Appeal No. EAT/0121/01

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 2 May 2002

Before
MR RECORDER LANGSTAFF QC
MS N AMIN
MR D J HODGKINS CB

THE COMMISSION OF THE INLAND REVENUE	APPELLANT

ST HERMANS ESTATE CO LTD	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MISS J EADY 
(of Counsel)
The Solicitors Office
East Wing
Somerset House
Strand
London
WC2R 1LB	

RECORDER LANGSTAFF QC:
1.	This unopposed appeal from an Employment Tribunal sitting at Southampton raises interesting questions as to the approach which a Tribunal should take under the National Minimum Wage Act 1998.  

2.	In extended reasons promulgated on 22 November 2000, the Employment Tribunal allowed an employer’s appeal in part against an enforcement notice issued by a compliance officer under the National Minimum Wage Act.  It allowed it in part because it accepted the argument on behalf of the Commissioners of Inland Revenue that the compliance officer was entitled to issue such a notice.  Against that part of the Employment Tribunal’s decision there has been no appeal.  

3.	The background, briefly, is this.  An employee, Mrs Dodd, of the Respondent, was paid £55 a week for unspecified hours.  She worked on duties which included sweeping the farmyard, cleaning the toilet, emptying the dustbin, watering the sheep daily, observing their general condition and collecting money from caravaners using the Respondent’s site.  

4.	No records were kept of the time that she worked, despite the obligation imposed under the 1998 Act to do so.  That almost inevitably created problems when an assessment later fell to be made by the compliance officer as to whether or not less than the minimum wage had been paid to Mrs Dodd and whether the shortfall should be paid to her by the employer.  He concluded that a sum, ultimately set at £4925.90, should have been paid.  He determined this on the basis of that which Mrs Dodd told him.  In part this was because there was no authoritative or any record kept by the employer which gave the lie to that which Mrs Dodd was saying.  

5.	It was against the enforcement notice requiring the employer to pay at least the national minimum wage to Mrs Dodd and others for the future and ordering the payment of the sum we have mentioned that the employer appealed to the Employment Tribunal.  

The Law
6.	The law is conveniently contained in section 19 of the National Minimum Wage Act 1998.  By subsection 1 it is provided;

“If an officer acting for the purposes of this Act is of the opinion that a worker who qualifies for the national minimum wage has not been remunerated for any pay reference period by his employer at a rate at least equal to the national minimum wage, the officer may serve a notice (an “enforcement notice”) on the employer requiring the employer to remunerate the worker for pay reference periods ending on or after the date of the notice at a rate equal to the national minimum wage.”

By subsection 2 it is provided that;

“An enforcement notice may also require the employer to pay to the worker within such time as may be specified in the notice the sum due to the worker, omitting the irrelevant words, in respect of the employer’s previous failure to remunerate the worker at a rate at least equal to the national minimum wage.”

The right to appeal to an Employment Tribunal is provided for by subsection 5.  Subsection 6 is central to this appeal.  It provides;

“On an appeal the employment tribunal shall dismiss the appeal unless it is established-
(a)	that, in the case of the worker or workers to whom the enforcement notice relates, the facts are such that an officer who was aware of them would have had no reason to serve any enforcement notice on the appellant; or… 
(c)	where the enforcement notice imposes a requirement under subsection (2) above in relation to a worker,-
(i)	that no sum was due to the worker under section 17 above; or
(ii)	that the amount specified in the notice as the sum due to the worker under that section is incorrect”

7.	Accordingly, a Tribunal may determine that the notice should not have been served at all under 19(6)(a).  This Tribunal did not so order.  As to 19(6)(c), it is plain from the opening words of the section that the burden of proof rests upon the employer.  It is for him to show that the enforcement notice is in error in that it records a sum as due when no sum was due, or that it gets the sum wrong.  

8.	If the employer fails to satisfy the burden of proof then the consequence must be that the enforcement notice stands.  However, if the Tribunal is satisfied that the amount specified in the notice is incorrect, there is no power under subsection 6 to substitute any other figure.  The consequence of such a finding is shown by section 19 subsection 8.  That provides that in a case where an appeal is allowed by virtue of subsection 6(c), then;

	“(a)	the employment tribunal shall rectify the enforcement notice; and
(b)	the enforcement notice shall have effect as if it had originally been served as so rectified”

9.	Accordingly, on our view of the law, if it is established by the employer to the satisfaction of an Employment Tribunal that an enforcement notice is in error in specifying the wrong sum due to the worker, the Employment Tribunal is under a duty to insert the right figure.  

The Tribunal Decision:
10.	The Tribunal so far as material, in paragraph 6 said this;

“with regard to that part of the enforcement notice which requires the Appellant to make a payment to Mrs Dodd pursuant to s.19 (2) of the 1998 Act, the Tribunal concludes that the evidence is so unsatisfactory from both the Appellant and Mrs Dodd as to the hours she worked pursuant to her employment that it is wholly unsafe to draw any conclusion from which a calculation can safely be made requiring any payment to be made.  The evidence is so unsatisfactory that the Tribunal is unable to determine whether the payments made exceed or fall short of national minimum wage.  It therefore follows, on the facts of this particular case, that the Tribunal concludes that the Appellant has established on the balance of probabilities, that it is impossible to specify whether any sum was due to Mrs Dodd and rectifies the enforcement notice by striking out the provision for payment.”

11.	The question which the Tribunal should have addressed, which we have identified under section 19 subsection 6(c) 2 is whether or not the sum in the enforcement notice was incorrect.  As expressed in paragraph 6(d), the Tribunal were simply saying that there was no evidence either way which would entitle it to conclude either that the notice was right or that it was wrong or indeed if it was wrong, to the extent it might be wrong.  If matters rested there, the conclusion might have been that the employer had failed to establish the amount in the notice was wrong.  However, we have to have regard to the Tribunal decision as taken as whole.  

12.	In an earlier part of that decision the Tribunal had concluded as a matter of fact that the compliance officer had taken the figure he did for the purpose of the enforcement notice from the evidence and material provided to him by Mrs Dodd.  He had apparently accepted her claim that she had worked approaching 70 hours per week for a period of at least 6 months.  The Tribunal rejected evidence given to it by Mrs Dodd that she had done so.  They did not, as it happens, find the extent to which she had worked but were satisfied that that which she had told Mr Waddington upon which she had based the enforcement notice was exaggerated.  It follows that on their own recitation of the facts, the evidence (and therefore the employer) had satisfied them and established that the amount specified in the notice was incorrect.  

13.	In our view, the Tribunal should then have proceeded to do its duty under section 19 (8)(a) to rectify the enforcement notice.  That required the Tribunal to assess the true amount as best it could.  Since earlier in its decision it rejected the evidence of the employer which was to the effect that Mrs Dodd worked somewhere between one and a half and one and three quarter hours per day for seven days a week as insufficiently representing the true amount of work which she did (because she failed to take into account various other matters which it was accepted on the evidence she had performed) it might appear that the wage that she was due, applying the national minimum wage rate to the hours worked, fell somewhere in between that which was contended for by the employer on the one hand and by Mrs Dodd on the other.  

14.	The fact that evidence is unsatisfactory is sadly, often a fact of life.  Given the duty to rectify the enforcement notice and given that no burden of proof applied to that exercise, what was required of the Tribunal in our view was to do the best it could on the material available to it, to provide its best estimate of the amount that should have appeared in the enforcement notice.  It might be that the best estimate was nothing.  However, that would be an unusual finding in this case, given first that the Tribunal had determined that the officer was entitled to serve an enforcement notice.  

15.	We suggest that the exercise should be approached in this way.  It is for the employer to establish that the enforcement notice is in error.  If it is in error there is then no onus either on the national minimum wage team or the employer to establish that one figure rather than another is or is not correct.  That is a matter entirely at large for the best judgment of the Tribunal.  

16.	In many ways an analogy might be drawn between the position here and the position under section 98 of the Employment Right Act, familiar to those concerned with unfair dismissal.  There, there is a burden of proof to show what was the employer’s reason for the dismissal, but the fairness of it is a matter which is at large, for the best assessment that the Tribunal can make having regard to all the circumstances.  Here, we consider that the Tribunal could not, within the scope of section 19, decide that the task was so difficult that it would simply award no payment at all.  What it had to do was give its best estimate, accepting all the imperfections and uncertainties that there might be in the light of the material before it.  

17.	It will follow that the order that we shall make at the end of this decision will be that the matter should be remitted.  We shall come to the nature of that remission in a moment.  But first let us deal briefly with one other ground of appeal for which permission to proceed was given at the preliminary hearing of the appeal.  That was, in effect, to argue that the Tribunal did not pay proper regard to the evidence before it and were perverse in concluding that the enforcement compliance officer had not made any attempt to divide and separate the time that Mrs Dodd had spent at work from the hours that she spent working at the farm in a voluntary and private capacity.

18.	It is unnecessary for the purposes of this appeal to determine that issue and therefore we do not do so.  We need only say that we see some force in the point as plainly did the Appeal Tribunal over whom His Honour Judge Altman presided.  It may therefore be that if this matter should return to the same Tribunal, that that Tribunal will need to take care to examine again the evidence as to the hours which Mrs Dodd claims and has claimed to Mr Waddington, the compliance officer, to have spent, pursuant to her employment and those which were attributed by her and by him to her private capacity.  

Remission
19.	It has been submitted to us that it might be convenient in the circumstances, if the matter were remitted, as it would have to be for a determination under section 19 subsection 8 of the 1998 Act to a freshly constituted Tribunal.  We think however, that there are considerable advantages in the matter being remitted to the Tribunal from which this appeal comes.  First, the jurisdiction is an unfamiliar one to most Tribunals.  Second, we have every confidence that this Tribunal will follow the guidance which we have just given.  Thirdly, that Tribunal has heard the evidence.  

20.	In a case such as this, in which there is inevitably a danger that positions will be moderated in the light of a first hearing, a view of the witnesses when they first gave evidence and were first challenged upon it may be more reliable than one based on the evidence, adjusted as it might be on a second occasion.  

21.	We consider therefore, that the Tribunal to which this matter should be remitted should be the Tribunal from which the appeal came unless, that proves administratively inconvenient to reconstitute.  The Tribunal will no doubt wish to hear such further evidence as either the employer or the Appellant seeks to put before it, but the scope of its enquiry is simply into what figure there should be in rectification of the enforcement notice as to the amount due to Mrs Dodd in respect of the best estimate of the hours that she worked prior to the visit of the compliance officer.  

22.	Accordingly, this appeal is allowed and the order made as we have indicated.