Factual and Procedural Background
This case concerns claims by approximately 330 hourly-paid employees ("Claimants" or "Appellants") of Company A at its factory in The City for guarantee payments under Part III of the Employment Rights Act 1996. The Claimants worked a 39-hour week Monday to Friday but, due to poor trading conditions, Company A reached a temporary agreement with the recognised trade union for a reduction to a 34-hour week Monday to Thursday ("the Agreement"). The Agreement initially covered 1 January to 26 June 2009, later extended to 31 December 2009, and allowed Company A to cancel it on one week's notice.
The Union contended that Fridays during the Agreement were "workless days" under section 28 of the 1996 Act, entitling employees to guarantee payments. Company A denied this, arguing that the Agreement meant Fridays were not days employees were "normally required to work" under their contracts, thus no guarantee payments were due.
The Claimants commenced proceedings in the Employment Tribunal in June 2009 ("the 2009 proceedings") claiming "unlawful deduction of wages" under Part II of the Act to benefit from a more generous limitation period. Further proceedings were commenced in February 2010 ("the 2010 proceedings") to cover the extended Agreement period, again pleaded under Part II.
Company A raised procedural and jurisdictional objections, including a failure to comply with statutory grievance procedures required by the Employment Act 2002 (applicable only to the 2009 proceedings) and time-bar defenses. It also relied on a "September invitation" whereby employees were invited to return to five-day working from 1 October 2009, which Company A argued affected entitlement to guarantee payments.
The Employment Tribunal dismissed the claims in both sets of proceedings, primarily on procedural grounds in the 2009 proceedings and on limitation grounds in the 2010 proceedings, though it also found against the Claimants on the substantive issue that Fridays were not "normally" working days during the Agreement.
The Claimants appealed to the Employment Appeal Tribunal ("EAT"), challenging the substantive finding and the refusal to allow amendment of the 2009 proceedings to rely on section 34 of the 1996 Act rather than section 23, thereby avoiding the 2002 Act jurisdictional bar.
Legal Issues Presented
- Whether, during the currency of the Agreement, Fridays were days on which employees were "normally required to work" under their contracts of employment for the purposes of section 28 of the Employment Rights Act 1996 (the substantive issue).
- Whether the Employment Tribunal erred in refusing permission to amend the 2009 proceedings to claim under section 34 of the 1996 Act, thereby circumventing the jurisdictional bar imposed by the Employment Act 2002.
- Whether the non-returners (employees who continued four-day working after 13 November 2009) have a viable claim in the 2010 proceedings, particularly considering the effect of the September invitation and the limitation periods.
Arguments of the Parties
Appellants' Arguments
- The Agreement was a temporary variation and did not alter the "normal" contractual requirement to work Fridays; thus Fridays remained workless days when no work was provided, entitling employees to guarantee payments under section 28.
- The refusal to allow amendment to plead under section 34 was incorrect because it was effectively a re-labeling of the claim, not a new cause of action, and was necessary to overcome the jurisdictional bar imposed by the 2002 Act.
- The September invitation did not constitute provision of work under section 28(1), as Company A had not formally terminated the Agreement; hence, the non-returners retained their entitlement to guarantee payments.
Respondent's Arguments
- The Agreement created a "new normal" working pattern, effectively removing the requirement to work on Fridays during its currency, negating entitlement to guarantee payments for those days.
- The 2009 proceedings were jurisdictionally barred due to non-compliance with statutory grievance procedures under the Employment Act 2002, and the Claimants should not be permitted to amend to avoid this bar.
- The September invitation was reasonable and, under section 29(4), the Claimants who refused alternative work lost entitlement to guarantee payments; also, many claims were out of time under the limitation provisions.
- In the EAT, it was contended that the 2010 claims were out of time and that the Claimants had been provided with work after the September invitation, defeating their claims under section 28(1).
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| HMRC v Stringer [2009] ICR 985 |
Confirmed that claims under the Employment Rights Act can be brought under both specific statutory payment provisions and general unlawful deduction provisions, with differing limitation regimes. |
Accepted to explain the dual regime for claims and the more generous limitation period under Part II. |
| Selkent Bus Co. Ltd v Moore [1996] ICR 836 |
Guidance on the exercise of discretion in allowing amendments to pleadings in employment tribunal proceedings. |
Applied to assess whether permission to amend the 2009 proceedings should have been granted. |
| Barke v Seetec Business Technology Centre Ltd [2005] ICR 1372 |
Procedure for obtaining clarification of tribunal decisions (Burns/Barke procedure). |
Referenced in the EAT's refusal to allow amendment of the Notice of Appeal due to prejudice to the Respondent. |
| Cocking v Sandhurst (Stationers) Ltd [1974] ICR 650 |
Limits on tribunal power to amend originating applications lacking procedural compliance. |
Relied on by EAT to support refusal of amendment due to jurisdictional nullity argument. |
| British Printing Corporation (North) Ltd v Kelly [1989] IRLR 222 |
Approval of Cocking and principles on tribunal amendment powers. |
Supported the EAT's reasoning on amendment jurisdiction. |
| Capek v Lincolnshire County Council [2000] IRLR 590 |
Failure to attach correct legal labels does not necessarily deprive tribunal of jurisdiction. |
Considered persuasive but not binding; the Court preferred to decide on principle. |
| Clemens v Peter Richards Ltd [1977] IRLR 332 |
Effect of unilateral contractual change on entitlement to guarantee payments. |
Discussed as non-binding precedent; distinguished due to absence of temporary variation. |
| Daley v Strathclyde Regional Council [1977] IRLR 414 |
Acceptance of unilateral change and its effect on "normal" contractual working days. |
Referenced to highlight distinction between temporary and permanent changes. |
| Stevenson v Patonpond Ltd (unreported) |
Short-time working agreement and guarantee payment entitlement. |
Supported the view that temporary agreements do not negate guarantee payment rights. |
Court's Reasoning and Analysis
The Court undertook a detailed analysis of the statutory provisions governing guarantee payments under Part III of the Employment Rights Act 1996, particularly sections 28 to 34, and the interplay with the Employment Act 2002 grievance procedure requirements and limitation periods.
On the substantive issue, the Court rejected the Respondent's "hard" argument that a temporary contractual variation extinguished the Claimants' right to guarantee payments by creating a new "normal" working pattern without Fridays. It emphasized that the critical test under section 28(1) is whether the employee would "normally be required to work" on that day "in accordance with his contract," with "normally" referring to the usual pattern absent abnormal circumstances such as short-time working.
The Court found that the Agreement was a temporary and terminable arrangement, and thus Fridays remained "normally" working days. This interpretation was supported by statutory provisions on calculation of guarantee payments (sections 30(5) and 31(6)) which contemplate variations and new contracts related to short-time working without negating entitlement.
The Court also considered and preferred the Claimants' submissions over the Employment Judge and Silber J's reasoning on this issue, finding that the latter had placed undue emphasis on the contractual variation without sufficient regard to its temporary nature.
Regarding the amendment issue in the 2009 proceedings, the Court held that refusal to allow amendment to plead under section 34 was erroneous. The Court reasoned that the amendment was essentially a re-labeling of the same claim to enforce the right to guarantee payments, involving no new facts or causes of action, and that no prejudice to the Respondent arose. The Court distinguished the jurisdictional bar argument based on the Employment Act 2002, finding that the proceedings were not nullities prior to the tribunal's jurisdictional ruling, and thus amendment was permissible.
On the 2010 proceedings concerning the non-returners, the Court found that their claims were not out of time, as the most recent workless days fell within the three-month limitation period and earlier workless days could be aggregated under the "series of deductions" provision.
The Court rejected Silber J's alternative reasoning that the September invitation constituted provision of work under section 28(1), which would defeat the claims. The Court held that this was a distinct legal argument not raised before the Employment Tribunal or EAT, denying the Claimants a fair opportunity to respond. Further, the findings on the September invitation did not clearly establish an unequivocal offer of five-day working to all Claimants for the entire period, and the Agreement had not been formally terminated.
Accordingly, the Court concluded that the non-returners' claims should succeed on the substantive issue, subject only to quantification and any peculiarities in individual cases.
Holding and Implications
The Court's final decision is to allow the appeal in respect of all Claimants in the 2009 proceedings and the non-returners in the 2010 proceedings, and to remit both cases to the Employment Tribunal for quantification of sums due.
Holding: The Court held that during the currency of the temporary Agreement, Fridays remained days on which employees were "normally required to work" under their contracts for the purposes of the Employment Rights Act 1996, entitling them to guarantee payments for workless Fridays. The refusal to permit amendment of the 2009 proceedings was erroneous, and the non-returners' claims in the 2010 proceedings were not out of time and should succeed on the substantive issue.
Implications: The decision clarifies that temporary contractual variations do not necessarily alter the "normal" working pattern for guarantee payment purposes under section 28. It also affirms that procedural bars such as jurisdictional limitations under repealed statutes should not prevent amendment where no prejudice arises, facilitating substantive justice. No new precedent beyond the application of existing principles was established. The case is remitted for quantification, expected to be largely arithmetical and straightforward.