Qantas Cabin Crew (UK) Ltd v Lopez & Anor

A signed employment contract remains binding according to its objectively construed terms unless a recognised basis for setting it aside is established. Autoclenz requires a realistic examination of the actual agreement where written terms may not reflect it, but does not permit subjective expectations to displace terms in a non-sham secondment agreement.

A payment earmarked within an overall salary package for additional living costs may be a payment in respect of expenses. It is therefore excluded from “wages” under Part II of the Employment Rights Act 1996, even if it is not precise reimbursement. By contrast, taxable relocation incentive payments were wages. A single alleged shortfall cannot constitute a series of deductions for the extended limitation rule.

Two Australian cabin-crew employees accepted temporary employment in London with the appellant. They claimed that their contracts entitled them to a living-away-from-home allowance in addition to their ordinary pay, and to higher relocation payments shown in part of the later written contract.

The Employment Tribunal upheld the living-away-from-home claims but dismissed the relocation-payment claims. The employer appealed, contending that the allowance was included within the overall package and was in any event a payment for expenses outside Part II of the Employment Rights Act 1996. The employees conditionally cross-appealed on the relocation payments.

The central issues were the proper construction and binding effect of the contracts, whether the disputed payments were wages, and whether one employee’s claim was presented in time.

1. Appeal allowed; cross-appeal dismissed. The Employment Tribunal erred in holding that the living-away-from-home allowance was payable in addition to salary. The November contract was the parties’ true agreement. In any event, the October contract, construed objectively and in its tax-efficiency context, had the same effect: the allowance was a component within the total salary package, not separate additional pay.

2. Autoclenz v Belcher did not justify treating the employees’ subjective understanding as determinative. That authority permits a realistic inquiry into whether written terms represent the actual agreement, particularly where the contractual relationship is said to be unreal. There was no sham allegation here. The employees were free to accept the secondment, had opportunity for advice, and signed the revised terms. Their signatures bound them. Unpleaded allegations of misrepresentation and non est factum could not be introduced on appeal and would in any event fail.

3. The living-away-from-home component was paid in respect of the additional food and accommodation costs caused by working from London. Applying section 27 of the Employment Rights Act 1996, a payment need not precisely reimburse the worker’s expenditure to be “in respect of expenses”. It was therefore excluded from the statutory definition of wages, and the Tribunal had no Part II jurisdiction over that claim.

4. The higher relocation figures in the November document were an obvious mistake known to the employees. Construed with the surrounding documents, the agreed payments were £4,000 and £1,000. The relocation incentives were nevertheless wages, rather than expenses, because they were taxable inducements to relocate. Ms Hooper’s complaint concerned only one alleged deduction and was out of time; it could not be a series under section 23.

5. The living-away-from-home claims were dismissed. The Tribunal’s dismissal of the relocation claims was upheld.

• Employment Appeal Tribunal: employer’s appeal allowed on the living-away-from-home allowance; employees’ conditional cross-appeal dismissed.
• Employment Tribunal (London South): judgment given 3 October 2011, with reasons sent on 28 October 2011. It upheld the living-away-from-home claims but dismissed the relocation-payment claims.