ISS Mediclean Ltd v Elesina

Whether wages have been unlawfully deducted depends on the sum properly payable under the employment contract. Contractual terms must be construed objectively, by asking what a reasonable person with the background knowledge reasonably available to the parties would have understood. The court must consider the contract as a whole and relevant parts of the factual matrix, including incorporated documents and communications. A worker’s actual knowledge is not the test. The contra proferentem rule cannot be applied without identifying a genuine ambiguity. Where enhanced pay is expressed in documents applying only when a client has provided funding, the contract may not confer an immediate entitlement if the objective construction shows that funding and agreement were prerequisites to implementation.

Mrs Elesina, employed by ISS Mediclean Ltd as a catering assistant at Kingston Hospital, claimed enhanced rates for work during unsocial hours. The Employment Tribunal found that the incorporated handbook entitled her to those rates and held that non-payment constituted unlawful deductions from wages under Part II of the Employment Rights Act 1996.

ISS appealed, contending that the handbook’s provisions applied only where the relevant NHS Trust had agreed to provide the funding necessary to implement them. The central issue was the proper construction of the contract dated 4 March 2009, considered against the relevant background.

1. Appeal allowed. The Employment Tribunal’s finding was set aside and a finding was substituted that there had been no unlawful deduction from wages.
2. Under section 13 of the Employment Rights Act 1996, the question was what wages were properly payable on the relevant occasions. That depended on the proper construction of the employment contract.
3. The applicable contractual construction principles were those stated in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896. Construction is objective. The relevant question is what the document would convey to a reasonable person with the background knowledge reasonably available to the parties. The contract must be read as a whole and the relevant factual matrix must be considered.
4. The Tribunal erred by treating the absence of funding as an unattractive interpretation, by applying contra proferentem without identifying any ambiguity, and by considering what the Claimant herself knew about the background.
5. The 4 March 2009 contract, read with the handbook, the September 2007 agreement and the July 2008 memorandum, did not objectively confer an express entitlement to enhanced unsocial-hours payments before the necessary agreement and funding had been obtained from Kingston Hospital. The Tribunal’s findings that no such agreement or funding existed were inconsistent with its construction of the contract.

• Employment Appeal Tribunal: allowed ISS Mediclean Ltd’s appeal from the Employment Tribunal’s judgment promulgated on 11 May 2011. The EAT substituted a finding that no unlawful deduction from wages had occurred.