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 EWCA Civ 1148, Court of Appeal - Oliver Segal QC, Charlie Sparling
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A judge had erred in finding that a variation of contract, intended to be temporary, to reduce employees' hours of work meant that they were not entitled to a guarantee payment under the Employment Rights Act 1996 s.28. The court gave guidance on the correct interpretation of s.28 and clarified the circumstances in which claims could be amended to introduce a new cause of action.
The appellants (X) appealed against a decision ( I.C.R. 213,  I.R.L.R. 13) that an employment tribunal had no jurisdiction to hear their claims for unlawful deductions from wages arising out of the non-payment of guarantee payments.
X were 330 employees who worked for the respondent (R). They had worked 39 hours per week, Monday to Friday. In January 2009, due to financial difficulties, R reduced their working hours to 34 hours per week, Monday to Thursday. X claimed that they were entitled to guarantee payments under theEmployment Rights Act 1996 s.28 in respect of the "workless days" on Fridays. In June 2009 they brought a claim for unlawful deductions under s.23. The claim was dismissed because X had failed to comply with the statutory grievance procedure and the tribunal therefore lacked jurisdiction. Claims for guarantee payments under s.34 were not covered by the statutory grievance procedure, but the tribunal refused to allow X to amend their claim to include s.34. X made a second claim for unlawful deductions in February 2010 in respect of the period June to December 2009. That claim was dismissed as (i) it was out of time in respect of claimants who had begun working Fridays again in November 2009; (ii) in respect of those who had not returned to work on Fridays, the change to working hours amounted to a variation of their employment contracts. Thus their "normal" working hours were 34 hours, Monday to Thursday and no guarantee payments were due.
X submitted that (1) the agreement that they would not work Fridays was intended to be temporary and Friday remained one of their normal working days; (2) the judge should have allowed them to amend their first claim to plead under s.34.
HELD: (1) The question which governed liability under s.28 was whether the employee would "normally be required to work [on the day in question] in accordance with his contract of employment". The phrase "in accordance with his contract of employment" was governed by the word "normally", which was the key concept underlying s.28. The contrast which it imported was between the state of affairs where the employee was not being required to work and the state of affairs as it would be but for the abnormal non-provision of work. The fact that the employee had expressly agreed to a departure from the norm in a manner which gave rise to a variation of the contract of employment did not by itself mean that it was any less a departure. Further, s.30(5) provided for the calculation of a guarantee payment in cases where an employee's contract had been "varied in connection with a period of short-time working". That was not compatible with R's argument that no guarantee payment was due where the contract was varied. It would be surprising and unsatisfactory if by giving his explicit agreement to a period of short-term working, as opposed to suffering the employer to act unilaterally, an employee lost his right to a guarantee payment, Clemens v Peter Richards (t/a John Bryan)  I.R.L.R. 332, Daley v Strathclyde RC  I.R.L.R. 414 and Stevenson v Patonpond Ltd (t/a British Button Industries) considered. In the instant case five-day working remained the norm; the agreement provided for a temporary departure from it rather than a replacement of it. Fridays were therefore "workless days" in respect of which X were entitled to guarantee payments (see paras 34-36, 41 of judgment). (2) It was doubtful that an amendment to base the claim on s.34 rather than s.23 could be properly described as raising a new cause of action. On either basis the claim was to enforce the right to a guarantee payment created by s.28. In any event, there was nothing in the rules or case law to say that an amendment to substitute a new cause of action was impermissible. The correct approach was to focus on the extent to which the new pleading was likely to involve substantially different areas of enquiry compared to the old: the greater the difference, the less likely it was that the new claim would be permitted, Selkent Bus Co Ltd v Moore  I.C.R. 836 explained. It was well recognised that where the effect of a proposed amendment was simply to put a different legal label on facts already pleaded, permission would normally be granted. Whilst a fresh claim under s.34 would have been out of time, the relevance of that factor depended on the circumstances. Where the new claim was wholly different from the original claim, the claimant should not usually be permitted to circumvent time limits by introducing it by way of amendment, but where it was closely connected with the claim originally pleaded, justice did not require the same approach. In the instant case it was a factor of no real weight. Further, the fact that a claimant had commenced proceedings which the tribunal decided it had no jurisdiction to determine was not an absolute bar to an amendment which would remove that difficulty. The proceedings were not a nullity as they were initially valid. X's amendment was therefore allowed. The first claim succeeded and was remitted to the tribunal for quantification (paras 46-57). (3) The second claim by those who had not returned to work five days per week was also remitted to the tribunal (paras 58-66).
Counsel for the appellants: Oliver Segal QC, Charles Sparling.