Appeal No. UKEAT/0049/07/MT

EMPLOYMENT APPEAL TRIBUNAL
52 MELVILLE STREET, EDINBURGH, EH3 7HF

	At the Tribunal
	On 17 June 2008

Before
THE HONOURABLE LADY SMITH
(SITTING ALONE)

SARTI (SAUCHIEHALL ST) LTD 	APPELLANTS

MR A. POLITO 	RESPONDENT

Transcript of Proceedings

JUDGMENT

APPEARANCES

For the Appellants	MR IAN KENNEDY
(Solicitor)
Sentinel Employment Law
Inglewood House
Inglewood
Alloa
FK10 2HU	
For the Respondent	MR PETER GRANT–HUTCHISON
(Advocate)
Instructed by:
Messrs Ian Smith Watson Solicitors (Scotland) Ltd
10 Park Road
Kelvinbridge
Glasgow
G4 9JG	

SUMMARY
Entitlement to statutory sick pay.  Jurisdiction. 

THE HONOURABLE LADY SMITH

INTRODUCTION
1.	This case concerns Statutory Sick Pay (‘SSP’).  The claimant was absent for a period during which he claims he was unable to work due to ill health; the respondents did not accept that that was the case because they were told that he was working.  They told the claimant, accordingly, that they would not pay SSP to him unless the Benefits Agency confirmed to them that they should do so.  The respondents raise an issue as to the jurisdiction of the Employment Tribunal in these circumstances. 

2.	This is an appeal against a decision of an Employment Tribunal in Glasgow, Chairman Ms J Porter, in chambers, dated 16 November 2007.  The respondents had, by letter dated 19 October 2007, intimated what they referred to as a “motion” to have the claim struck out on the basis that the Tribunal had no jurisdiction to hear the claim.  It seems that that was intended to be an application for an order under rule 11 of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2004 (‘the 2004 rules’).  There was no response to the application from the claimant.  The Tribunal intimated the Chairman’s decision by letter of 16 November 2007 in the following terms:
“The Chairman of the Tribunals, Ms J Porter, has noted the respondents’ position insofar as the claimant’s entitlement to SSP is concerned.  However the claimant’s claim of constructive dismissal incorporates issues over and above the respondents’ non-payment of SSP to him.  For this reason the Chairman adheres to new (sic) original decision to have this case set down for a full hearing on the merits at which all issues will be explained.” 

BACKGROUND
3.	The parties appear to be agreed that from about 19 February 2007, the claimant was absent from work and provided self certification and medical certificates.  The respondents’ position is that on or about 30 March 2007, they were advised by a third party that the claimant was working.  The claimant accepts that they were told that he was working although he denies that that was the case.  Correspondence ensued:
-	On 2 April 2007, the respondents wrote to the claimant advising him that they had been made aware of allegations that he had been working whilst on sick leave and that they felt unable in these circumstances to pay SSP ‘for fear that this may leave the company complicit in a Benefit Fraud’.  They asked him to contact the Benefits Agency and said that if they wrote authorising payment then they would act on that advice.
-	On 4 April 2007, the respondents wrote again repeating that once they had received approval to pay the SSP from the Benefits Agency, they would pay it.  
-	On 10 April 2007, the respondents wrote again advising that they had not heard from the Benefits Agency in respect of the release of SSP and suggesting that the claimant expedite a letter from them.  
-	On 10 April 2007, the respondents wrote a second letter, following on the claimant having visited their office, and reiterated that the only way in which they would release payment of SSP would be if they had a letter from the Benefits Agency confirming that they should do so. 
-	On 13 April, the respondents wrote to the claimant referring to him having said he had contacted the Benefits Agency at Partick and that they had advised that the matter did not concern them and advising that they had been in touch with that office, had been referred to their fraud department and inviting the claimant to contact that department.  
-	On 16 April, the claimant’s solicitor wrote to the respondents in the following terms:
“We understand our client has been absent from work due to illness from 5 March 2007 and his most recent medical certificate expires on 23 April 2007.  We further understand that you have withheld payment of Statutory Sick Pay, on the basis that you believe that Mr Polito has been working elsewhere during his absence.
Regardless of the allegations which have been made, you are not entitled to withhold payment of statutory sick pay and our client is seeking payment of £232.10 by return.  Your failure to pay Mr Polito the statutory sick pay to which he is entitled may result in our client referring the matter to HM Revenue and Customs, for them to make a formal decision.  Should you be concerned about any fraud being committed by Mr Polito (which is denied), it is open to you report the matter to Benefits Agency, but you are not entitled to withhold payment.” 

The claimant has not, however, referred his claim for SSP to HM Revenue and Customs.

Tribunal Procedure thus far:
4.	The claimant’s claim is one for constructive dismissal and unlawful deduction from wages in respect of the non payment of SSP.  On 24 August 2007, a pre-hearing review took place to consider the question of whether or not the claimant had complied with the requirements of the statutory grievance procedures before presenting his complaint to the Tribunal.  If he had not done so, the Tribunal would have had no jurisdiction to entertain it (Employment Act 2002 s.32 (2)).  At that hearing, the claimant relied on the fact that his solicitor had written to the respondents by letter dated 16 April, to which I have already referred.

5.	The letter of 16 April sets out the nature of the claimant’s complaint as being twofold.  The first part is a complaint of being asked to phone in every second day whilst absent on sick leave.  The second is a complaint regarding his not having received SSP.  That letter makes no complaint that the respondents acted in bad faith in withholding SSP.  It makes no complaint of the claimant having been verbally abused by the owners of the respondents in front of other members of staff. 

6.	The claim contained in the claimant’s subsequent ET1 is, firstly, that he was unfairly constructively dismissed and, secondly, that he suffered an unlawful deduction from wages.  The latter related to the non-payment of SSP.
7.	Following the pre hearing review, the Tribunal found that the letter of 16 April satisfied the requirements of section 32(2) of the 2002 Act and it had, accordingly, jurisdiction. Its finding that it had jurisdiction is, understandably, expressly linked to the grievance that had been lodged.  

8.	Although there is reference, in the ‘unfair dismissal’ section of the form ET1 to the claimant having been verbally abused, it cannot be regarded as part of the claim for constructive dismissal.  That complaint is distinct and separate from his complaint about the respondents’ failure to pay SSP and did not form part of his grievance.  The Tribunal has, accordingly, no jurisdiction to entertain it (see, for instance, Cyprus Airways Ltd v Lambrou 1 May 2007 UKEAT/0526/06; also, for the need for there to be a match between the grievance and the subsequent complaint, see the line of authority summarised in Highland Council v TGWU & Ors [2008] IRLR 272.)

9.	There is also reference at the end of the form to the claimant having been made to work at night sometimes and not being paid an out of hours supplement.  Not only did that not form part of his grievance but it is not related to any cogent claim.  It is not part of his claim of unfair dismissal and it is not a claim regarding any of the other matters specifically allowed for in the ET1. 

10.	The claimant plainly claims for the SSP, he says he should have been paid, as an unlawful deduction from wages.  It amounts to £560.40.  Ultimately, Mr Grant- Hutchison seemed to accept that the unlawful deduction from wages claim was also at the heart of the constructive dismissal claim.  I should record that he had earlier sought to suggest that there were two other aspects to it.  Firstly, he referred to the verbal abuse referred to in the ET1.  The Tribunal has no jurisdiction in respect of that, however, on account of the absence of a relevant grievance having been intimated in respect of it, as above referred to.  The second was an allegation that the SSP was withheld in bad faith.  As regards that, there is no hint of any notice being given of that being the claimant’s case in the ET1 or even in any of the correspondence.  It is a serious matter to allege bad faith since it connotes dishonesty.  I was surprised that Mr Grant-Hutchison felt able, in the circumstances, to state, repeatedly, that it was the claimant’s position that the respondents had been acting in bad faith.  I cannot see that the bases on which he said he did so, namely that the claimant himself knew he was not working when off sick and that the owners of the business had been verbally abusive to him, give rise to an inference of bad faith or of anything else of a dishonest nature.  Moreoever, no such allegation was advanced as a grievance so the absence of jurisdiction on account of there having been no compliance with the requirements of section 32(2) of the 2002 Act would arise in relation to it also.

11.	The Tribunal’s decision which is appealed against is set out above.  It seems to have accepted that there either is or may be merit in the respondents’ argument that it has no jurisdiction to determine the question of whether or not the claimant was entitled to be paid SSP.  If that was not what it meant, it is difficult to see why it states that the claim of constructive dismissal incorporates issues over and above the matter of the respondents’ non payment of SSP.  It seems to be implied in that comment that it recognises that there is a difficulty for the claimant in that regard.  There is though no indication that the Tribunal considered the other difficulty for the claimant arising out of the fact that the only matter in respect of which he intimated a grievance was the non- payment of SSP, as I have already discussed.  

The Issue
12.	It is evident, accordingly, that the only claim before the Tribunal which has complied with the statutory grievance procedures and the only claim which, therefore, the Tribunal has jurisdiction to entertain under section 32(2) of the 2002 Act, is a claim for unfair constructive dismissal.  

13.	There are problems with the claim of constructive dismissal.  If, as Mr Grant–Hutchison sought to suggest, part of the reason for his resignation was the verbal abuse to which I have referred, to adopt HHJ McMullen QC’s language in the Cyprus Airways case, it is not justiciable and it is very difficult to see how, on Mr Grant-Hutchison’s approach, the two elements could be regarded as severable by the Tribunal.  

14.	If, however, they were to be regarded as severable, that means that the claimant’s claim is one for constructive dismissal on the basis that the claimant resigned because the respondents did not pay SSP to which he asserts he was entitled.  That is in circumstances in which, according to the claimant’s own narrative in the ET1, he accepted that the respondents’ reason for not paying it was that they had been told by someone else that he, the claimant, was working whilst off sick.  Further, his solicitor, on his behalf, in the letter of 16 April, refers to the respondents believing that that was the case.  Thus, if the matters not covered by the grievance (verbal abuse and bad faith) are put to one side, what is left of the claimant’s case is that the respondents were in material breach of contract because they did not pay the SSP.  That accords, as I understood it, with Mr Grant-Hutchison’s approach to the case in the event that verbal abuse and bad faith could not be founded on.
15.	Given the claimant’s acknowledgement that the respondents’ reason for not paying the SSP was their belief that he was working, I cannot envisage any circumstances in which he could show that the respondents were in material breach of contract in doing as they did, namely refusing, in the light of that belief, to pay until the relevant statutory authority had confirmed that it was in order for them to do so.  His case seems to be that whilst accepting that the respondents did hold that belief, they ought not to have done because he was in fact entitled to SSP.  The only issue raised by the claimant, accordingly, is whether or not he was entitled to SSP in the period that he was absent from work prior to resigning. 

Taylor Gordon & Co Ltd v Stuart Peter Timmons [2004] IRLR 180:
16.	This decision of the EAT was the only authority referred to (and is, I understand, the only authority available) on the subject of whether or not an employment tribunal has jurisdiction to determine whether or not an employee is entitled to SSP.  Having considered the relevant statutory provisions, Mr Recorder Luba QC, found that it did not.  Exclusive jurisdiction to determine the issue was vested in the officials of the Board of the Inland Revenue.

Relevant Statutory Provisions
17.	A claim of unlawful deduction from wages can be made under s13(1) of the Employment Rights Act 1996 (‘the 1996 Act’).  Section 13 (3) provides:
“Where the total amount of wages paid on any occasion by an employer to a worker employed by him is less than the total amount of the wages properly payable by him to the worker on that occasion (after deductions) the amount of the deficiency shall be treated for the purposes of this Part as a deduction made by the employer from the worker’s wages on that occasion.” 

‘Wages’ is defined in section 27 as including:
“27…… ……..
    (a)…….
    (b) statutory sick pay under Part IX of the Social Security Contributions and Benefits Act 1992                            …….”.

Submissions for the Respondents
18.	Mr Kennedy submitted that the Tribunal had erred.  Employers are not obliged to pay SSP unless employees qualify under the relevant statutory provisions.  Where a question as to entitlement arose, the onus was on the employee to apply to have it determined (Statutory Sick Pay and Maternity Pay (Decisions) Regulations SI 1999/776, reg 2).  Employees had no express contractual rights to SSP.  Even if there was an implied right, an employer could not be in material breach where he withheld SSP until the issue of entitlement was resolved.  It was for the employee to satisfy the employer as to entitlement (Social Security Administration Act 1992).  It would not be possible to raise any challenge by way of a claim for constructive dismissal in such circumstances unless it was first established whether or not the claimant was entitled to the SSP claimed.  The same could be said wherever entitlement to SSP was raised whether as a central or incidental issue.

19.	Separately, Mr Kennedy submitted that it was clear that an employment tribunal had no jurisdiction to determine whether or not an employee was entitled to be paid SSP, as was determined in the Timmons case. 

Submissions for the Claimant 
20.	I have already referred to a number of the submissions advanced on behalf of the claimant in the course of discussing the background and issues in this case.  Separately from those Mr Grant–Hutchison submitted that the Tribunal did have jurisdiction to determine entitlement to SSP.  The case of Timmons had, he submitted, been wrongly decided. 

21.	In support of his submission regarding the case of Timmons, he submitted that its ratio rendered section 27(1)(b) the 1996 Act devoid of meaning.  The logical conclusion to be deduced from a reading of the provisions of section 13 and 27 of the 1996 Act was that it was for the tribunal to decide whether or not SSP was payable or, at least, it had a parallel jurisdiction to that of the Board of the Inland Revenue.  He also submitted that there was a contradiction between paragraph 44 and 45 of the decision in Timmons which undermined its conclusion.  He pointed to the fact that on the one hand, paragraph 44 referred to the tribunal having jurisdiction to determine a claim of unlawful deduction from wages in respect of unpaid SSP where there had been a determination by the Board that it was payable whereas, on the other hand, in paragraph 45, it referred to the provisions of reg 9A of the Statutory Sick Pay (General Regulations) 1982 which provide that if the employer does not pay SSP which has been found by the Board to be due, then the liability of the employer towards the employee is extinguished and the Inland Revenue Commisioners become liable to pay the employee.  I note that they, in turn, would have a right of recourse against the employer. 

22.	What, thus, Mr Grant-Hutchison seemed to be saying was that there was a contradiction in the reasoning in Timmons regarding whether or not the Tribunal would have jurisdiction to entertain a claim for unlawful deduction from wages after the Board of the Inland Revenue had determined that SSP was due and that therefore, the decision was wrong when it determined that the Tribunal did not have jurisdiction to determine that question of whether or not an employee was entitled to SSP in the first place.  

23.	Also, Mr Grant–Hutchison submitted that the decision in Timmons could be shown to have been in error because no weight was given to there being no express exclusion in the legislation of the tribunal’s jurisdiction to determine entitlement to SSP.  A dual jurisdiction must have been intended  In support of that submission he relied on Hutchings v Islington London Borough Council [1998] 3AER 445, a decision confirming that the county court had jurisdiction to determine whether a plaintiff was entitled to statutory pension benefit; it did because the claim was, properly understood, founded on contract.  The case does not appear to be in point and I did not find it of any assistance in determining whether an employment tribunal has jurisdiction to determine entitlement to SSP. 
 
Decision
1.  Entitlement to SSP: Jurisdiction   
24.	I have considered the reasons set out in the Timmons case for the conclusion that the Tribunal has no jurisdiction to determine whether or not an employee is entitled to SSP and I am in full agreement with them.  I accept that there may be some confusion as between paragraphs 44 and 45 of the decision regarding the matter of whether or not it has jurisdiction to entertain a claim for unlawful deduction from wages following a Board determination of entitlement to SSP but that is beside the point. 

25.	The only possible source of jurisdiction for the Tribunal is in the terms of section 13(3) read together with the definition of wages in section 27 (1) (b).  Mr Grant–Hutchison did not suggest otherwise.  Section 13(3) prohibits deduction only where wages are “properly payable” and the inclusion of “statutory sick pay” in the definition of wages in section 27 is expressly under reference to the statutory provisions which govern it.  Thus, to find out whether or not a sum claimed to have been unlawfully deducted is SSP, resort has to be had to the legislation governing an employee’s entitlement to have SSP paid to him, as explained in the Timmons case.  That legislation shows, as explained in Timmons, that jurisdiction to decide that matter lies with the Board of the Inland Revenue.  There is no need and no room for the employment tribunal also to have jurisdiction.

2. The Tribunal’s Decision of 16 November 2007  
26.	It appears to be implicit in the Tribunal’s decision that it accepted that it had no jurisdiction to determine a question of entitlement to SSP.  It was correct to do so, for the above reasons.  What, however, the Tribunal failed to notice was that, for the reasons I have explained, the only issue raised by the claimant which he would be able to take forward is that of whether or not he was entitled to be paid SSP.  That is not an issue which the Tribunal has jurisdiction to determine and therefore, the Tribunal should have pronounced an order dismissing the claim. 

Disposal 
27.	In these circumstances, I will pronounce an order allowing the appeal and dismissing the claim.