The Employment Appeal Tribunal (EAT) has held in Weatherilt v Cathay Pacific Airways Ltd that tribunals are entitled to determine issues about the construction of the contract or the implication of any term of the contract when resolving a dispute about unlawful deduction of wages under Part II of the Employment Rights Act (ERA), contrary to another recent EAT decision.
In addition to his basic salary, Mr Weatherilt was entitled to hourly duty pay (HDP) and excess flying pay (EFP). However, after going off sick at short notice at the beginning of July 2015 when he was rostered to work, he was only paid his basic salary and overnight allowances. He argued that as Cathay Pacific had not included elements for HDP and EFP within his sick pay, it had made unlawful deductions from his wages under Part II of the ERA.
Conditions of service
Clause 27.2 of the airline’s Aircrew Conditions of Service (2008) on sickness allowance states that officers are entitled to “such amount of Salary, allowances and benefits which that Officer would have earned under normal circumstances”.
Schedule 2 of the conditions states that EFP and HDP are dependent on “credit hours” accruing. Credit hours accrue during the performance of duties, in particular flying duties. Where the officer is on rostered annual leave or rostered sickness absence credit hours, accrue at the rate of two hours per day.
The tribunal judge decided that although clause 27 was about “pay in the broad sense and that the key concept is that normal pay should be payable during the initial periods of sickness”, this did not mean that HDP and EFP were included during periods of unrostered sickness absence. As these allowances were only payable if credits had been earned according to schedule 2, they were not salary for the purposes of clause 27.
Mr Weatherilt appealed; while Cathay Pacific cross-appealed on the basis that the tribunal did not have jurisdiction to interpret a contract or imply terms into it when hearing unlawful deduction of wages claims, following the earlier EAT decision in Agarwal v Cardiff University (LELR weekly 518).
The EAT rejected the company’s argument, holding instead that tribunals are entitled to determine issues about the construction of the contract or the implication of any term of the contract when resolving a dispute about unlawful deduction of wages under Part II ERA.
Relying on Court of Appeal authority in Delaney v Staples and Camden Primary Care Trust v Atchoe both of which concerned claims for wages under part II ERA 1996, the EAT held that a tribunal must determine the contractual term or the existence of an implied term as a preliminary matter when deciding a claim for unauthorised deduction from wages. It distinguished this case from Agarwal on the basis that the EAT was not referred to these authorities and had relied on the case of Southern Cross Healthcare Co Ltd v Perkins which was concerned with provisions applicable to written particulars in Part I ERA. Although there was “a degree of tension” between the approach in Southern Cross and the approach in the cases of Delaney and Camden Primary Care Trust, the EAT held that this could be explained by reference to the different origins, purpose and terms of the statutory provisions.
Dismissing Mr Weatherilt’s appeal, the EAT held that HDP and EFP did not amount to salary, allowances or benefits within the definition of clause 27.2. Rather whether HDP and EFP were payable depended on the conditions set out in Schedule 2. Given the absence of unrostered sickness from the table within Schedule 2, it was clear that no HDP or EFP was payable in respect of unrostered sickness.