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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Smith v Oxfordshire Learning Disability NHS Trust [2009] UKEAT 0176_09_2406 (24 June 2009) URL: http://www.bailii.org/uk/cases/UKEAT/2009/0176_09_2406.html Cite as: [2009] UKEAT 176_9_2406, [2009] UKEAT 0176_09_2406, [2009] ICR 1395

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APPEARANCES

 

For the Appellant	MR A SMITH (The Appellant in Person)
For the Respondent	MR O SEGAL (of Counsel) Instructed by: Morgan Cole Apex Plaza Forbury Road Reading RG1 1AX


 


SUMMARY

NATIONAL MINIMUM WAGE

The Appellant, a care worker in a residential home, was required on occasion to "sleep in" at the home, in return for a flat-rate payment ("the sleep-in payment") which equated to an hourly payment of £2.70. It was conceded by the employer that his time doing so was "time work" within the meaning of the National Minimum Wage Regulations 1999 and accordingly fell to be taken into account in calculating whether the national minimum wage had been paid. The Appellant argued, however that the sleep-in payment fell to be excluded because it constituted an "allowance": see reg. 31 (1) (d).

Held: (by a majority) that the sleep-in payment was not an allowance within the meaning of the Regulations (Burrow Down [2008] ICR 1172 referred to) and accordingly ought to be taken into account. (However, if the payment had been an allowance it would not have been "attributable to the performance of the worker in carrying out his work" so as to fall within the words of exclusion in reg. 31 (1) (d) – Bellfield (UKEAT/0194/00) followed.)


 


THE HONOURABLE MR JUSTICE UNDERHILL (PRESIDENT)

1. The Appellant was employed by the Respondent ("the Trust") as a part-time "lifestyle support worker" from 20 July 2005 until his resignation with effect from 30 November 2007. He worked at a residential care home for adults with learning disabilities. His contract of employment required him on some occasions to sleep in at the home. In correspondence which began in August 2007 the Appellant raised various questions with the Trust about that obligation, including a question whether, by reason of the payment arrangements governing such sleep-ins, the Trust was in breach of its obligations under the National Minimum Wage Regulations 1999 (the "NMWR"), which are made under ss. 1 and 2 of the National Minimum Wage Act 1998. It was because he was dissatisfied with the answers which he received that the Appellant resigned. On 28 February 2008 he commenced proceedings in the Employment Tribunal claiming (a) that he had been unfairly (constructively) dismissed and (b) that he had suffered an unlawful deduction from his wages by reference to the NMWR. There was also what appeared to be a claim under the Working Time Regulations 1998.
2. The case was heard by an Employment Tribunal sitting at Reading, chaired by Employment Judgment Byrne, on 25 September 2008. By a Judgment sent to the parties on 29 September all the Appellant's claims were dismissed. Written Reasons had been prepared but owing to an administrative failure they were not sent to the parties until 20 December.
3. The Appellant's Notice of Appeal appears at first reading to challenge only the dismissal of his claim under the NMWR, although on a closer reading of the Amended Grounds of Appeal which he submitted following receipt of the Tribunal's Reasons, it seems that he wishes also to challenge the decision on the unfair dismissal claim: we return to this question at para. 28 below. But, whatever the precise scope of the appeal, the primary question is whether the Trust had breached its obligations under the NMWR. The Appellant appears in person, as he did before the Employment Tribunal. The Trust is represented by Mr Oliver Segal of counsel, who also appeared below.
4. We should start by setting out the relevant contractual provisions and how, in the light of those provisions, the Appellant was in fact paid during his employment.
5. So far as the contract is concerned, the Appellant entered into a written contract with the Trust on his appointment. The relevant provisions are as follows.

(1) The term relating to pay reads, so far as relevant, as follows:

"Your salary will on [sic] the scale of £13,694 - £16,389 per annum, pro rata (Agenda for Change Band 3, scale points 7 – 13). Your commencing salary will be £13,694 per annum, pro rata. You will be able to progress through the scale once you have completed at least twelve months service and met the necessary criteria. You will normally be paid on the 27^th of each month by bank credit."

The figure of £13,694 went up at various points thereafter. By 1 November 2007 it had become £15,523. Since the full working week was 37½ hours, and the Claimant worked 15 hours (see (3) below), those figures would be discounted by 15/37½.

(2) Immediately following the term relating to pay is a term entitled "Enhancements". This reads:

"Where you are required to work sleep-ins or unsocial hours you will receive the relevant enhancements."

(3) The term headed "Hours" reads as follows:

"You are contracted to work 15 hours per week, exclusive of meal times, work in rostered shifts which include weekends, evenings, nights and bank holidays.

Your normal duty hours of work or shift pattern will be notified to you by your Manager/Supervisor and will depend on the specific needs of the Client Group you are supporting.

In addition to normal weekly hours, you may be required to participate in a roster of sleep-ins on the premises in accordance with the Trust Sleep In Policy. The appropriate flat rate will be paid."

6. The "Trust Sleep In Policy" referred to in the contract explains the background to the relevant duties as follows:

"This policy is intended to cover situations where Line Management have determined that Clients in a residential home setting do not require the level of care and supervision normally given by nursing staff on "Waking Night Duty" but do need 1 or more members of staff to be present on the premises during the night on "Sleep In Duty" and to be available for duty during the night if needed."

Para. 2.3 of the Policy is headed "Payment" and reads as follows:

"Staff will receive basic pay plus any enhancements up to the agreed start time of the sleep in providing they are undertaking Client related activity. However, where staff go to sleep during this period, they will receive basic pay only.

Staff will receive a Sleeping In Allowance paid at the current Whitley Council rates for the period between the end of the evening shift and the beginning of the day shift."

For completeness, although its provisions do not arise directly on the facts of this case, we should also refer to para. 2.5 of the Policy, headed "Disturbed Nights", which reads as follows:

"If staff are awake for excessive periods during the night (at least 1 hour or more in total) this time will be paid at the appropriate enhancement rate. For such periods staff will normally receive time off in lieu in addition or if this is not possible be paid accordingly."

7. By the dates with which we were concerned there were no longer specified Whitley Council rates for the "Sleeping In Allowance" as referred to at para. 2.3 of the Policy; but by local agreement the payment contemplated by the contract was fixed at £25. We will refer to that payment as "the sleep-in payment" – or "SIP". Neither the contract nor the Policy specified the duration of sleep-ins; but it was common ground before the Tribunal and before us that the period was 9¼ hours.
8. Both the Appellant and Mr Segal submitted that the contract is to be read as treating the salary – that is, the pro rata equivalent to £13,694 - as constituting payment specifically for the normal working hours and not as covering the sleep-in obligation, which is remunerated by the SIP. That seems to us to be correct. The contract treats sleep-in duties as self-contained and the subject of their own remuneration arrangement. It follows that the Appellant's total remuneration in any month comprised two elements:

(1) Salary for the normal 15 hours. The precise hourly rates obviously depended on changes in the annual figure; but as from April 2007 it was £7.84 gross (rising in his last month of employment, November 2007, to £7.94). This produced a monthly gross entitlement of £511.13 (or, in November 2007, £517.43).

(2) The SIP(s) in respect of any sleep-ins. Typically there were one or two sleep-ins per month; but in September, October and November 2007 there were five, three and five respectively. The SIP is equivalent to an hourly rate of £2.70. (The only potential exception would arise where the person sleeping in had a "disturbed night". But this never occurred in the Appellant's case, and he did not know, nor did the Tribunal have occasion to find, how the somewhat opaquely drafted provisions of para. 2.5 of the Policy were applied in practice.)

9. We should also mention, because it is relevant to a point made at para. 25 below, that in the course of the correspondence referred to at para. 1 the Appellant asked (by letter dated 17 November 2007):

"1. What is the hourly rate of pay for any one of my 15 contracted hours? And how is this calculated?

2. What is the flat rate for the sleep-in? How has this rate been determined? Why exactly do you say it is appropriate and who for?

…

6. What is my basic pay? And what is its hourly rate?"

On 20 November an HR manager at the Trust replied:

"With reference to your questions 1, 2 and 6 the answers are as follows:

1 UHB our payroll provider advise that your hourly rate of pay would be calculated as follows:

Since 20 July 2007 you have been on Band 3, scale point 9.

This has been paid at £15,107 per annum (the 2006/2007 pay for that scale point), but should retrospectively be paid at £15,334 (the relevant pay effective from 1^st April 07 to 31 October 2007); in common with all other employees you will receive any back pay owing in the New Year.

From 1^st November 2007 the relevant pay for that scale point will be altered to £15,523 (which will be effective until 31 March 2008).

For the 2006/7 pay scale:

Divided £15,107 pa by 52.143 weeks = £289.72 per week

£289.72 per week divided by 37.5 hours = £7.7259 per hour

…

2 Sleep ins are paid at £25.00 per sleep in. This amount has been agreed through discussion with the unions at the Trust Joint Consultative and Negotiating Committee."

10. The question in this appeal is how the elements identified at para. 8 above should be taken into account for the purpose of the NMWR. In order to set the scene, we will ignore for the present the precise terms of the Regulations and note only that the essential exercise required is the calculation, over the period of a month, of an average hourly rate by dividing all sums received (subject to certain exceptions) by all hours worked. Both parties agree that it is necessary to bring into account the sleep-in hours "worked" in each month, but they differ as to whether it is necessary to bring in the SIPs: the Trust says that they should be included and the Appellant that they should be excluded. On both approaches, the average hourly rate for the month is brought down from the figure of £7.94 which is derived from the salary element alone: that is bound to be the case since the hourly rate implicit in the SIP is lower. But of course the effect is more pronounced on the Appellant's approach because the denominator (the bottom half of the fraction) is being increased by the number of sleep-in hours and nothing is being added to the numerator (the top half). Obviously also the effect depends on how many sleep-ins are "worked" in each month: the more there are, the more the rate derived from the salary element is diluted. On the Trust's approach, the average rate would not dip below the minimum wage – which was £5.35 per hour until September 2007 and £5.52 from October – unless the Claimant worked six or more sleep-ins: since he never worked more than five, no breach of the NMWR occurred. However, on the Appellant's approach, the average fell below the statutory figure in each of the last three months of his employment - by £84.36, £18 and £103.23 respectively. The sums are small but not trivial, and the issue is one which could affect the Trust, and other employers employing similar arrangements, in other cases.
11. That being the broad nature of the dispute, we turn to the details of the terms of the Regulations. The starting-point is reg. 14, which reads as follows:

"(1) The hourly rate paid to a worker in a pay reference period shall be determined by dividing the total calculated in accordance with paragraph (2) by the number of hours specified in paragraph (3).

(2) The total referred to in paragraph (1) shall be calculated by subtracting from the total of remuneration in the pay reference period determined under regulation 30, the total of reductions determined under regulations 31 to 37.

(3) The hours referred to in paragraph (1) are the total number of hours of time work, salaried hours work, output work and unmeasured work worked by the worker in the pay reference period that have been ascertained in accordance with regulations 20 to 29A."

The "pay reference period" is, save in special circumstances which do not apply in the present case, one month: see reg. 10 (1). The regulations identified under para. (2) constitute Part IV of the NMWR. The different kinds of work referred to in para. (3) are identified in regs. 3-6, to which we need not refer for present purposes, and how the number of hours of each kind worked is to be ascertained is governed by Part III (regs. 15-29A).

12. One important preliminary point needs to be made about reg. 14, namely that it takes a global approach, aggregating all relevant remuneration and hours in the pay reference period. As it is helpfully put in the IDS Employment Law Handbook on Wages (2003 edition, p. 149):

"This means that an employer can pay the worker at a rate less than the NMW for a particular type of work so long as, when all the different types of work done by the worker during the pay reference period are taken into account, the worker is paid at an average rate not less than the NMW."

We are not entirely clear whether the Appellant intended to contend, either before us or before the Tribunal, in addition to the case identified above, that his salary and the SIP should be disaggregated and considered in separate boxes. He described the normal-hours and sleep-in obligations as being "like two separate jobs". He also attached importance to the fact (mis-stated by the Tribunal in its Reasons) that whereas his sleep-in hours were "time work" his normal 15 hours were "salaried hours work". But neither point is material. Reg. 14 clearly lumps together all moneys received (subject to the detailed provisions of Part IV) and all hours worked, however characterised: the only reason for the distinction made in the Regulations between the different kinds of work is that different methods are needed for calculating the hours worked.

13. As we have already noted, the Trust accepts that the full 9¼ hours of each sleep-in constitute work ("time work" in NMWR terminology) falling within para. (3) of reg. 14 and accordingly require to be brought into the calculation. We at first found this stance surprising because reg. 15 (1A) (which was introduced by amendment with effect from October 2002) provides as follows:

"In relation to a worker who by arrangement sleeps at or near a place of work and is provided with suitable facilities for sleeping, time during the hours he is permitted to use those facilities for the purpose of sleeping shall only be treated as being time work when the worker is awake for the purpose of working."

On the face of it, that provision would mean that the Appellant (who, as we understand it, had "suitable facilities for sleeping") could not bring into account his time spent asleep (which in practice was the entirety of his sleep-in time). But Mr Segal explained that the Trust's view was that British Nursing Association v Inland Revenue [2003] ICR 19 and Scottbridge Construction Ltd v Wright [2003] IRLR 21 (as confirmed by Burrow Down Support Services Ltd. v Rossiter [2008] ICR 1172 following the introduction of reg. 15 (1A)) establish authoritatively that on facts such as those of the present case a "sleeping-in" worker is indeed "working" for the purpose of the NMWR whether required to undertake any actual tasks or not; and we have not sought to question that concession.

14. Accordingly, we are only concerned with reg. 14 (2) and Part IV. As para. (2) stipulates, the first step in the exercise is to establish all remuneration in the pay reference period: that is governed by reg. 30 and gives rise to no issue in the present case. The next step is to subtract any "reductions". "Reductions" are identified in reg. 31 (1). Item (d) under that paragraph is:

"any money payment paid by the employer to the worker by way of an allowance other than an allowance attributable to the performance of the worker in carrying out his work."

"Allowance" is defined at reg. 2 (1) as follows:

"'allowance' … means any payment paid by the employer to a worker attributable to a particular aspect of his working arrangements or to his working or personal circumstances that is not consolidated into his standard pay, but does not include an allowance designed to refund a worker in respect of expenses incurred by him in connection with his employment … ."

15. It is the Appellant's case before us, as it was before the Tribunal, that the SIP is an allowance within the meaning of reg. 31 (1) (d). The Tribunal rejected that contention on the basis that the SIP was not an allowance in the first place: it did not therefore have to consider the question whether it was "attributable to the performance of the worker in carrying out his work". It said, at para. 24 of the Reasons:

"[The Claimant's] argument that the sleep-in amounted to an allowance does not stand scrutiny of the wording of Regulation 2(1) and the definition of "allowance," which is, "any payment made by the employer to work attributable to a particular aspect of his working arrangements or to his working or personal circumstances that is not consolidated into his standard pay". On an objective interpretation of that definition "allowance" must relate to "a particular aspect of his working arrangements". Circumstances in which an allowance might be paid could, for example, be working at height, working in a dusty atmosphere, or working in a hazardous environment. Those are all examples which are clearly "attributable to a particular aspect of his working arrangements". On the facts in this case the sleep-in payment was not "attributable to a particular aspect of his working arrangements"."

16. Accordingly, the issues before us are:

(1) Is the SIP an allowance within the meaning of the NMWR" ?

(2) If so, is it "attributable to the performance of the worker in carrying out his work ?

We consider those questions in turn.

(1) IS THE SIP AN "ALLOWANCE" ?

17. Our decision on this issue is not unanimous. What follows at paras. 18-23 is the judgment of the majority (Underhill J. and Mrs Chapman): Ms Tatlow's dissenting view appears at paras. 24-25.
18. We should start by noting that the SIP is described in the Policy as an "allowance". On the other hand, that term is not used in the contract itself, where the reference is simply to payment at the "appropriate flat rate". But the real point is that the label used by the parties is of limited significance. It is very common in industrial relations for terms to be used in different or particular ways which do not correspond to how they may be defined in statute. The real question for us is whether the SIP was an allowance within the terms of the definition in reg. 2 (1).
19. As to that question, the Appellant correctly points out that the SIP was not "consolidated into his standard pay". But that is not the only element in the definition: an allowance must also be "attributable to a particular aspect of [the worker's] working arrangements or to his working or personal circumstances". This is not very easy language to get to grips with, but the key phrase seems to us to be "a particular aspect". In our view that indicates an intended distinction between, on the one hand, the entitlement that is attributable simply and generally to the worker's doing of his basic job and, on the other, an entitlement attributable to some other element over and above, or distinct from, that. The alternative defining characteristic of an allowance – "attributable to [the worker's] working or personal circumstances" – points, albeit somewhat less clearly, in the same direction. Examples of payments which constituted allowances in that sense were given in the Guide to the National Minimum Wage published by the Department of Trade and Industry at the time that the NMWR came into force. Para. 92, headed "Allowances", says:

"Special allowances over and above standard pay may be paid by an employer to a worker for all kings of things: (for example, London Weighting); performing special duties over and above a workers normal duties; being "on call" for work; regular prompt arrival at work. Such allowances do not count towards national minimum wage pay unless they are consolidated into standard pay. If they are consolidated, they do count towards national minimum wage pay."

Although the Guide has no special statutory status, that passage was quoted with apparent approval by this Tribunal in Aviation & Airport Services Ltd. v Bellfield (EAT/194/00), subject to the correctness of one of the examples ("regular prompt arrival at work"). Essentially the same passage appears in the current BERR Guidance, although "regular prompt arrival at work" has been removed in order to reflect the decision in Bellfield itself. We agree that the instances given in the Guidance are good examples of the kind of "particular aspects of … working arrangements" or "working or personal circumstances" that the draftsman had in mind. That approach would make sense in policy terms. It is easy to see why the NMW regime might be designed to ensure that employees are entitled to the minimum wage for the basic element of their work while other elements which the parties had treated as deserving separate recognition remain payable as additional elements and are not simply flattened out into the statutory floor.

20. If that is the right approach, as we believe it is, then the SIP is not an allowance within the meaning of reg. 31 (1) (d). It is a payment – the only payment – to the Appellant for performing the sleep-in duty. The fact that it is a flat-rate payment, and one that works out to an hourly rate well below the minimum wage rate, is neither here nor there. It is inherently different from the unsocial hours "enhancements" to which the Appellant was separately entitled for the hours immediately before and after a sleep-in or the special payments that he would get if he had a disturbed night, each of which are paid on top of the basic remuneration for the work in question. Both of those "enhancements" seem to us good examples of genuine "allowances" within the meaning of the NMWR – and the first is of course one of those mentioned in the Guidance. (In this connection it is fair to note that the relevant term in the contract (see para. 5 (2) above) refers to "sleep-ins" as well as "unsocial hours" as attracting "the relevant enhancements". But it seems that the draftsman of the contract was simply using the term to refer to payments other than salary.)
21. Our conclusion on this issue is reinforced by the decision of this Tribunal, chaired by Elias P, on the cross-appeal in Burrow Down (above). The facts of that case were very like those of the present case. The claimant was a night sleeper in a care home who was required to be present at the home from 10 p.m. to 8 a.m. two nights a week, during which time he was permitted to sleep, subject to securing the safety of the premises and attending to emergencies. The only difference, though not a material one for the purpose of the present point, is that that was his only work for the employer – i.e. he had no separate salaried work. He was paid £20 per night, with a separate entitlement for any periods during which he was awake and carrying out some particular task. The employment tribunal held that he was, for the purpose of the NMWR, working throughout the night, even during the periods when he was asleep. As noted at para. 13 above, this Tribunal upheld that decision. However, the claimant also claimed that the £20 which he received should be left out of account in calculating the extent of the shortfall in his entitlement to payment under the Regulations. The employment tribunal rejected that contention and held that the sum required to be taken into account. This Tribunal dealt with the point as follows:

"27 [The claimant], who appeared in person before us, puts his point very simply. He submits that the payment for sleeping in is in the nature of an attendance allowance. It should not be considered as part of the basic pay. This is confirmed, he says, by the fact that he was paid separately and in addition for the time when he was actually at work.

28 He relies upon a decision of this tribunal,  Aviation & Airport Services Ltd v Bellfield  (unreported) 14 March 2001 (Judge Peter Clark presiding) where a payment which was referred to as an attendance allowance was treated as being quite independent of the basic pay. In that case there was an attendance allowance of £55 per week payable if an employee worked the whole of a rostered shift for a given week without absence, lateness or other default. It was a sum which was related, in other words, to satisfactory attendance and performance. The basic rate was less than the minimum pay. The employer contended that he ought to be allowed to take account of the attendance allowance as part of the basic pay. Not surprisingly, the Employment Appeal Tribunal rejected that argument. This was not an automatic payment which would be made to all employees as part of their wage. It was a bonus which was payable over and above the basic pay only to those employees who met certain conditions. That is not this case. Here the fixed sum was payable automatically as part of the consideration for the work performed. It was not a separate payment contingent on the employee meeting certain conditions other than simply being at work and which would not be paid unless those conditions were met.

29 We should add that we think this argument is singularly without merit. The very basis of the claimant's successful appeal is that, although the employers contended that he was not actually at work but only available for work when sleeping, in fact he should be treated as actually at work even during those periods. In short, he challenges the employers' description that he has merely been attending work and says it is inaccurate. Yet for the purposes of this argument he contends that the employers' description was correct and that since he was being paid this sum simply for being available for work, he should be paid separately for actually being at work. This is not an attractive submission and for the reasons we have given we think it is wrong."

Although the point arose in a somewhat different way from the present case, it seems to us that Elias P's reasoning applies with equal force here, and echoes our own as set out above.

22. It follows that we agree with the decision of the Tribunal.
23. We have in the foregoing analysis left out of account one particular argument derived from the language of the words of exception (i.e. following "other than …") in reg. 31 (1) (d). The meaning of that phrase is the subject of the second question. However, the construction which, as appears below, we prefer is entirely consistent with our conclusion on this point: see in particular para. 29 (2) below.
24. Ms Tatlow would reach a different conclusion. In her view the SIP is indeed an allowance within the meaning of reg. 2 (1). Her reasoning is as follows. The sleep-ins were not an extension of the Appellant's normal weekly duties; nor were they unsocial hours duties i.e. normal duties undertaken at unsocial hours. The Appellant was not simply "doing his job". Rather, the sleep-ins constituted a particular aspect of the claimant's working arrangements. As the Guidance points out, examples of allowances may include:

"… performing special duties over and above a workers normal duties; being on-call for work…Such allowances do not count towards national minimum pay unless they are consolidated into standard pay."

The sleep-ins in which the Appellant was required to take part were clearly very different from his normal duties and were much more akin to being on-call for work.

25. Ms Tatlow attaches importance to the terms of the Trust's letter of 20 November 2007 set out at para. 9 above. The letter did not treat the hours as payment attributable to the sleep-ins as part of the hourly rate quoted to the Appellant: if they had been, the rate would have been substantially lower. Neither the letter nor the contract treated the SIP as consolidated into standard pay.

(2) IS THE SIP "ATTRIBUTABLE TO THE APPELLANT'S PERFORMANCE IN CARRYING OUT HIS WORK" ?

26. In view of our conclusion on the first issue, this question does not arise. But we should nevertheless deal with it in case we are wrong. On this aspect our view is unanimous.
27. The language of this part of the regulation is, again, obscure, but it seems to us that there are only two possible constructions:

(a) that it refers to allowances which are paid for good performance – as in the phrase "performance bonus" – or, to put it another way, which are related to the quality of the worker's work; or

(b) that it refers to allowances which are attributable to the actual tasks done – using "perform" simply as a synonym for "do" – i.e. as opposed to allowances paid for other aspects of the work such as unsocial hours or a particularly unpleasant environment.

Mr Segal argues for the second construction and the Appellant for the first.

28. The only reported case in which this aspect of reg. 31 (1) (d) appears to have been considered is Aviation & Airport Services v Bellfield (above). In that case one of the issues was whether an attendance allowance, paid to employees who attended regularly and punctually for work over a given period, came within the words of exception, so that it did not fall to be deducted as an "allowance". The employment tribunal, as recorded in the judgment of HHJ Clark in this Tribunal, held that:

"The attendance allowance was not an allowance attributable to the performance of the worker within the meaning of Regulation 31(1)(d). By reference to the definition of "performance bonus" in Regulation 2(1) the tribunal concluded that performance relates to the quality and amount of work; in their view the natural meaning of the word performance has to do with the way in which somebody does their job and not the fact that they are there (cf. this attendance allowance)."

At paras. 31-33 of his judgment Judge Clark said this:

"31. The final point taken by Mr Underhill [counsel for the appellant] concerns the meaning of the word "performance" in Regulations 31 (1) (d) of the Regulations.

32. He submits that full attendance at work is an integral part of the employee's performance. The DTI Guide is wrong to suggest, at paragraph 92, that an allowance paid for regular prompt arrival at work does not count towards the NMW.

33. Again, on this aspect of the case we find ourselves in agreement with the tribunal's construction. It seems to us that "an allowance attributable to the performance of the worker in carrying out his work" properly refers to his performance whilst at work. It covers things like a production bonus, payable on the achievement of a specified quality/quantity target. This attendance allowance does not fall within the exception. It therefore falls to be deducted from the total remuneration paid to the applicants for the purpose of calculating the NMW payable."

29. Although the actual debate in Bellfield centred on whether an allowance for prompt and regular attendance for work could be regarded as an aspect of the worker's performance "in carrying out the work", the examples given by Judge Clark in para. 33 clearly support the Appellant's construction. No reasons are in fact given for the Tribunal's view, but good reasons could be advanced. In particular:

(1) The Regulations were made in response to the first report of the Low Pay Commission (Cm. 3976)^[1]. Ch. 4 of the report contained the Commission's recommendations on "defining the wage". The Commission was clearly of the view that "payments related to output, productivity or performance [emphasis supplied]" should count towards the minimum wage: see paras. 4.13-4.19. The report is of particular significance in the construction of the Regulations, since by s. 5 the Secretary of State was obliged before making them to obtain the Commission's recommendations and to lay a report before Parliament if he chose to depart from them in any respect in the regulations which he made. The most natural explanation of the words of exception in reg. 31 (1) (d) is that they are designed to give effect to this aspect of the Commission's recommendations by precluding any argument that such "payments related to … performance" constitute payments attributable to the worker's "working circumstances" or otherwise constitute "allowances" and so fall to be left out of account. It may at first blush seem odd that employees should not get the benefit of such payments in addition to the statutory minimum; but the report shows that that result was (for reasons which are given) intended.

(2) On Mr Segal's construction, the words of exception in reg. 31 (1) (d) are, strictly speaking, redundant: ex hypothesi a payment simply for performing the tasks required under the contract would not be an "allowance" in the first place – see our conclusions at paras. 19-20 above. Mr Segal acknowledged this but submitted that they had been included for the avoidance of doubt. We find this unconvincing.

(3) Mr Segal's submission that "perform" and "performance" are no more than neutral words synonymous with "do" and "doing" would in some contexts doubtless be correct. But the phrase here is not "the performance of the work" but "the performance of the workers"; and in that context the language seems to us to connote more naturally the quality of the work. "Performance" is very commonly used in that sense, as in such phrases as "performance-related pay". If the draftsman had meant no more than "attributable to the carrying out [or performance] of the work" he could have said so, rather than adopting the elaborate formulation which he did. (In this connection, we acknowledge that the draftsman did in a different context - see regs. 4 (4) (a), (6) and (7) - define the term "performance bonus" in a way which referred explicitly to "the quality or amount of work done"; but we do not believe that his omission to adopt such a definition in this, different, context is significant.)

30. We would only take a different view from that expressed by the Tribunal in Bellfield (even if not strictly as a matter of ratio) if we were sure it was wrong. For the reasons given, that is not the case.
31. Accordingly, if – contrary to our view – the SIP was an allowance we would not hold that it fell within the words of exception or, therefore, needed to be taken into account in calculating the minimum wage.

CONCLUSION

32. It follows that this appeal must be dismissed.
33. As noted at para. 3 above, the Appellant appeared to wish to challenge the unfair dismissal claim. Had we held that the Trust was in fact in breach of its obligations under the NMWR we would have been inclined to permit him to do so, notwithstanding the language of the original Notice of Appeal. In that case, an interesting question might have arisen as to whether in all circumstances a deliberate though bona fide failure to pay wages due will constitute a fundamental breach of contract. But Mr Segal was not expecting to argue this point, and in those circumstances, given that it does not arise on our decision, we do not do propose to consider it.

Note 1    We were not referred to the report of the Commission during argument, but we subsequently drew it to the attention of Mr Smith and Mr Segal and invited supplementary written submissions on its relevance to this question (i.e. “question (2)”). We have considered the submissions received, which in fact also covered its relevance to “question (1)”: as regards the latter point, we need only say that the majority regard the contents of the report as confirming the view which they had already formed, but Ms. Tatlow does not.     [Back]