Taking action

Cooper and ors v Isle of Wight College

It is well established in law that employers are entitled to make a deduction from someone’s wages when they go on strike. In Cooper and ors v Isle of Wight College, the High Court has said, however, that employers cannot include a portion of holiday pay when calculating the value of a day’s pay.

Basic facts

The three claimants (all members of Unison) worked as full time support staff for the college. All went on strike on 28 March 2006 and their employer subsequently made a deduction from their March pay packet which included not just their salary for the day, but also holiday pay.

All three accepted that the college was entitled to make a deduction as a result of their breach of contract in line with the decision in Miles v Wakefield MDC, but said that the college could not include holiday pay.

Miles v Wakefield MDC 1987

In this case, the House of Lords established the principle that employers are allowed to deduct “from wages a sum representing the time not worked as a result of industrial action” by one or more of their employees.

The obvious advantage to the employer was that they were able to recoup their “loss” without having to go through the hassle of suing each employee for breach of contract.

However, their Lordships did not establish how much the employer was entitled to deduct, the point at issue in this case.

Calculation of a day’s pay

Each of the men’s contract stated that they were required to work 37 hours per week. It also stated they were entitled to be paid for all public and bank holidays, as well as 25 days’ holiday per year.

The claimants argued that the maximum that their employer could deduct from their salary was the value of a day’s pay. To work that out, they said all non-working time first had to be deducted from the 365 days in the normal calendar year – 104 in all (discounting the odd day), leaving 260 working days. On that basis, the formula for calculating a day’s pay should be 1/260.

The college, however, said that it should be allowed to deduct the overall value of the withdrawal of the men’s services for that day, which came to more than a day’s pay.

It argued that since an employee earns holiday pay by working the hours contracted, failure to work those contracted hours entitled the employer to reduce holiday pay pro rata and make a deduction for that as well as the wages for the hours not worked. In other words, holiday pay entitlement only arose for days that they had actually worked. That meant that the formula for calculating a day’s pay should be 1/228.

High Court decision

The High Court first of all considered the employer’s general obligations to pay their employees and concluded that: “it is clear that if the employer improperly failed to pay the employee for a day's work during the working year the quantum [amount] that the employee could recover in an action for payment under the contract is the day's pay as calculated by the 1/260 formula.”

Interpreting the case of Miles v Wakefield MDC, the High Court judge said employers can deduct “that which the employee cannot sue for”. In other words, wages for hours that they have not worked.

The correct test, therefore, in relation to a deduction from wages as a result of the employee withdrawing their labour “is to determine whether the employee could sue for the withheld wages, rather than focusing on what the overall losses to the employer are by reason of the partial non-performance”.

Applying those principles to the claimants' contracts of employment, the wages payable for the day of industrial action were 1/260 rather than 1/228 of the annual wages payable.