validated pursuant to the exercise of discretion by a Burton J, sitting alone, on appeals from the Registrar.  The Respondent was at that time represented by different Counsel and today has the advantage to be represented by Mr Duncan Roy of Counsel.  The Claimant has not appeared nor did he appear in the proceedings on late presentation.

5.	The simple issue before the Tribunal was to determine what the rate of pay was of the Claimant between 1 February and 27 April 2004.  Following the validation of the Notice of Appeal, I gave directions sifting this case to a full hearing and I directed that the Respondent’s application to adduce fresh evidence would be accepted; and thus it is that we have more material before us than was before the Employment Tribunal.  As is clear from our recital of the Tribunal’s Judgment, the Claimant failed on his claim for unfair dismissal, succeeded on his first claim in relation to unlawful deductions as to which the sum of £148 was ordered to be paid, and succeeded on his claim relating to the National Minimum Wage.  

6.	The Claimant had been through a number of different contractual situations at the Respondent’s but it seems to be common ground that his work was regulated by a document which contained the words found by the Employment Tribunal to be the contract.  The document is headed “The Greater Brighton Construction Training Limited Modern Apprentice Terms and Conditions”.  At paragraph 4 there is this:
“4.	Your employer will agree with you your rate of pay which will not be less than that set down under the Minimum Wage Rate and advise you of the method of payment”.

7.	The question is: what was meant by this phrase, as to which there are two candidates.  Mr Roy contends that the rate of pay agreed between the parties as a matter of fact was £2.50.  The Claimant contended, and the Tribunal found, that it was that set out by the National Minimum Wage legislation and was in his case £3.80 an hour.  The document itself is incomplete.  It consists of seven paragraphs.  As a result of the successful application for additional material, another document headed “The Greater Brighton Construction Training Limited Employers’ Schedule” sets out the arrangements between the Respondent and the Claimant and the word “apprentice” appears frequently.  Here, there is mention of salaries for this is what is said:
“(u)	The Employer must comply with, at a minimum, the nationally agreed industry wage agreement and the Minimum Wage legislation”.
Again, that document is incomplete because it is a schedule to some other document which has not been produced. 

8.	The second document produced as additional material to us, and therefore the third said to regulate the relationship, again is incomplete for it begins at Section 2 and ends at Section 5 with signatures including those of the Claimant and the Respondent.  This is undoubtedly a reference to a programme called modern apprenticeship with training to start on 1 February 2004 and expected to complete in 2008.  There is no reference to the rate of pay.  

9.	The legislation which is relevant to this case is the National Minimum Wage Act 1998 Section 1 of which gives the right to the National Minimum Wage to those who are qualified and in this case it means a worker.  A set of obligations is imposed upon employers which go beyond the payment of the National Minimum Wage as in force at any time and includes the keeping of records, disclosure provisions and offences.  A Claimant may appear before an Employment Tribunal alleging that he or she has not been paid the National Minimum Wage and if so, there is reverse burden of proof, for Section 28(1) provides as follows:
“28. (1) Where in any civil proceedings any question arises as to whether an individual qualifies or qualified at any time for the national minimum wage, it shall be presumed that the individual qualifies or, as the case may be, qualified at that time for the national minimum wage unless the contrary is established”.

10.	Regulations may be made under the Act for effectively setting the minimum wage in force.  The Regulations in place at the relevant time were the 1999 Regulations and in Part 2 of the Act, entitled “The Rate of the National Minimum Wage, the Rate and Exclusions” there is Section 11, “The Rate of the National Minimum Wage: the single hourly rate of the National Minimum Wage is …” (at the relevant time in respect of a person of the Claimant’s age, 18)  £3.80.  Exclusion is provided under Regulation 12(2)(b) of apprentices.  The net effect is that the national coverage of the Act does not apply to the Claimant who is, we find, an apprentice at the relevant time.  But that says nothing about the rate of pay which is agreed between him and his employer during the course of the apprenticeship.  What is clear is that the Claimant cannot invoke, by complaint to the Employment Tribunal, the provisions of the Act but of course he has to be paid something.  In the only provision relating to pay, there is reference to the minimum wage rate.  We think it was deliberately set out that way with capital letters to point out that there was a relationship to the Act.  It is almost the same as the heading in Part 2. 

11.	Two submissions are made.  The first is that it means the National Minimum Wage rate applicable to an apprentice where, of course, the National Minimum Wage does not apply to an apprentice. The second is that we should add the word “applicable” after the word “rate”.  In our judgment, both of those submissions fail.  Given that the purpose of this document is to regulate the relationship between an employer and juveniles or young people entering upon a training relationship where a duty of care exists, it would be quite pointless to direct such an employee to a wage rate which did not exist.

12.	We can well understand the Claimant, seeking to understand what his rate of pay should be, going to the National Minimum Wage Act and to Regulations where he would find the rate of the National Minimum Wage.  The purpose of this clause is to give assurance to the apprentice as to what will be the minimum rate of pay in his case.  If Mr Roy’s construction were accepted, it would be to the effect that you will be paid not less than a rate of pay which does not exist.  That cannot be right.  The right of pay of an apprentice is not found in the National Minimum Wage Act.  The rate of pay of employees who are not apprentices is.  Essentially, what is being regulated here is a floor below which the rate set in the bilateral agreement between an employer and an apprentice may not fall.  

13.	Since we construe these words as a reference to the National Minimum Wage rate in force at any given time, and it was in the Claimant’s case £3.80, this clause means that the Claimant will be paid by the Respondent a rate of pay of not less than £3.80 an hour.  He was paid £2.50 an hour and this was therefore a breach.  No dent is made upon that analysis by the other two partial documents which have been disclosed.  As we have said, the reference in the first document to salaries includes a reference to nationally agreed industry wage agreements which Mr Roy does not advance and appears to be irrelevant; and the second is the National Minimum Wage legislation.  As we have indicated, compliance with that legislation involves far more than simply paying the minimum rate, but since it is included under the heading “Salaries”, it reinforces our view that the parties were agreeing a minimum provision of wages by reference to the National Minimum Wage legislation.  If, indeed, the parties knew that apprentices were excluded, then the introduction of an agreed minimum by reference to that statutory figure is clearly understandable.  

14.	The third document put in evidence before us does nothing more than show that the Claimant was engaged upon a programme of modern apprenticeship.  It does not assist in answering the question of the rate of pay.  

15.	That disposes of the case, but we are asked to pay attention to a number of features of this case.  The first is, as Mr Roy put it, that all of Brighton is on edge, waiting for the outcome of this Judgment.  Although it involves only £678.04, we are told that a very large number of other employers are very interested in the outcome because it was their intention to pay in the same way as the Garretts did.  They will, of course, now read this Judgment and will wish to alter their rate of pay in accordance with it since, as Mr Roy said, they are all affected in the same way. 

16.	Secondly, these documents emanated from a body which is engaged specifically in training and in issuing documents and training instructions for apprentices. Since the intention in issuing these documents was that the apprentices should be paid not less than the National Minimum Wage, that could be made clearer.  If that was not the case, then they can issue documents requiring fresh agreements to be made to deal with the substance of our Judgment.  

17.	Thirdly, we have considered most carefully the impact on Mr Garrett who presented the claim on behalf of a limited company through his wife.  Essentially, he was a litigant in person, albeit an employer and essentially the Claimant was a litigant in person, albeit through his father.  Mr Garrett, we are told, was faced with a Claimant producing, for the first time at the hearing, a copy of the document which he relied on and which we have upheld and Mr Garrett felt that that was unfair.  We can see that, and it was for that reason that I allowed the new evidence to be introduced.  Mr Roy submitted that the only remedy in this case which was appropriate would be to allow the appeal to be sent back to an Employment Tribunal for it to consider the documents because, as he put it, there must be more; these documents are incomplete.  That is a most unattractive submission, given that the burden of proof is on the Respondent to show the non-applicability of the National Minimum Wage rate.  Bearing in mind the long procedural history in this case, there is no excuse for Mr Garrett not presenting to us, pursuant to the permission given, in response to his own application, all of the new material which would help us to construe the contractual relationship.  His case cannot get any better than it is today.  We are in as good a position as the Employment Tribunal would be in in construing this document.  It has construed the document which we regard as the primary document on which our Judgment is based.  We uphold it because the Tribunal was correct. The additional documents simply reinforce our view as to its correctness.

18.	We would very much like to thank Mr Roy for coming along today to argue what he said was a slim point. The appeal is dismissed.