New Century Cleaning Company v Church [2000] IRLR 27 Court of Appeal

In a disappointing decision, the Court of Appeal has found that a unilateral reduction in the money payable per job to window cleaners does not amount to an unlawful deduction from wages for the purposes of Section 13 of the Employment Rights Act 1996.

Mr Church and his colleagues were paid according to an unusual formula. They were divided up into teams, each with a team leader. A team would accept a particular job for which there would be a "work-bill" price payable by the employer to them. It was then up to the window-cleaners in each team to decide how they would divide up between themselves the global "work-bill" price. It was usually on a percentage basis.

Section 27 of the Employment Rights Act 1996 defines "Wages" as "any sums payable to the worker in connection with his employment...whether payable under his contract or otherwise". Mr Church therefore had to establish that the amounts he had previously been receiving were such sums.

The Employment Tribunal concluded that the rate offered for regular jobs was a contractual entitlement which could not be varied without bilateral consent.

Alternatively, the rate was a key element in the calculation of wages, so that the "wages properly payable" were those being received before the unilateral reduction took effect. The Employment Appeal Tribunal upheld the decision.

The Court of Appeal disagreed, finding that the "wages properly payable" by an employer to a worker are sums to which the employee has some legal, though not necessarily contractual, entitlement. There was nothing in the contracts of employment which entitled the team to the same price each week for the same jobs and there was no apparent reason to imply a term to the effect that the employers were obliged to maintain the rate at which a job was offered.

In addition, because the amount due to each worker was dependent upon the agreement reached within the team, any particular window-cleaner's share of the amount paid by the employers was not sufficiently certain to have contractual force. 
This is an excessively restrictive interpretation of the phrase "...wages properly payable". Parliament did not define wages in terms of "Wages to which a worker is legally entitled".

Tribunals should be able to look beyond a technical definition of a legal entitlement to the industrial reality of the situation. The industrial reality was that a recurrent job carried a recurrent price, and the employer should not have been able unilaterally to reduce that price.

We need to be vigilant to ensure that the implications of this case are not extended to other quirky forms of payments.