THE INDUSTRIAL TRIBUNALS 

CASE REF:	325/07

CLAIMANT:	Isaac Cosby 

RESPONDENT:	Blackbourne Electrical Co Limited 

DECISION

The decision of the tribunal is that the tribunal has no jurisdiction to determine whether the deductions from the claimant’s wages are lawful as the deductions fall within the excepted deduction provisions of Article 46 (1)(a) of the Employment Rights (Northern Ireland) Order 1996. 

Constitution of Tribunal:

Chairman:		Ms M Sheehan

Appearances:

The claimant:    	The claimant was represented by Mr McLatchie from Belfast Unemployed Resource Centre.
   
The respondent	Mr D Daly a director of the respondent company appeared on behalf of the respondent.

The Issues

1.	The parties agreed that the only issue for determination by the tribunal was whether or not the deductions made by the respondent from January 2007 onwards qualify as an excepted deduction within the provisions of Article 46 (1) of the Employment Rights (Northern Ireland) Order 1996, in effect whether there was an “overpayment” of wages which the employer since January 2007 is reclaiming back through deductions from payments of salary due to the claimant since that date.   

Sources of Evidence

2.	The tribunal heard evidence from the claimant and from Mr David Daly of the respondent company.  In addition the tribunal was referred to a number of documents, which were identified as “R1”, “C1” and “C2”.  The tribunal having heard and considered all the evidence including the documentation before it found the facts as detailed in the paragraphs below.

The Facts 

3.	The respondent employs approximately 135 persons.  The respondent’s main activity is the provision of electrical and mechanical services primarily in the construction industry.  The respondent is a registered company with the Joint Industry Board for the Electrical Contracting Industry (hereinafter referred to as the JIB).  The effect of such registration is that wage levels for employees are determined and paid in accordance with nationally agreed wage agreements which are usually settled for a number of years in advance.  The respondent company strictly adheres to the agreed rates of pay prescribed by reference to grade of employee and location of place of work.  The respondent company does not determine the grade of an employee but employees can apply for particular grading to the JIB on foot of an application which details evidence of qualifications and experience.  There appears to be a very structured system for grades and movement between grades. 

4.	The claimant had an earlier period of employment with the respondent, which had been terminated in April 1998 as a result of redundancy.  He was then employed by the respondent from 11 November 2002 as a Labourer on “terms and conditions similar to those” in his previous term of employment.  The copies of the statement of terms and conditions provided to the claimant and included in “R1” stated the claimant’s occupation as “Labourer”.  While the claimant claimed he was employed as a “Labourer/Electrician helper”, the tribunal was satisfied that he was employed as a “labourer” that being the only grade of employee for which he appeared to satisfy the description or criteria.  While the tribunal saw one document, a letter of reference dated 1st October 2002 where Mr Daly appeared to describe the claimant as a “Labourer/Electrician helper”, having heard evidence and read the documentation provided in “R1” the tribunal accepted that the reference in the letter was directed at reflecting to a prospective employer the nature of the work carried out by the claimant for the respondent company.  It is clear no such trade or occupation of “Labourer/Electrician helper” exists in the actual industry within which the claimant and the respondent operate.   

5.	In 2005 the JIB published rates of pay for the years 2005 to 2007.  It is clear that the rates were determined by occupation with increased rates for those working in London.  An employee of the respondent company in the accounts department made an error when inputting into the computerised wages system the applicable rates of pay from 9 January 2006.  It was not in dispute that the hourly rate inputted for the claimant and the five other labourers employed by the respondent in January 2006 related to the rate prescribed for labourers (Own Transport) based in London for the year 2005.  This error resulted in the claimant receiving an hourly rate of £9.50 as opposed to £8.86.  The previous hourly rate for the claimant had been £8.34.  

6.	The claimant gave evidence that he thought the pay rate was his entitlement as he was mainly employed as an assistant to an electrician.  He did not directly query the amount with his employer.  At the same time he gave evidence that all six labourers commented at the amount of their pay rise, approximately a 20% increase on salary – well in excess of any previous increase in other years.  While the respondent company employs approximately 135 people most are employed as foremen, qualified electricians and apprentices.  There are only 6 employees in the claimant’s position who are employed as labourers.  Some of the labourers like the claimant work with an electrician assisting him in completing various electrical works.  Other labourers are based on site where they have “caretaker” and van driving responsibilities.  The error made in inputting the hourly rate only occurred with that small group of employees on the labourer rate irrespective of the nature of the work they carried out. 

7.	There clearly was some degree of uncertainty and surprise at the amount of the wage increase given that the claimant and the respondent agree that at least one employee, Mr Harold Rainey, did contact the wages department to query whether the pay was correct.  It appears, without any check having been made by the employee in the wages department, Mr Rainey was advised that the rate was correct.  The claimant appears to have either been told or heard that Mr Rainey had queried the rate and been told it was correct.  There could be little criticism of the claimant in those circumstances for failing to take any further action to query his rate of pay. 

8.	In November 2006 the error in the hourly rate of pay for the six labourers was discovered and brought to the attention of senior management.  Each employee had received payments of £1,000 over and in excess of their correct salary entitlement.  The respondent decided to take action to recover the wages overpaid to the claimant and other labourers.  The claimant was contacted by telephone by Mr Daly to advise him that an “error” had been made in his rate of pay and therefore the hourly rate was to be reduced and the respondent was proposing that repayment would be made at a rate of £20 per week out of his wages.  This telephone call was followed with a letter confirming the situation and the proposed method of repayment.  The level of repayment was pegged at approximately 8% of the employees’ nett wages.  At the request of a number of the labourers affected by this situation the respondent deferred the collection of any repayments until January 2007 when all the employees would receive an increase in hourly rates of pay.  The correct hourly rate of pay from 8 January 2007 for labourers would be £9.30.  The respondent hoped this would minimise the potential for hardship on the employees including the claimant.   

9.	The claimant notified the respondent by letter dated 21 January 2007 that he objected to their proposed actions and requested no deductions be made.  He also advised he intended to take legal advice.  The respondent did not treat this letter as the claimant requesting or indicating that he had a “grievance” with their proposed action.  The payments were deducted by the respondent in any event. 

10.	The claimant in September 2006 commenced a course in further education, which would assist him in obtaining qualifications as an electrician.  He undertook this course at his own expense and had reduced his working week by one day with the agreement of the respondent.  The course ran from September 2006 until June 2007.  While it is clear that the respondent did not invite the claimant to enter into negotiations re a possible variation of the proposed payments, equally the claimant appears to have taken the approach that no payment was due and therefore he would not make any proposal with regard to reducing the amount of the payments.   

Applicable Law

11.	The crucial issue between the parties was whether the claimant had received an “overpayment” of wages from 9 January 2006 to November 2006.  Part IV of the Employment Rights (Northern Ireland) Order 1996 provides protection to employees from suffering unauthorised deductions from their wages.  Article 45 of that Order imposes a general restriction on any deductions from wages by an employer.  Article 46 disapplies Article 45 in a number of situations.  For this case the material provision states “Article 45 does not apply to a deduction from a worker’s wages made by his employer where the purpose of the deduction is the reimbursement of the employer in respect of (a) an over payment of any wages, made (for any reason) by the employer to the worker.” 

Conclusions in light of the facts and law

12.	The tribunal considered the provisions of Article 46 of the Employment Rights (Northern Ireland) Order 1996. It also considered relevant case law including Sunderland Polytechnic v Evans [1993] IRLR 196 and Gill and others v Ford Motor Co Ltd and Wong and others v MAE Systems Operations [2004] IRLR 840.

13.	It is clear from the legislation and case law that certain kinds of deductions from wages are excluded from the protection of wages provisions contained in Part IV of the Employment Rights (Northern Ireland) Order 1996.  Deductions that fall into these excepted categories are outside the scope of the protection of wages provisions.  The legislation is unambiguous and the provisions in Article 46 are widely worded as they included any overpayment made for “any reason”.  Gill and others v Ford Motor Co Ltd and Wong and others v MAE Systems Operations [2004] IRLR 840 approved Sunderland Polytechnic v Evans when it stated in its judgement that it is common ground that the question of whether (Article 46) is engaged goes to the jurisdiction of the tribunal.  The question of whether an employee in fact received an overpayment can be considered separately from the question of whether the employer may contractually i.e. lawfully deduct wages as a result of that overpayment.  The protection provisions do not apply where the purpose of the deduction is the reimbursement of the employer in respect of an overpayment of wages. 

14.	The tribunal found on the balance of probabilities it was satisfied, in light of the facts found, that the claimant was paid between the 9 January 2006 until November 2006 an hourly rate of pay, which was higher than the rate of pay he should have been paid in accordance with a national agreement.  This equated to an overpayment and accordingly the claimant is not entitled to the protection of the provisions of Article 45 of the Employment Rights (Northern Ireland) Order 1996.  Any potential remedy lies outside the jurisdiction of the industrial tribunal as the claimant is still in the respondent’s employment.

Chairman:

Date and place of hearing:  3 October 2007, Belfast

Date decision recorded in register and issued to parties: