Luke v Stoke-On-Trent City Council

An employee’s salary forms part of a reciprocal employment relationship and depends on performing, or being willing to perform, contractual work. An employee cannot insist on returning only on self-selected conditions where the employer has adopted a reasonable position within the scope of the contract. If the employee then does not perform the contractual work, withholding salary is not an unauthorised deduction under section 13 of the Employment Rights Act 1996. It is unnecessary to imply a mobility or redeployment term where the express contract and employment relationship resolve the issue. Any implied term must be necessary for business efficacy and consistent with the express terms.

Mrs Beryl Luke, a special needs teacher employed by Stoke-on-Trent City Council at the ACE Centre, claimed that the Council had made unauthorised deductions from her salary contrary to section 13 of the Employment Rights Act 1996. Following disputes about her return to work, she declined to accept an investigation report and would not consider alternative work outside the ACE Centre. The employment tribunal held that the Council was entitled to stop paying her. The Employment Appeal Tribunal upheld that decision in UKEAT/0344/06, relying on an implied contractual term. The central issue before the Court of Appeal was whether the claim could instead be resolved by the express contract and the employment relationship, without implying a mobility or redeployment term.

Disposition. Lord Justice Mummery dismissed the appeal. Lord Justice Laws and Lord Justice Moses agreed. Mrs Luke’s claim for arrears of salary therefore failed.

1. The employment relationship was governed by the ACE Contract. It had to be construed as a whole and in its surrounding circumstances. A term could be implied only if necessary for business efficacy, and could not contradict an express term.
2. The relationship imposed reciprocal obligations. Mrs Luke was required to comply with the Council’s reasonable instructions or management decisions, provided they fell within the scope of the contract. The employment tribunal had found that the Council’s position—that she could not return to the ACE Centre without accepting the Chadwick Report—was reasonable.
3. Mrs Luke chose not to accept the Report, did not return to the ACE Centre and would not consider alternative work outside it. Nothing in the contract or employment relationship entitled her to dictate the conditions of her return or to receive salary while not performing work under the contract. The case was therefore a straightforward application of no work, no pay. The Council had not made an unauthorised deduction under section 13 of the Employment Rights Act 1996.
4. It was unnecessary to imply any further mobility or redeployment term. The implied-term reasoning adopted below was an unnecessary and irrelevant excursion, and the proposed terms contradicted the express contract. The Court of Appeal could determine the no-work-no-pay point even though it had not been expressly argued below because it was not a new point of law and the tribunal’s findings required no further evidence.
5. For completeness, the Court agreed that the ratio in Courtaulds did not cover this case, which concerned employment as a teacher at a particular type of institution rather than employment at a specified geographical location: Courtaulds Northern Spinning Ltd v Simpson and the Transport & General Workers Union [1988] IRLR 305. That discussion was unnecessary to the result, and the Court expressed no concluded view on the EAT’s alternative formulation of an implied term.

1. Court of Appeal (Civil Division) dismissed the appeal from the Employment Appeal Tribunal.
2. Employment Appeal Tribunal, in UKEAT/0344/06, upheld the employment tribunal’s decision that the Council was entitled to stop paying Mrs Luke’s salary.
3. Employment Tribunal held in its judgment sent on 3 August 2005 that the Council was entitled to stop payment under the ACE Contract and had not made an unauthorised deduction under section 13 of the Employment Rights Act 1996.