Alistair Cantor reviews the Supreme Court’s decision on the appropriate rate of deductions from pay for striking workers. The ruling is likely to have implications for most professionals on annual contracts paid monthly.
The Appellants are employed at the Respondent’s sixth form college, with contracts of employment incorporating terms relating to working time from a collective agreement relating to the employment of sixth form college teachers. Under said terms, an employer may withhold pay for days spent on strike.
The Appellants went on strike for one day on 30 November 2011, following which the Respondent made deductions from their pay at a rate of 1/260 of their annual pay, the figure of 260 representing the number of week days in a calendar year. The Appellants contended the appropriate figure was 1/365 pursuant to s2 of the Apportionment Act 1870 (“the Act”). That section is entitled “Rents, &c to accrue from day to day and be apportionable in respect of time” and provides as follows:
“All rents, annuities, dividends, and other periodical payments in the nature of income (whether reserved or made payable under an instrument in writing or otherwise) shall, like interest on money lent, be considered as accruing from day to day, and shall be apportionable in respect of time accordingly.”
“Annuities” included salaries (s5). Section 7 of the Act stated that it did not apply where stipulation was made to the contrary and in particular “to any case in which it is or shall be expressly stipulated that no apportionment shall take place”.
The Appellants issued proceedings in the County Court at Birmingham for breach of contract. Following issue, Jay J handed down judgment in Amey v Peter Symonds College  EWHC 2788 (QB), determining the same issue in favour of the employer, which was not appealed. Accepting the county court was bound by that decision, the Appellants consented to judgment being entered so that an appeal could be made to the Court of Appeal. The Court of Appeal dismissed the appeal on 14 May 2015 ( EWCA Civ 455), following which the Appellant were granted permission to appeal.
The issues on the appeal
Lord Clarke, with whom the court unanimously agreed, gave judgment. The issues before the Supreme Court were :
- whether the appellants’ contracts of employment provided expressly or by necessary implication for their salary to be paid to them pro rata in respect of divisible obligations to perform work on each day of directed time so that the Act had no application to the case;
- what was meant by “accruing from day to day” in section 2 of the Act; and
- what was the correct construction of section 7 of the Act.
On the first issue, the Respondents argued : (1) The Act was made to address mischiefs which arise in the context of periodic payments which are entire indivisible payments. (2) The contracts in this case provide impliedly for the appellants to be paid periodically in respect only of the work they do in directed time. (3) Therefore the periodic payments were impliedly divisible.
This argument was rejected by the court . While Rs had correctly identified the mischief the Act was intended to address, A’s contracts provided neither expressly nor impliedly for salaries to be paid pro rata in respect of divisible obligations to perform work on each day of directed time. In fact, As’ annual salary was not only in respect of “directed time”, that is scheduled teaching days, but also “undirected time”, namely time spent on various duties outside those teaching days, such as lesson planning, writing reports and running extra-curricular activities. As spent significant amounts of time working in undirected time .
On the second issue, the court concluded that s2 had to be construed so as to read that “all … salaries … shall, like interest on monies lent, be considered as accruing from day to day, and shall be apportionable in respect of time accordingly” . The appropriate rate at which accrual took place would depend on the true construction of the particular contract . In the instant case, the rate contended for by the Respondents of 1/260 was rejected since it assumed work on weekdays only. The Appellant’s suggested rate of 1/365 was broadly fair since they were paid monthly, including when on holiday, while work was carried out throughout the year including in evenings and on weekends . The fact that the Appellants’ contracts were annual contracts was described as “critical” .
On the third issue, it was clear that Parliament had, by virtue of the inclusion of s7, intended to permit contracting out from the Act. In order to do so there needed to be an express provision in the contract of employment disapplying the statutory formula of apportionment . The court stated :
“There would have to be a clear intention derived from the contract that the principle should not apply. I would accept that only if it can fairly be said that in a particular case, there is, in the words of section 7, an express stipulation in the contract that no apportionment should take place.”
There was no such stipulation in the Appellants’ contracts. The Court of Appeal was wrong to conclude that the contracts did not envisage an equal daily accrual , with heavy emphasis again placed on the performance of “undirected” work outside of normal teaching hours.
The first and obvious point of significance is to teachers, and other professionals on annual contracts, who are paid monthly and whose work can extend to being carried out at evenings and weekends. For those types of employees, the appropriate daily rate of deductions while on strike is likely to be 1/365.
Care must be taken however. The court was careful to emphasise the rate will be determined in the context of the particular contract of employment. Different rates could be applied, most likely in the cases of contracts other than annual contracts, but also potentially where some feature of the contract or work means that duties are strictly confined to certain days or times for example.
Furthermore, the judgment makes clear that the statutory formula of apportionment may be contracted out of. A clause expressly excluding the Act would certainly suffice, but other types of clauses may suffice if they are sufficiently clear in showing an intention to oust the usual statutory rule.