City Facilities Management (UK) Ltd v Beckett

It is not necessary for an employer to itemise a London weighting allowance separately, but the tribunal must first identify what sums were properly payable at the contract date.

Contractual construction must be performed by reference to the parties' knowledge when the contract was made, not by reference to later internal documents or post-contractual events.

Where a contract specifies no fixed rate for an allowance the claimant may only recover a particular rate if that rate can be implied with sufficient certainty; otherwise only a "reasonable" allowance is potentially recoverable and the tribunal may lack jurisdiction to award a specific unidentified rate.

Where a tribunal has failed to make essential findings of fact on these points, the proper remedy is to remit the matter for rehearing.

The respondent, a store cleaning manager, claimed unlawful deductions from wages in respect of a London Working Allowance (LWA) after transfer to a store in the LWA area.

The employment tribunal found the claimant entitled to LWA at 11% and awarded arrears. The respondent appealed, challenging the tribunal's approach to contractual construction, reliance on internal pay forms, and identification of the base salary and rate of LWA.

The Employment Appeal Tribunal considered whether the tribunal had correctly identified what wages were "properly payable" and whether post-contractual or internal documents could establish a contractual rate of allowance. The central issue was whether the tribunal made the findings necessary for a lawful determination under section 13 of the Employment Rights Act 1996.

(1) Appeal outcome: the Employment Tribunal erred in law and the matter is remitted to a fresh tribunal for rehearing.

1. On the proper statutory and contractual approach, the first question under section 13 is what sums were properly payable as wages. That requires construing the contract as at the date it was made. The tribunal must identify the base salary and then determine whether any allowance is included within it (see paragraph [28] and the court's analysis).
2. Post-contractual events and internal documents not communicated to the employee are, generally, irrelevant to that exercise of contractual construction. The tribunal here gave undue weight to such material when it decided the rate and existence of a separate LWA entitlement.
3. Where the contract does not specify a rate, there are two possibilities. If a particular rate is certain or notorious within the employer's arrangements it may be implied and so be determinable by the tribunal. If no certain rate can be implied, the claimant at best may claim a "reasonable" allowance. In that second situation the tribunal may lack jurisdiction to award a specific unascertainable sum under section 13 (see the judgment's treatment of the point and its reference to [2007] EWCA Civ 19).
4. The Employment Judge failed to make essential findings about the claimant's base salary on transfer and about whether the 11% figure was part of the contractual package. That failure was material and fatal to the decision that there had been unlawful deductions calculated at 11%.
5. It was neither appropriate nor safe for the Employment Appeal Tribunal to substitute its own factual conclusions given conflicting evidence. The correct remedy was remittal. The judge considered remittal criteria and concluded that, given the wider implications and passage of time, the matter should be reheard by a fresh tribunal.
6. Order: appeal allowed and the claim remitted to a fresh Employment Tribunal to rehear and make the necessary factual findings and legal determinations.

• Employment Appeal Tribunal: appeal allowed; remitted to a fresh Employment Tribunal for rehearing (this judgment).
• Employment Tribunal (Ashford): original decision in favour of the claimant finding unlawful deductions and awarding arrears (oral hearing 2 July 2013; reasons sent 10 July 2013).