Appeal No.UK/EAT/0319/07/ZT

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 10 October 2007

Before
HIS HONOUR JUDGE PETER CLARK
(SITTING ALONE)

DEPARTMENT OF WORK AND PENSIONS
	APPELLANT

	RESPONDENT
MISS C E SUTCLIFFE

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	Ms S-J Davies
(of Counsel)
Instructed by:
The Office of the Solicitor
Department of Work & Pensions
Quarry House
Quarry Hill
Leeds
LS2 7UA	
For the Respondent	No appearance or representation by or on behalf of the Respondent	

SUMMARY

Unlawful deduction from Wages
Maternity Rights and Parental Leave:  Pregnancy
Contract of Employment:  Incorporation into Contract

Whether Maternity Leave policy incorporated into contract of employment.  Whether sick pay is ‘remuneration’  s71 ERA.  Whether entitled to sick pay whilst on maternity leave.

HIS HONOUR JUDGE PETER CLARK

Introduction
1.	This is an appeal by the Department for Work and Pensions (DWP), the Respondent before the Manchester Employment Tribunal, against the reserved judgment of a Chairman, Mr H.G. Forrest, sitting alone on 3 April 2007, upholding the Claimant, Mrs Sutcliffe’s complaint of unlawful deductions from her wages.  That judgment was promulgated with r easons on 24 April 2007.  I shall so describe the parties.

The Facts
2.	The Claimant commenced employment with DWP as an administration officer at the Burley Pension Centre on 18 April 2006.  She informed her employer that she was pregnant and that her baby was due at the end of August.  In late May she approached her team leader, Azmina Hussain, to inquire about maternity leave and pay during that leave.  With Ms Hussain’s assistance she completed an application for maternity leave, which she signed and dated 31 May.  She there stated that she wished to apply for maternity leave starting on 1 August 2006 and expected the birth to take place during the week commencing 28 August.

3.	Ms Hussain faxed a covering letter, together with the application form, to the DWP Employee Service Centre on 2 June.  In that covering letter Ms Hussain pointed out that due to pregnancy-related complications the Claimant’s doctor had given her a four week sick certificate.  In the event, the Claimant continued to be certificated sick for that reason until at least January 2007.  

4.	Her application for maternity leave was accepted.  She received full sick pay during June and July, based on her annual salary of £13,320 gross.  Her monthly take-home pay was £885, according to the Respondent’s form ET3.  On 17 July she was sent a letter by DWP offering her appointment from 18 April.  Enclosed was a written contract which she was asked to sign and return.  There is no evidence that she did so.  Consequently, the status of that document is that of a statement of terms and conditions of employment, as required under Part I of the Employment Rights Act 1996 (ERA).  From 1 August sick pay ceased; instead she received maternity allowance of £108.85 per week, paid by her local Job Centre.  Her daughter was born on 17 August.

5.	In late August she wrote to the DWP, referring to a section in the terms and conditions document sent on 17 July, to which I shall return, asking that her maternity allowance be made up to her full sick pay.  The DWP declined to do so, their position, set out in a letter dated 11 September, being that maternity leave is not sick absence.  It is that issue which prompted the Claimant to lodge her claim form ET1 with the Tribunal on 1 December 2006.  The claim was resisted.  

The 17 July document
6.	The following passages are material:
“Introduction.  
“This contract gives particulars of the terms and conditions of employment applicable to your appointment in the Department for Work and Pensions and the Pension Service pending the further development and negotiations of new terms and conditions for the Department for Work and Pensions and the Pension Service following your appointment to Administrative Officer on 18 April 2006 … full details of your conditions of service are contained on the ‘The Department and You’ intranet site.  Your line manager will be able to show you how to access the intranet site. ”

7.	Pausing there, the Chairman found that after the Claimant went off sick on 2 June she had to give up her pass to the intranet and it was subsequently inaccessible to her.  No one informed her of the information contained on the site and she does not appear to have requested it.  

8.	The contract document does not itself refer to maternity leave.  However, the DWP maternity leave policy was posted on the intranet site.  Before turning to the relative terms of the policy I should refer to this section in the contract document on which, in the event, the Chairman placed reliance in reaching his conclusions:
“Sick leave.  
“You will be allowed sick absence on full pay, less any Social Security National Insurance Benefits such as incapacity Benefit or Maternity Allowance received, for up to six months in any period of 12 months.  After that you will be allowed to receive half pay, subject to an overriding maximum of 12 months sick absence in a period of four years or under.  Any Statutory Sick Pay (SSP) will be paid with sick pay up to the maximum of full pay.  
“If your attendance is unsatisfactory because you have frequent or continuous sick absences we will review your suitability for continued employment.  Full information is contained on the ‘Department and You’ intranet site.”

9.	Paragraph 2 of the Maternity Leave policy (MLP) provides:
“Less than 26 weeks service.  
“2.  Regardless of length of service or hours worked, you have the entitlement to unpaid Departmental maternity leave of 52 weeks.  You do not need to be in paid service to qualify.  You are entitled to receive all contractual entitlements during the first 26 weeks maternity leave, apart from remuneration.”
By paragraph 22:
“If you have already notified the Department of the date at which you would like maternity leave to start, and subsequently become sick, Departmental maternity leave can start as originally intended.  The period before the start of Departmental maternity leave would be treated as sick leave, and the statutory maternity pay offset against any Departmental sick pay.”

Paragraphs 23 to 32 deal with maternity pay depending on length of service.  Under paragraph 23 one year’s service is required before the employee is eligible for Departmental maternity pay, which is more generous than statutory maternity pay.  However, statutory maternity pay was only payable after 26 weeks service.  The Claimant, with her shorter length of service, qualified for neither.  Hence she was entitled only to maternity allowance, which she claimed.

10.	I should also set out paragraphs 43 and 44 of the MLP:
“Sickness during or after Maternity Leave.
“43.  If you are sick whilst on paid or unpaid maternity leave your absence will continue as Maternity leave unless you want to end it early by sending in form DWP ML6.  Maternity leave will end 28 days from the date the medical evidence and the form are received.  You will be subject to the normal attendance management process and sick pay rules.  However, if you are sick with a pregnancy-related illness during your pregnancy or Departmental maternity leave, it will not count towards the Department’s sick pay calculations for half and nil pay and will be disregarded by managers when considering formal action under the attendance management procedures.
44.  If you are too ill to recommence work at the end of your Maternity leave, the normal sick pay rules will apply.  If your absence results from non-maternity related causes, then your absence will be considered under the attendance management procedures.”

The statutory right to maternity leave
11.	Section 71 ERA is headed: “Ordinary Maternity Leave”.  By section 71(1):
“An employee may, provided that she satisfies any conditions which may be prescribed, be absent from work at any time during an ordinary maternity leave period.”  

12.	Subsection 2 provides for 26 weeks ordinary maternity leave, according to regulations made by the Secretary of State.  The relevant regulations are The Maternity and Parental Leave, etc Regulations 1999 (SI99/3312) (the Regulations).

13.	Section 71(4) provides that an employee exercising her right under section 71(1) may be entitled to the benefit of the terms and conditions of employment which would have applied if she had not been absent and entitles her to return from maternity leave to a job of a prescribed kind.  

14.	By section 71(5)(b), terms and conditions of employment does not include terms and conditions about remuneration.  Regulation 9(3) of the regulations provides:
“For the purposes of section 71 of the 1996 Act (ERA), only sums payable to an employee by way of wages or salary are to be treated as remuneration.”

Unlawful deductions from wages
15.	By section 13 ERA an employer shall not make a deduction from wages of a worker employed by him subject to inapplicable exclusions on the facts of this case.

16.	By section 27(1)  the expression “wages” 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.
(b)	Statutory sick pays.
(c)	Statutory maternity pay, [and other types of payment there set out].

17.	Section 23(1) provides that 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 …”

The Chairman’s Decision
18.	At paragraph 4 of his reasons, the Chairman summarised the Claimant’s case in this way: she had been signed off sick by her General Practitioner throughout the period of her maternity leave.  The contract document provided for:
“Sick absence on full pay less any … Maternity Allowance received.”

She did receive maternity allowance which could only be paid to someone on maternity leave, thus she was contractually entitled to have her full pay made up by DWP during her maternity leave whilst she was certified sick.  

19.	In accepting that contention the Chairman rejected the case for DWP, which was: 
	(1) Insofar as she took her entitlement to maternity leave under the statutory provisions of section 71 ERA she was not entitled to remuneration, which includes sick pay.  The Chairman held that remuneration in section 71(5)(b) and regulation 9(3) did not include sick pay, and 
	(2) The terms of the MLP were incorporated into the contract of employment and they excluded the payment of remuneration (paragraph 2) which included sick pay. The Chairman held that the MLP was not incorporated into the contract because the Claimant had no access to the DWP intranet site after receipt of the contract document, but even if it did apply, the policy did not state that sick pay was not payable.  On the contrary, paragraph 43 of the Policy, properly construed, provides for the payment of sick pay in the event of sickness during maternity leave.

The Appeal
20.	The Claimant’s position in this appeal is somewhat delphic.  She does not appear today, is not represented and has not lodged a formal Respondent’s Answer.  Instead her solicitor, Mr Gaskell, who represented the Claimant below, wrote this letter to the EAT dated 6 July 2007, following my order of 22 June granting permission for the appeal to proceed to a full hearing:
“Dear Madam, 
I write on behalf of Ms Sutcliffe as the solicitor who represented her at the original tribunal.  I have spoken to Miss Sutcliffe on the subject of resisting the Appeal from the Judgment of His Honour Judge Thomas from the Manchester Employment Tribunal.  
Whilst I do not have a copy of the actual Respondent’s answer form that was supplied to Miss Sutcliffe, I can confirm that we do not resist the application for the Appeal.  Our case is by way of case stated.  We have nothing further to add and we will not be attending the ppeal Hearing.  
“We understand the Appeal will go ahead in our absence.  Our view is that the DWP are appealing against the decision of the Judge; that the Judge erred in Law, that is a decision to be made by the Tribunal itself.  We would make no further representations at this stage.  We will abide by the decision of the Appeal Tribunal and await the Outcome in due course.”

21.	In my view, Miss Davies adopts a perfectly proper approach to the Claimant’s position in this appeal.  It is that she does not appear, and makes no submissions in support of the Chairman’s reasoning; she simply relies upon it.  That letter, therefore, should not be treated as in any way consenting to the appeal being allowed.  Even had that been the proper construction, it is not the practice of the EAT to allow an appeal, even by consent, against the reasoned Judgment of an Employment Tribunal without itself being satisfied that the Tribunal has fallen into error.  Accordingly I have considered the grounds of appeal advanced today by Miss Davies on behalf of DWP on their merits.

22.	In summary, DWP take three points:
(1)  The expression “remuneration” in section 71(5)(b) ERA, read with regulation 9(3), includes sick pay.
(2)  The Chairman was wrong in Law to find that the MLP was not incorporated into the contract of employment.
(3)  On a proper construction of the MLP the Claimant was not entitled to sick pay while she was on maternity leave.

23.	In my judgment DWP is correct on each count.  Consequently the Chairman’s decision cannot stand.  The appeal is allowed and the finding of unlawful deductions is set aside.  The claim is dismissed.  My reasoning for reaching that conclusion is as follows:
	(1)  Both parties and the Chairman (see Reasons, paragraphs 2, 4 and 5) have proceeded on the basis that the Claimant commenced a period of maternity leave on 1 August 2006 and that leave continued throughout the relevant period.
	(2)  If the Chairman was correct in finding that the MLP was not incorporated into the contract, then the contract document of 17 July is silent on the subject (Reasons, paragraph 3.4).  Accordingly the Claimant would then be dependent on her statutory rights under section 71 ERA.
	(3)  Applying section 71 I agree with the DWP that remuneration under section 71(5)(b), read with regulation 9(3), includes sick pay, and thus entitlement to sick pay during maternity leave is excluded by operation of section 71(5)(b).  Put another way, it would be a strange result if contractual sick pay formed part of a worker’s wages within the meaning of section 27(1) for the purposes of a complaint under section 23(1), as the Chairman correctly found for the purposes of upholding the complaint, but not remuneration, that is sums payable by way of wages or salary, within the meaning of regulation 9(3).
 	(4)  I also agree that in fact the MLP was incorporated into the contract of employment by virtue of the notification in the contract document to the employee of the full details of her Conditions of Service on the intranet site.  I do not accept the Chairman’s reasoning that because the Claimant did not have access to the intranet site during her absence that the policy was thereby not incorporated.  DWP had done all that was reasonably sufficient to give the Claimant notice of the policy.  See Hood v Anchor Line (Henderson Bros) Ltd  [1918] AC 837.  The fact that the Claimant did not read the policy or was incapable of personally doing so is immaterial.  See Thompson v LMS Railway Company [1930] 1KB 41.
	(5)  The terms of the MLP are tolerably clear.  Paragraph 2 provides that an employee without at least 26 weeks service (this Claimant) is entitled to receive all contractual entitlements during maternity leave, apart from remuneration.  As I have earlier indicated, remuneration includes sick pay by parity of reasoning.  Paragraph 22 makes clear that the period before maternity leave will be treated as sick leave; it does not allow for sick pay during maternity leave.  The position under paragraph 43, on which the Chairman relied, requires the employee to give notice of early termination of maternity leave if she wishes to claim sick pay for sickness during maternity leave; the employee will then be subject to the normal attendance management process.  There is no evidence that the Claimant served notice to end her maternity leave; on the contrary, it was common ground, as I have earlier observed, that her maternity leave ran its normal course.
	(6)  That leaves the final point which impressed the Chairman.  The contract document, in the section headed “Sick Leave”, provided that the employee would be allowed sick absence on full pay less any Social Security and National Insurance Benefits such as, among others, Maternity Allowance.  Before the Chairman, Counsel then appearing suggested that was a mistake.  Before me, Miss Davies has raised the possibility that by reference to paragraphs 21 and 22 of the MLP, and regulation 6 of the regulations, it is conceivable that an employee might, for the four-week period before the expected week of childbirth, be entitled to sick pay at a time when she was in receipt of Maternity Allowance.  I do not find it necessary to reach any conclusions on that possibility. In my judgment, the reference to Maternity Allowance in the sick leave section of the contract document does not operate to grant a right to sick pay, which is otherwise excluded in the case of employees on maternity leave, to which the MLP applies.  

24.	It follows, in my view, that whether the Claimant relies on her statutory or contractual rights, the result is the same.  She is not entitled to sick pay during maternity leave.