Webber v NHS Direct

Where a contractual pay-protection clause requires an average of payments earned in the three months immediately preceding

The calculation must use the eligible sums earned in the reference period, rather than sums paid during it. Contractual pay-protection payments made while an employee continues to work are wages within section 27(1) of the Employment Rights Act 1996. They are not compensation for loss of office under section 27(2) where they are referable to the employee’s continuing obligation to render services.

The claimant had been employed in a Band 7 role. Following organisational change, she accepted redeployment to a lower-paid Band 6 role from 22 November 2010. Her contract incorporated a pay-protection policy requiring a monthly average of eligible payments earned in the three months immediately preceding the first day in the new post.

The Bristol Employment Tribunal dismissed her unlawful-deduction claim. It treated the reference period as the three completed calendar months before redeployment and used payments made in those months. The claimant appealed on both aspects of construction.

The respondent cross-appealed, contending that the Tribunal lacked jurisdiction over a free-standing contractual claim and that protected-pay sums were not wages for the purposes of Part II of the Employment Rights Act 1996.

1. The claimant’s appeal was allowed and the respondent’s cross-appeal was dismissed. Clause 3.5 was unambiguous. The words “three months immediately preceding the first day of employment in the new post” fixed the final day of the reference period as 21 November 2010, the day before the new employment began. The Employment Tribunal wrongly substituted three completed calendar months for that period.

2. The dates on which monthly salary was paid were irrelevant to identifying the period. The corresponding-date approach, accepted in [1981] 1 WLR 1027 and applied in [2011] ICR 1251, supported calculating calendar months from the relevant corresponding dates. Nothing in the clause or the circumstances displaced that approach.

3. The Tribunal also erred by averaging payments made during the period. The critical contractual word was earned. Protected pay was intended to reflect basic salary and unsocial-hours enhancements actually earned within the preceding three calendar months, including the period from 21 August to 21 November.

4. Although a free-standing breach-of-contract claim could not be determined while the claimant remained employed, that claim had been withdrawn. Properly read, the Tribunal had construed the contract only for the unlawful-deduction claim.

5. The protected-pay sums were wages under section 27(1) of the Employment Rights Act 1996. They were contractual remuneration for an employee who accepted and continued in the new role, and were referable to her obligation to render services. They were therefore not excluded as compensation for loss of office under section 27(2).

6. The EAT substituted a decision that the unlawful-deduction claim succeeded and remitted the case to a freshly constituted Employment Tribunal for remedies, unless the parties agreed the amount due.

• Employment Appeal Tribunal: The claimant’s appeal was allowed, the respondent’s cross-appeal was dismissed, and the unlawful-deduction claim was remitted for a remedies hearing.
• Bristol Employment Tribunal: In a judgment promulgated on 15 July 2011, the employment judge dismissed the claimant’s unlawful-deduction claim.