Luke v Stoke-On-Trent City Council

The Court of Appeal dismissed the employee's claim that the employer made an unauthorised deduction from salary under section 13 of the Employment Rights Act 1996. The court accepted the employment tribunal's factual findings that the employee refused to accept the investigator's report and would not consider reasonable proposals to return to suitable work outside the ACE Centre. It held that, on the true construction and effect of the employment relationship, the employer was not obliged to continue paying salary when the employee refused to perform work she was employed to do: in short, no work, no pay. The court concluded it was unnecessary to imply any additional contractual term to determine the dispute.

Background and parties:

• The appellant, Mrs Beryl Luke, was employed as a special needs teacher at the Assessing Continuing Education (ACE) Pupil Referral Unit under a Written Statement of Particulars identifying her service as at "The Pupil Referral Unit" (the ACE Centre).
• The respondent was Stoke-on-Trent City Council.

Nature of the claim and procedural history:

• Mrs Luke brought proceedings claiming unauthorised deductions from salary contrary to section 13 of the Employment Rights Act 1996, arising after the Council stopped paying her on 11 February 2004 because she was not performing work under the ACE contract.
• The employment tribunal dismissed her salary claim; the Employment Appeal Tribunal (Underhill J) upheld that decision. Mrs Luke appealed to the Court of Appeal.

Primary issues framed by the court:

• Whether, on construction of the ACE contract and the employment relationship, the Council was obliged to continue paying salary when Mrs Luke would not return to the ACE Centre and refused to consider suitable alternative work.
• Whether it was necessary to imply a term into the contract permitting temporary redeployment or other changes to the place or nature of work.

Court's reasoning and subsidiary findings:

• The tribunals below found (and the Court of Appeal accepted as fact) that an external investigator's report (the Chadwick Report) upheld one complaint but rejected others and proposed an Action Plan requiring acceptance for a return to the ACE Centre; Mrs Luke would not accept the report.
• The Council reasonably took the stance that the Action Plan could not be implemented unless she accepted the report and for that reason sought to find suitable alternative or interim work so that public funds paying her salary would be justified; Mrs Luke declined to consider such proposals and only undertook limited home tuition work.
• The Court of Appeal held that the reciprocal obligations inherent in the employment relationship entitled the Council to require the employee to comply with reasonable managerial requirements falling within the contract's scope; because Mrs Luke refused to work, the contractual entitlement to pay did not continue.
• The court considered but rejected the need to imply any additional contractual term: the outcome followed from the express contract and the tribunals' factual findings.

Relief sought:

• Arrears of salary claimed under section 13 of the Employment Rights Act 1996.

Appeal dismissed. The court held that on the facts found by the employment tribunal (refusal to accept the investigator's report and refusal to consider reasonably offered alternative work) the employer was not obliged to continue paying salary under the ACE contract; it was unnecessary to imply any additional contractual term to reach that conclusion.

Appeal to the Court of Appeal from the Employment Appeal Tribunal (Underhill J) UKEAT/0344/06, which upheld the employment tribunal's dismissal of the salary claim (employment tribunal judgment sent 3 August 2005; EAT decision dated 18 December 2006).