Evans v. The Malley Organisation Ltd (t/a First Business Support)

Factual and Procedural Background

This is an appeal by the Appellant against a Decision of the Employment Tribunal, sitting at The City South, on 31 October and 1 November 2000, which dismissed his various claims against Company A t/a Company B. The Appellant’s claims included a complaint of unauthorised deductions from wages, specifically relating to accrued holiday pay upon termination of employment and pay during a period of suspension prior to termination.

The Appellant was employed as a sales representative by Company A, which provides services to small and medium-sized businesses in employment law and health and safety. The contract of employment included a basic salary plus commission payments, with holiday pay explicitly stated to be paid at the normal basic rate.

The Employment Tribunal made findings regarding the terms of employment, commission calculation, and the circumstances of the Appellant’s suspension and dismissal. The Tribunal dismissed the Appellant’s claims, including that the Respondent made unauthorised deductions from his wages. The appeal challenges those findings.

Legal Issues Presented

1. Whether the Appellant was entitled to accrued holiday pay calculated by reference to his basic pay plus commission, rather than basic pay alone, under the statutory framework including the Working Time Regulations 1998 and the Employment Rights Act 1996.
2. Whether the Appellant was entitled to pay during his suspension that included commission payments, rather than just his basic rate of pay, as a matter of contract law.

Arguments of the Parties

Appellant's Arguments

• The Appellant contended that accrued holiday pay should be calculated to include commission payments, relying on the statutory scheme incorporating the Working Time Regulations 1998 and section 221 of the Employment Rights Act 1996.
• He argued that during the suspension period, he was entitled to pay including commission, not just the basic rate, and that the Tribunal erred in dismissing this claim without proper contractual analysis.

Respondent's Arguments

• The Respondent maintained that holiday pay was correctly calculated at the basic rate as expressly provided in the contract.
• Regarding suspension pay, the Respondent argued that the statutory framework did not apply and that the contract did not support payment of commission during suspension.
• They also contended that the Appellant’s claim for commission during suspension would amount to double payment, which was rejected by the Tribunal and reiterated in the appeal.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court analysed the statutory provisions governing holiday pay, particularly the Working Time Regulations 1998 and section 221 of the Employment Rights Act 1996. The court found that while the contract expressly provided for holiday pay at the basic rate, the statutory scheme overrode this contractual term, requiring holiday pay to be calculated by reference to average weekly remuneration including commission under section 221(3).

Regarding pay during suspension, the court held that the statutory framework did not apply, so the issue was purely contractual. The Tribunal had erred by dismissing the claim without properly considering the legal principles of contractual implication and the meaning of "pay" in the suspension clause. The court noted the need to consider what the parties would have objectively regarded as the meaning of "pay" during suspension, including whether the contra proferentem rule might apply, but declined to decide the issue itself, remitting it for further consideration.

The court rejected the argument that payment including commission during suspension would amount to double payment, reasoning that suspension and holiday are periods when the employee cannot perform work that might generate commission, so the payment reflects a projected loss rather than duplication.

Finally, the court granted permission to amend the Notice of Appeal to include the suspension pay issue, which had not been raised initially but was properly argued before the Employment Appeal Tribunal.

Holding and Implications

The court UPHELD THE APPEAL in relation to both accrued holiday pay and pay during suspension. It substituted its own decision on the accrued holiday pay limb, ruling that holiday pay must be calculated including commission under the statutory formula. It remitted the suspension pay issue to the Employment Tribunal for further evidence and legal analysis regarding the proper contractual meaning of "pay" during suspension.

The direct effect is that the Appellant is entitled to holiday pay calculated on a statutory basis including commission, and the question of pay during suspension requires further determination. No new precedent was established beyond clarifying the application of existing statutory and contractual principles in this context.