Mears Ltd v Salt & Ors

A payment which originated as a travel allowance may become a contractual emolument if, as a matter of fact and degree, it has ceased to depend on travel, expense or lost productivity and is paid as a fixed premium for days worked. It can then be “wages” for the unlawful-deduction regime, rather than an excluded expenses payment under Employment Rights Act 1996, section 27(2)(b).

In determining whether wages are properly payable, an Employment Tribunal may make factual findings as to an express agreement, including one made orally or by conduct. It is not thereby construing or amending a contract. A regular practice may also crystallise into an implied contractual right.

Five electricians claimed unpaid electrician’s travel time allowance (ETTA) after their employment transferred to Mears Ltd. The allowance had originated under Birmingham City Council arrangements but had continued through successive transfers.

The Employment Tribunal upheld claims for unlawful deductions from wages under Employment Rights Act 1996, section 23. It found that ETTA had become a fixed daily contractual payment, and that each claimant had an express agreement for payment or, alternatively, an implied right arising from custom and practice.

Mears appealed on jurisdiction, contractual entitlement, transfer, and quantification grounds. The central issue was whether the allowance was wages properly payable, rather than an expenses payment or unearned compensation claim.

1. The appeal was allowed only to correct Ms King’s award. Her April 2008 claim contained 20, not 21, hours. Her award was reduced by £11.64 from £4,164.12 to £4,152.48. The appeal was otherwise dismissed.

2. The Employment Tribunal was entitled to hold that ETTA was within the unlawful-deduction jurisdiction. Although it had originally compensated for travel-related loss of productive time, it had become a fixed daily premium. It was not conditional on travel, actual expenditure, or impaired productivity. Applying the fact-and-degree approach in London Borough of Southwark v O’Brien, it was a contractual emolument rather than an expenses payment excluded by section 27(2)(b) of the Employment Rights Act 1996.

3. Lucy v British Airways did not assist Mears. In that case the employees had not contractually earned the flying allowance and the possible claim concerned loss of an opportunity to earn it. Here, the claim was for a crystallised contractual allowance which was properly payable for the relevant days worked.

4. The Tribunal’s duty under section 23 included deciding whether the wages were properly payable. Its findings that each claimant had an express agreement, supported in some cases by prior payments and management conduct, were factual findings. They neither interpreted nor invented contractual terms. An express agreement may be oral or made by conduct. The alternative finding that a sufficiently regular individual practice had crystallised into an implied contractual right was also open on the evidence.

5. The transfer to Mears and the designation of Kings Road as the primary location did not reset the contractual trigger for ETTA. The transfer letter expressly preserved existing terms and described location as a practical change.

6. The unquantified claim forms did not cap recovery at the £11 hourly figure later used in solicitors’ schedules. The Tribunal could award the contractual rate of £11.64 where the evidence established that rate. Its credibility findings and findings on the days and hours worked by the other claimants disclosed no appealable error.

• Employment Appeal Tribunal: Allowed Mears Ltd’s appeal only to reduce Ms King’s award by £11.64; otherwise dismissed the appeal.
• Employment Tribunal, Birmingham: Declared the five claims for unlawful deductions from wages under Employment Rights Act 1996, section 23 well founded and awarded the scheduled sums.