Alastair Dobbie v Paula Felton t/a Feltons Solicitors

The Employment Appeal Tribunal dismissed the claimant's appeal, holding that the written Consultancy Agreement (clause 3) did not entitle the claimant to 40% of all fees billed and received by the practice in respect of client A, but only to 40% of the fees billed and received in respect of the claimant's own personal work for that client. The tribunal applied ordinary contractual interpretation principles (including Arnold v Britton and Wood v Capita) and rejected the appellant's submission that the clause plainly conferred entitlement to fees generated by other fee earners.

The tribunal also addressed the appellant's reliance on an oral variation and the Contract's "entire agreement"/"no oral modification" clause (clause 14), noting MWB Business Exchange Centres Ltd v Rock Advertising and holding that any oral variation that would alter the written agreement would be ineffective; however that point was ultimately academic because the written agreement, properly interpreted, produced the same result. Because the claimant's contractual entitlement was only £5,000 per month, there was no unlawful deduction from wages.

Background: The claimant was engaged as a consultant under a written Consultancy Agreement dated 6 March 2014, under which he was to be paid a consultancy fee of 40% of "the fees billed which have been paid and received by the Practice". A dispute arose over entitlement to fees in respect of one client ("client A") for January and February 2016. The claimant alleged either (a) an oral agreement that he should receive £10,000 per month in respect of client A, or (b) as a matter of construction of clause 3 of the Consultancy Agreement he was entitled to 40% of the whole £25,000 monthly fee billed to client A.

Procedural posture: This is an appeal to the Employment Appeal Tribunal from Employment Judge Elliott's reconsideration decision (judgment sent 4 October 2023) following earlier tribunal determinations (reasons dated 1 November 2017, 6 December 2019, 7 December 2020 and a reserved judgment of 14 June 2023). The claimant sought reversal of the tribunal's finding and a declaration that he was owed 40% of the full fees (or alternatively a £10,000 retainer).

Issues framed: (i) the proper interpretation of clause 3 of the Consultancy Agreement (textual and contextual meaning, applying Arnold and Wood); (ii) whether a separate oral agreement existed or could vary the written agreement given clause 14's entire agreement/no oral modification provision (considering MWB v Rock); and (iii) whether there had been an unlawful deduction from wages under Part II of the Employment Rights Act 1996 (section 13 and related provisions), including the effect of section 24(2) on remedies.

Reasoning and decision: The EAT held that clause 3 was ambiguous on its face but, read in its documentary, factual and commercial context, including the requirement that the consultant render an invoice, the phrase "fees billed which have been paid and received by the Practice" was aimed at fees attributable to the consultant's own billed and paid work. The tribunal relied on textual and contextual analysis and commercial common sense to reject constructions that led to absurd consequences (for example, entitlement to a share of fees where the consultant did minimal or no work). The EAT further held that while the employment judge was wrong to treat an oral arrangement as a separate modifying agreement without addressing the written no-oral-variation clause, that error was immaterial because the correct interpretation of the written Consultancy Agreement produced the same outcome: entitlement of £5,000 per month (40% of claimant's 50 hours' share of the billed £25,000). Given that the claimant's proper contractual entitlement was £5,000, there was no unlawful deduction from wages. The appeal was dismissed.

Appeal dismissed. The Employment Appeal Tribunal held that clause 3 of the Consultancy Agreement must be interpreted in context to mean the consultant is entitled to 40% of fees billed and paid in respect of his own personal work; an oral modification inconsistent with the written "entire agreement"/"no oral variation" clause would be ineffective (per MWB v Rock), but that point was academic because the written agreement, properly interpreted, produced the same outcome of £5,000 per month. Accordingly there was no unlawful deduction from wages.