Vision Events (UK) Ltd (“Vision”) v Paterson (“Mr P”) UKEAT/0015/13
Mr P was entitled to participate in a flexi-hours scheme which allowed him to take time off in lieu if he worked in excess of his normal weekly hours of work.
Mr P was made redundant and at the time of his dismissal he had accrued 1042.84 hours of flexi-time. His employer offered to pay 50% of the accrued flexi-time, but Mr P refused this. Mr P brought claims for unfair dismissal and an unlawful deduction from wages relating to his unpaid flexi-time.
The employment tribunal found that in the absence of an express term setting out what would happen to accrued flexi-time upon termination, there was an implied term that payment was due for accrued hours on termination. Vision had not made it clear that it operated a “use it, or lose it” policy in respect of accrued flexi-time which had not been used when an employee left the company. The employment tribunal also did not understand why Vision had offered to pay Mr P for half of his accrued hours if it genuinely considered that Mr P was not entitled to be paid for the additional hours. Mr P was awarded £12,514 in respect of his accrued flexi-time.
The decision was appealed to the employment appeal tribunal as Vision argued that the employment tribunal had made an error in law, as there was no implied term relating to payment for accrued flexi-hours on the termination of employment.
The employment appeal tribunal decided that the employment tribunal was wrong to imply a term that Mr P would be paid for his accrued flexi-hours on the termination of his employment.
The majority view within the employment appeal tribunal was that it was not necessary for business efficacy to imply such a term and it was not a term which both parties believed should be implied. The business efficacy test allows the courts and tribunals to imply terms which are necessary to make the contract workable.
In addition to this, the majority disagreed with the employment tribunal decision that Vision’s offer to pay 50% of the accrued time meant that the term was implied into the contract.
The employment appeal tribunal upheld Vision’s appeal, by a majority.
Commentary
The employment appeal tribunal found that poor drafting had been central in this case. To avoid this issue arising, employers should ensure that the terms relating to flexi-hours are clear and well managed to avoid such a significant build-up of accrued time. A policy should also expressly address what happens to accumulated hours on termination.
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