Vision Events (UK) Ltd v Paterson

An accrued flexi-hours balance does not, without an express or necessary implied contractual term, create a right to payment in money on termination. A term will be implied only where necessary for business efficacy or where both parties would plainly have agreed to it. It cannot be implied merely because payment would be fair.

Where the contract permits the employer to determine when flexi-hours are taken, the employer may require them to be taken during the notice period, provided wages for that period are paid. On the facts found, the redundancy dismissal process, consultation and selection were fair.

The employee, a salaried multimedia producer, participated in a flexi-hours scheme under which additional hours could be taken as time off at a time suitable to the employer. On redundancy he had accrued more than 1,000 flexi-hours. The contract and handbook did not state how untaken flexi-hours would be treated on termination.

The Employment Tribunal dismissed his unfair dismissal claim but upheld his claim for unlawful deduction from wages, awarding payment for all accrued flexi-hours. It held that a contractual term requiring payment should be implied and that the employer could not require flexi-hours to be taken during statutory notice.

The employer appealed the deduction award. The employee cross-appealed the dismissal of his unfair dismissal claim.

1. Appeal allowed by a majority; cross-appeal refused. The Employment Tribunal erred in implying a term requiring payment in money for accrued flexi-hours on termination.

2. The written contractual material was poorly drafted but contained no express provision entitling an employee who was not entitled to overtime to payment for untaken flexi-hours when employment ended. A term may be implied only where it is necessary for business efficacy or where both parties would plainly have agreed to it. Neither condition was met. The Tribunal had instead implied the term because it considered payment fair. That was not the correct test.

3. The employer's goodwill offer to pay part of the accrued hours did not amount to a concession that payment was contractually due. Nor did the inconsistent reference in the ET3 to payment under the terms and conditions establish the implied term.

4. The minority would have upheld an implied entitlement to some payment. It considered that an employee would plainly expect payment for work done where time off could no longer be provided on termination, and that any contractual ambiguity should be construed against the employer. The majority view governed.

5. The employer was contractually entitled to direct when flexi-hours were taken and could therefore require their use during the notice period. Its obligation was to pay wages during that period, which it had done. The Tribunal also erred in holding that the statutory notice entitlement prevented that direction.

6. On the cross-appeal, the Tribunal had made permissible findings of a genuine redundancy, fair selection and adequate consultation. Although aspects of an individual consultation meeting were criticised, no error of law in the conclusion of procedural fairness was shown.

• Employment Appeal Tribunal: the employer's appeal against the unlawful deduction award was allowed by a majority. The employee's cross-appeal against dismissal of the unfair dismissal claim was refused.
• Employment Tribunal: dismissed the unfair dismissal claim but upheld the claim for unlawful deduction from wages and awarded £12,514 for 1,042.84 accrued flexi-hours.