Batty v BSB Holdings (Cudworth) Ltd.

In an employment contract, wages and work ordinarily go together. An employee claiming salary must show that he or she worked, or was ready and willing to work. A contractual suspension on full pay may be lifted on reasonable notice, even where the original suspension was intended to allow workplace difficulties to be resolved. Notice communicated to the employee’s solicitor may fix the employee with knowledge of its contents. Where an employee, knowing that suspension has ended, refuses or shows unwillingness to return, the employer may withhold salary. That withholding does not amount to a repudiatory breach.

The appellant was employed by the respondent under a five-year executive service agreement. The agreement permitted suspension on full pay. Following illness and disputes about his role, the respondent instructed him not to attend work. It later wrote to his solicitors seeking his return to work or an explanation for continued absence, and subsequently warned that salary and benefits would cease.

The appellant claimed damages for breach of contract, contending that the suspension continued, that he had not received effective notice to return, and that the withholding of pay was repudiatory. The county court dismissed the claim. The central issues concerned the effect of the suspension, the adequacy of notice, the appellant’s willingness to work, and whether non-payment justified termination.

1. Appeal dismissed. The respondent was entitled to withhold salary and benefits, and the appellant was not entitled to treat that withholding as a repudiatory breach.
2. The contractual power to suspend was separate from the disciplinary and grievance provisions. Clause 11.3 permitted suspension on full pay at any time. The September 1998 letter therefore created an effective contractual suspension, which continued until countermanded on reasonable notice.
3. The April 1999 letter, read in context, clearly required the appellant either to return to work or to explain why he could not do so. It was sufficient to lift the suspension. Because the letter had been received by the appellant’s solicitor, the appellant was fixed with knowledge of it, despite his claimed lack of actual receipt.
4. The governing principle was that wages and work go together. Following Miles v Wakefield Metropolitan District Council [1987] ICR 368, a claim for salary requires proof that the employee worked or was willing to work. That requirement also applied to the wrongful-dismissal claim based on withholding work or pay.
5. The Court of Appeal could not reverse the Recorder’s findings that the appellant had indicated that he would not return and knew that the suspension had been lifted. Those findings were not palpably erroneous. The respondent was therefore entitled to stop payment, and its conduct was not repudiatory.

Lord Justice Sedley agreed that the April letter ended the suspension and that the findings defeated the appellant’s assertion of readiness and willingness to work. Lady Justice Hale agreed.

• Court of Appeal (Civil Division): appeal from the judgment of Mr Recorder Kealy in Sheffield County Court dismissed with costs.
• Sheffield County Court: claim for damages for breach of the Executive Service Agreement dismissed and judgment entered for the respondent with costs.