Alastair Dobbie v Paula Felton t/a Feltons Solicitors

A consultancy remuneration clause which provides for a percentage of fees billed, paid and received must be interpreted in its contractual and commercial context. Where the agreement requires the consultant to render an appropriate monthly invoice and is structured as payment for the consultant’s duties, the clause may confine the percentage to fees for the consultant’s own work. It does not ordinarily entitle the consultant to share in fees generated by other fee earners.

A contractual no-oral-variation clause prevents an oral variation unless an estoppel applies. However, an error in treating an oral arrangement as governing may be immaterial where the written agreement independently produces the same entitlement. For Employment Rights Act 1996 purposes, whether there has been a deduction first depends on the wages properly payable under the contract.

The claimant, a solicitor engaged by the respondent firm under a written consultancy agreement, was entitled to 40% of fees billed, paid and received by the firm. The agreement contained an entire-agreement and no-oral-variation clause.

He claimed that, for work concerning client A in January and February 2016, he was entitled to 40% of the client’s total monthly fees, including fees for work done by other fee earners. The Employment Tribunal held that he was entitled to £5,000 per month, either under a separate oral arrangement or, alternatively, under the consultancy agreement.

On appeal, the central issues were the construction of the remuneration clause, the effect of the no-oral-variation clause, and whether paying £5,000 rather than £10,000 constituted an unlawful deduction from wages.

1. Appeal dismissed. The Employment Judge correctly construed clause 3 of the consultancy agreement as entitling the claimant to 40% only of fees billed, paid and received for his own consultancy work for client A. It did not give him a 40% share of fees attributable to work done by other fee earners.

2. The wording “fees billed” was ambiguous when read alone. Read in context, however, the requirement that the consultant submit an appropriate monthly invoice pointed to remuneration for the consultant’s personal work. The agreement as a whole was a bargain for the consultant’s personal services. The claimant’s construction would also produce commercially extraordinary results, including payment for work done by others or potentially for no work at all. The Employment Judge had interpreted the agreement; she had not implied an additional term.

3. The Employment Judge erred in treating the £5,000 arrangement for client A as a separate oral agreement governing the work. In light of the entire-agreement and no-oral-variation clause, and MWB Business Exchange Centres Ltd v Rock Advertising [2019] AC 119, an oral variation of the written agreement was ineffective absent writing and signature, subject to estoppel. That error was academic because the written agreement itself gave the claimant the same £5,000 monthly entitlement.

4. Under section 13(3) of the Employment Rights Act 1996, the logically prior question is what wages were properly payable. The claimant was properly payable £5,000 for each relevant month. There was therefore no deduction from wages, and the challenge based on the alleged oral arrangement failed.

• Employment Appeal Tribunal: dismissed the claimant’s appeal and upheld the conclusion that the written consultancy agreement entitled him to £5,000 per month for his personal work for client A.
• Employment Tribunal: Employment Judge Elliott’s judgment, sent to the parties on 4 October 2023, confirmed the claimant’s entitlement to £5,000 per month in respect of client A.