The claimant signed a document which paid him a lump sum in return for reduced hours. At the time he was also paid a weekly pay protection payment and prior to signing the document he asked his manager whether or not the pay protection would also be lost. The claimant argued that his manager did not explain that this pay protection allowance would indeed by lost, although the ET found that the document was unambiguous – it clearly said that the pay protection would be lost. The simple issue in this case was whether or not the statement by the claimant's manager disarmed the clear, unambiguous statement in the letter – the ET ruled that it did, found that there had been an unauthorised deduction and ordered £670.80 to be paid. The respondent appealed.

The EAT dismissed the appeal. The relevant authority was MCI Worldcom International Inc v Primus Telecommunications Inc [2004] EWCA Civ 957. Applying that to this case the judge was entitled to form the view that the respondent had represented to the claimant through his manager that it knew what the position was. In fact it was incorrect.  The formal position was that pay protection was lost but the claimant was entitled to, and did, rely on what his manager told him in respect of this.  This was a misrepresentation as to the effect of the contract and the claimant relied upon the misrepresentation.

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Appeal No. UKEAT/0593/12/BA

EMPLOYMENT APPEAL TRIBUNAL

FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX

At the Tribunal

On 19 September 2013

Before

HIS HONOUR JUDGE McMULLEN QC

(SITTING ALONE)

ROYAL MAIL GROUP LTD (APPELLANT)

MR ALDOUS (RESPONDENT)

Transcript of Proceedings

JUDGMENT

For the Appellant
Written Submissions

For the Respondent
Written Submissions

UNLAWFUL DEDUCTION FROM WAGES

The Employment Judge correctly held the Claimant did not sign away his rights to a protected payment, and that the employer had made unlawful deductions. MCI Worldcom principles applied.

1. The second case in my list today is Royal Mail Group Limited and Mr Aldous. This case came before me at a preliminary hearing and I sent it to a full hearing, listed for one hour before a judge alone and invited the parties to consider whether it could be dealt with on the papers and they have so consented, it being for a very small amount.

1. The appeal itself arises from a Judgment of Employment Judge Skinner sitting at Bury St Edmunds and sent with reasons on 4 September 2012. The Claimant was represented by his friend and the Respondent by a solicitor. Today written submissions have been made on behalf of the Respondent, Royal Mail, by Steve Peacock, a solicitor, and by Mr Jonathan Gidney, of counsel, and I am grateful to them both.

1. The simple issue in the case was to determine whether the Claimant's claim under s.23 of the Employment Rights Act 1996 for unauthorised deductions was well founded. The judge found that there had been an unauthorised deduction and ordered £670.80 to be paid.

1. This related to what was called a pay protection allowance of £11.18 a week. The Claimant signed away his rights under a document known as the cessation of protected pay. This document reduced his hours from 40 to 30 a week, and in exchange for that, as a post worker, he was given a lump sum of £5,287.98 from 8 November 2010. At the bottom of the page he said this:

"I have read, understand and agree to the variation of my contract and that my new terms and conditions of employment are set out above […] and I understand its implications. I have retained a copy […]."

1. The critical clause is paragraph 3, and it says this:

"Except as varied by this letter, all terms and conditions of your employment will remain the same. Note however that in voluntarily agreeing to vary your contract of employment through the buy down hours agreement, you are agreeing to adopt the standard terms and conditions for your grade at your reduced contractual hours. This means, for example, that any reserved or personal rights and entitlements, including pay protection measures, cease from the effective date of the buy down. For the avoidance of doubt this does not however include payment of the 'ex-PHG' supplement (if applicable) …"

1. In his claim form he said: "[…] at no point did my manager explain I would loose [sic] this allowance." The judge concluded that the words in the document were unambiguous and that they meant what they said: that he would lose the pay protection measure Network 2007 of £11.18 a week. So, how did the case arise?

1. The fact is that he did not lose the allowance and continued to be paid it for another eight months or so as did two of his fellows. But, at some stage prior to the day he signed this document he had a discussion with his manager, Mr Cook and Mr Cook acknowledged that it was not possible to discuss all the implications as fully as possible before he signed the buy down agreement. The Claimant gave evidence that Mr Cook had said to him at a date prior to the signing of the agreement that he did not think he would lose the pay protection. But, it is clear that at the time Mr Cook did not know whether or not that would in fact be lost. This is asserted in the grounds of appeal and is taken up by the Claimant in seeking to uphold the argument that the case was correctly decided by the judge.

1. The issue, therefore, turned on what the effect of the statement by Mr Cook was. The judge found that the Claimant effectively was in a weak position and took the oral assurance, as it was put, of Mr Cook. He said this:

"47. However, although this is a borderline case, I am satisfied as much on the Respondent's evidence as the Claimant's, that what was said between the parties leading up to the agreement and specifically on the day it was completed amounted to an express oral assurance that the Claimant's protected pay would not be lost. In the context of the casual and uninformative way in which the standard form buy-down letter was presented and the background of preceding discussions giving the Claimant to understand that they 'did not lose anything' under its terms, Mr Cook's express affirmation which the Claimant took at face value confirming that understanding in specific reference to the loss of network pay protection is sufficient in my judgement as a matter of law to disapply the otherwise unambiguous but contrary written term."

1. The judge acknowledged there had been considerable confusion in the minds of the employers in dealing with the Claimant's grievance and thereafter. His Judgment in favour of the Claimant was reinforced by this confusion by the relevant officers of the employer.

1. The simple issue in this case is whether or not the statement by Mr Cook disarms the clear, unambiguous statement in the letter. The relevant authority is MCI Worldcom International Inc v Primus Telecommunications Inc [2004] EWCA Civ 957 at paragraph 30. Applying that to this case the judge was entitled to form the view that the Respondent had represented to the Claimant through Mr Cook that it knew what the position was. In fact it is incorrect. The formal position is that pay protection was lost but the Claimant was entitled to, and did, rely on what his manager told him in respect of this. This is a misrepresentation as to the effect of the contract and the Claimant relied upon the misrepresentation. Mr Cook on the Respondent's own pleaded case here did not know at the time he uttered the statement that the Claimant would not lose his protection. He did not know either way. On the basis of that and the relative bargaining positions of the Claimant and the Respondent, MCI is to be applied in the Claimant's favour. In my judgment, the judge made no error.

1. I accept the force of the submission of Mr Peacock for the Respondent that the judge spent quite a lot of time examining the activities of the parties in this case after the change in the contract was made. That is often relevant in determining what was agreed on the day. The post-change conduct was to continue the payment, albeit it now seems by mistake. The Respondent recognised in its subsequent handling of the grievances that the Claimant had not been informed correctly of his entitlement and what he was to give up on his signing of the agreement. So, in my judgment, no error has occurred by the limited use of the post-contract materials by the Employment Judge and so this appeal is dismissed.