Case ref: 10.2 / Oct '05. Suspension from duty: loss of overtime pay
Summary of case
Our member Mr L was employed as a manager in a non-departmental public body. He was suspended from duty pending investigation into his conduct at work. It took five months to complete the disciplinary process.
All charges were dropped and he was reinstated to his managerial post. As a follow up to this Mr L argued via his PCS representative, to be compensated for overtime he was not allowed to work during his suspension.
He claimed that his terms and conditions required him to carry out overtime as part of his job. He produced evidence that overtime had been available to staff over the period in question. In setting out his case, Mr L argued that denying him overtime payment had caused him some acute financial difficulties.
Thompsons were asked to provide advice on a number of matters, including:
- the prospects for pursuing an ET case for unlawful deduction of wages under the ERA 1996
- had there been a breach of contract
- was it reasonable for Mr L to be treated differently than staff who in other similar circumstances had been allowed to redeploy to other posts where overtime continued to be worked until the investigation and disciplinary process was completed?
Key advice provided by Thompsons
With regard to a potential breach of contract the solicitor advised:
"Mr L is not contractually entitled to guaranteed overtime. He is only paid overtime if he works it. He lost the chance to work it whilst on suspension. The loss can only be claimed as damages if the suspension was in itself a breach of contract.
"The employer's disciplinary procedure (which I assume is contractual) states "Where an allegation of a serious nature is being investigated, or where suspension is felt to be appropriate, an employee may be suspended on full pay or redeployed at management discretion". I have not been given the full details of the allegations but they could be serious - "behaving in an intimidatory matter..in contravention of the employer's "Equal Opportunities and Bullying and Harassment Policies". The allegations were of intimidation.
"This could be serious even if the allegations did not involve any allegations of racism or sexism or any other form of prejudice or discriminatory behaviour. It will be worthwhile looking at the allegations in detail. The key issue is the substance of the allegations in the circumstances known to the employer at the time they made the decision to suspend. If they were not "serious" then the suspension was in breach of contract (see enforcement below).
"Even if the allegations were serious, the management discretion to suspend or redeploy must be exercised properly and not arbitrarily or without just cause.
"This is an implied term of the contract. It will be necessary to look at the actual allegations and the circumstances in which they were made, to identify what factors influenced the manager to make the decision to suspend. If, from this, it is possible to show that no reasonable manager would have made the decision to suspend as opposed to redeployment, there there is a breach of contract (see enforcement below).
"You tell me that redeployment is standard practice in cases similar to Mr L's but I have not got enough information to assess whether this amounts to a legal obligation as a result of custom and practice. In any event evidence about what happens in previous cases will be part of the circumstances that can be taken into account to assess whether any reasonable manager would have redeployed rather than suspend Mr L."
The solicitor pointed out that a potential remedy for a serious breach of contract may be resignation and a claim for unfair constructive dismissal. The solicitor firmly advised against pursuing this cause of action.
The solicitor also pointed out that:
"The principle remedy for the breach of contract is a County Court claim. It is not an unlawful deductions claim in the Employment Tribunal. Although some failures to pay wages or other benefits are both a breach of contract and an unlawful deduction from wages, this case is different. It is a claim for the damages that resulted from the suspension in breach of contract. The deadline for any such claim is within 6 years of the breach.
"The County Court can award damages for the breach of contract. This will be quantified on the basis of putting Mr L in the position he would have been in if the contract had been lawfully performed. This means either what he would have earned had he been redeployed or had stayed in his job.
"You have some evidence that overtime would have been available and he would have worked it. These losses can be claimed. The indirect financial losses such as the loss of benefit from the cancellation of the share save scheme and the additional costs of an overdraft may be more difficult to claim.
"It depends on how direct a consequence the costs or losses were and it was reasonable to expect that the loss of the relevant proportion of the net salary (given overtime is not guaranteed) would result in the need to take out an overdraft.
"It may also be difficult for him to claim for the stress illnesses he suffered; it will be necessary to separate out the illness caused by the fact of disciplinary action from that caused by the suspension alone. In my view it will not be possible to obtain medical evidence that would support an injury claim based on the breach of contract."
In summary, the solicitor confirmed that in this particular case there was:
- no reasonable prospect of success in an unlawful deduction of wages claim
- it may not have been reasonable for the employer to suspend Mr L but that this is not what determines whether there is a claim or not
- it may not have been reasonable to treat Mr L differently than others were treated but this is not what determines whether there is a claim or not
- there may be a breach of contract claim, but further information would need to be considered
- the issue was already subject to a grievance.
This should be pursued as it allows the individual to argue on wider grounds than simply breach of contract. It enables arguments for reasonableness and departure from well understood practice to be explored.
Any breach of contract claim would be via a County Court claim and not by application to an ET.
Legal department comment
A number of points emerge from the advice given by the solicitor:
Firstly, unless it explicitly says differently in any contract there is no contractual entitlement to guaranteed overtime pay.
Secondly, in line with guidance given previously, the constructive dismissal route is rarely one that members would be advised to take. Certainly in these types of cases we would argue strongly that members do not pursue such a course of action.
Thirdly, the advice reinforces advice previously given that where the member remains in employment a breach of contract claim is through the County Court and not via an application to the ET. Members who remain in employment should always be encouraged to seek further advice from an FTO before taking any decision to launch a breach of contract claim.
Finally, the case highlights that where it is appropriate every effort should be made to seek to resolve the issue through internal grievance procedures.