The claimants were entitled to a bonus if they tested more than 600 units per week. A bonus was paid for each unit over and above this number. The claimants were then asked to work a 4 day week as a result of reduced orders but they still had to fulfil the minimum 600 units before any bonus was paid. The claimants raised a grievance, arguing that the number of units should be calculated on a daily rate to take into account that they only had 4 days in which to achieve the minimum instead of 5. They lost the grievance and also lost at the ET, the judge concluding that timesheets showed a weekly bonus calculation of pay.

The EAT agreed with the ET, saying that they could only interfere with the ET decision where it could be shown there was an error of law. In this case, the ET's finding was permissible, and therefore the appeal failed.

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Appeal No. UKEAT/0143/10/ZT

EMPLOYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 28 October 2010

Before

HIS HONOUR JUDGE PETER CLARK

(SITTING ALONE)

(1) MR D A SCOTT

(2) MR R BUSH (APPELLANTS)

EPSILON TEST SERVICES LTD (RESPONDENT)

Transcript of Proceedings

JUDGMENT

For the Appellants MR D A SCOTT & MR R BUSH (The Appellants in Person)

For the Respondent MR LIAM VARNAM (Representative)

UNLAWFUL DEDUCTION FROM WAGES

Construction of a contractual term as to bonus payments. No error of law in Employment Judge's approach. Appeal dismissed.

1. This appeal raises a short point on the proper calculation of a contractual bonus. The parties at the East London Hearing Centre were the Claimants, Mr Scott and Mr Bush, and the Respondent Epsilon Test Services Ltd. This was a claim for unlawful deductions from wages because these two excellent employees still remain in the Respondent's employ as electrical engineers testing portable appliances.

1. The critical issue before the Employment Judge was whether or not the bonus system applicable to both Claimants' contracts of employment operated on a weekly or daily basis. Putting it shortly, that issue was resolved in favour of the Respondent in the Judgment with Reasons of Employment Judge Goodrich promulgated on 4 February 2010. Against that finding this appeal is brought and now comes before me following a preliminary hearing before His Honour Judge McMullen QC for full hearing. I have heard from Mr Scott on behalf of both Claimants and Mr Varnam on behalf of the Respondent; that was the representation below.

1. At the outset I made it clear, as Mr Varnam had submitted in his skeleton argument, and Mr Scott fully understood, that the perversity challenge to an Employment Tribunal judgment involves a high hurdle. I have been referred to the passage in the judgment of Lord Justice Mummery in Yeboah v Crofton [2002] IRLR634, at paragraph 93, where His Lordship said of perversity appeals:

"Such an appeal ought only to succeed where an overwhelming case is made out that the Employment Tribunal reached a decision which no reasonable tribunal, on a proper appreciation of the evidence and the law would have reached. Even in cases where the Appeal Tribunal has grave doubts about the decision of the Employment Tribunal, it must proceed with great care. See British Telecommunications PLC v Sheridan [1990] IRLR27 at paragraph 4; also a decision of the Court of Appeal."

1. How do the Claimants in this case successfully challenge what is plainly a finding of fact, that the bonus system was calculated on a weekly rather than a daily basis? I prefer to put the question the other way: can it be said that there was no evidence on which such a finding could be reached or, at the very highest, that the Employment Judge has wholly misunderstood the evidence which was before him? I regret to say for the Claimants, my answer is a resounding, no.

1. I begin with the written contractual term. Although the relevant document is headed, "Terms and Conditions of Employment", I understand that such documents were signed on behalf of the employer and by the individual Claimants and therefore were translated in to written contracts of service in accordance with the Court of Appeal decision in Gascol Conversions v Mercer [1974] ICR 420. Under the heading "Remuneration" this appears:

"Your current basic salary is (and the figure is given per annum) ... In addition you will be paid a bonus of £0.50 per full appliance test and £0.25 per visual test over and above 550 full tests or equivalent tested per week.

You are required to complete a minimum of 110 appliance tests per day. If this is not possible due to the client or job restrictions you must inform your Line Manager immediately with the reasons."

I understand that by consent those figures respectively were subsequently increased to 600 tests per week and 120 appliance tests per day.

1. Towards the end of 2008, as a result of the economic downturn, the Respondent wished to reduce the relevant employees working week from five to four days as an alternative to compulsory redundancy. On 27 January 2009, a letter was sent to each of the engineers, including the two Claimants inviting them to agree to that reduction in hours. The relevant paragraph of that letter reads:

"Whilst we are not proposing redundancies at the moment, in order to preserve jobs we are proposing from 1 February, (on a temporary basis), a 20 per cent cut across all engineers' hours to 32 hours per week and a corresponding cut in basic pay. Please note that your bonus will not be affected, where applicable."

In response to that invitation to vary the terms of the contract email correspondence ensued between the Claimant Mr Bush and the Respondent on 28 and 29 January 2009. Materially, Mr Bush asked:

"Also how many tests are we required to do a week, as we are losing a day, we will have to [do] a day less in bonus."

And the answer was:

"The number of tests required per week will remain the same."

To which Mr Bush responded:

"So basically, we are now required to do 150 tests per day."

That seemed to the Employment Judge to indicate that Mr Bush and indeed his colleagues, because it was a matter of some discussion, subsequently signed the variation knowing that there would be no reduction in the number of tests to generate a bonus entitlement. Having signed the variation, both Claimants were unhappy with the prospect of having to do the same number of tests over a four day rather than five day week. A grievance was pursued; that was rejected and in due course an appeal against that decision was rejected by the managing director, Mr Beardsmore.

1. The Judge also had before him evidence in the form of timesheets and although there was a considerable dispute during the hearing as to whether those timesheets showed that bonus was calculated weekly or daily, the Judge concluded at paragraph 22 of his reasons that the timesheets also show a weekly bonus calculation of pay.

1. In these circumstances, despite Mr Scott's charming submissions this morning, it seems to me quite impossible to say that the Judge reached a conclusion which was unsupported by, or contrary to, the evidence, or otherwise falls within Lord Justice Mummery's rubric in the case of Yeboah v Crofton.

1. The jurisdiction of the EAT to interfere with Employment Tribunal decisions is well known and derived from section 21 of the Employment Tribunals Act 1996. This Tribunal can only interfere where there has been shown to be an error of law below. I am quite satisfied that test is not fulfilled by the Appellants in the present case. This was a permissible finding by the Employment Judge and consequently this appeal fails and is dismissed.