Czarnecki v Choice Textiles Ltd

A contractual discretion does not ordinarily remove an employee’s right to have that discretion genuinely considered. Where its factual preconditions are satisfied and the employer has not considered it, damages are assessed by asking what the employer, acting rationally, fairly and without caprice, would have decided.

Contractual provisions must be read together. A clause making an enhanced rate for additional hours discretionary did not displace an express entitlement to normal pay for work outside normal hours. A claim for a discretionary allowance nevertheless fails where there is no evidence that the conditions making it due were met.

The claimant, an HGV driver, appealed aspects of the Watford Employment Tribunal’s reasons of 18 January 2012. The Tribunal had rejected claims for unpaid overtime and meal allowances. Its finding that compensation for conceded unfair dismissal was extinguished by contributory fault was not challenged.

The overtime claim concerned contractual clauses fixing normal hours at up to 52 hours per week, providing for discretionary enhanced overtime, and requiring payment at the normal rate for work outside normal hours. The meal-allowance claim concerned a discretionary weekly allowance. The central issues were the proper construction of the contractual provisions, the effect of an unexercised discretion, and whether the claimant had proved the factual basis of each claim.

1. The appeal was allowed in part. The appeal concerning overtime pay was allowed and remitted to the same Employment Tribunal. The appeal concerning meal allowances was dismissed.

2. The Tribunal had erred in treating the contractual discretion as meaning that no overtime payment was enforceable. Clauses 12 and 15 had to be reconciled. Hours above 52 per week, averaged across the working year, were additional hours for which the employee was entitled to the normal rate of pay. Only payment at an enhanced rate was discretionary.

3. Where the factual precondition for a contractual discretion is met, the employee is ordinarily entitled to genuine consideration of its exercise. Following the approach in [2005] ICR 402 and [2011] EWCA Civ 830, a failure to consider the discretion is a breach. Damages require the tribunal to determine what the employer would rationally, fairly and without caprice have decided about an enhanced payment.

4. The Tribunal made no proper finding on whether the claimant had worked more than 52 hours on average. That finding was essential both to entitlement to normal pay and to any duty to consider enhancement. The remitted Tribunal was directed to determine the additional hours worked and, if established, whether the enhanced-rate discretion had been considered and rationally exercised; if not, it must make the counterfactual decision itself.

5. The meal-allowance claim failed because the claimant adduced no evidence that an allowance was due and payable. The Tribunal could only conclude that the claim had not been established.

• Employment Appeal Tribunal: Allowed the appeal on overtime pay, set aside that part of the Tribunal’s reasoning, and remitted it to the same Tribunal. Dismissed the meal-allowance appeal.
• Employment Tribunal, Watford: In reasons dated 18 January 2012, rejected the overtime and meal-allowance claims. It also found conceded unfair dismissal but extinguished compensation for contributory fault; that finding was not appealed.