CASE STUDY – Caterpillar Northern Ireland wins at the Court of Appeal Northern Ireland
Caterpillar Northern Ireland wins at the Court of Appeal Northern Ireland
We recently supported our Member, Caterpillar, overturn an Industrial Tribunal Decision that found that the 3 waiting days before the employee received contractual sick pay amounted to an unlawful deduction from wages.
The Court of Appeal NI overturned this decision and found that the Tribunal had reached a bare, unreasoned decision, which was unsustainable in law. It found that the Company was entitled not to pay the employee for the 3 waiting days and therefore set it. The Tribunal erred in law on this point and the Court of Appeal corrected that error.
The union, who had supported employee at both the Tribunal and Court of Appeal sought ‘guidance in relation to how the issues of costs should justly be addressed in employment appeals generally.’
Whilst the Court of Appeal declined that invitation it reminded parties that the Court retains a judicial discretion that will be shaped and driven by fact specific, and the legally sensitive context of each particular case. The Court reminded the parties that general rule in the Court of Appeal, unlike Tribunal, is that costs follow the event i.e. the loser pays the winning parties costs. The union challenged this rule and sought an Order that each side be responsible for their own costs. The Court found that the general rule has an important function of encouraging parties to act sensibly in litigation. In this case the trade union was well resourced and had the availability of legal advice. It had made an essentially commercial decision in determining to finance the employee’s appeal. The Court of Appeal therefore applied the general rule and ordered it to pay Caterpillar Costs.
The case involved two production operators for whom working at height was an integral part of their role. At an occupational health assessment both were found to be fit for all aspects of the job except working at height. As working at height was an integral part of their role, and there were no other roles available, the employees were sent home on a half-day pass out as they could not do their job. One employee requested holiday and returned to work a week later. In this case, the Tribunal found there was no unlawful deduction and dismissed his case. There was no appeal in respect of that Decision.
In the second employee’s case, the employee attended his GP who provided him a Fit Note for 4 weeks for hypertension and prescribed him medication. The Company has a generous Company Sick Pay scheme set out in the Hourly Time Away from Work Policy that provides for full basic pay for up to 28 weeks, following a 3-day waiting period during which no pay is paid. These provisions reflect the statutory sick pay regime. The employee lodged a Fit Note that recorded Hypertension for 4 weeks, backdated to the day he was sent home and the Company paid the employee in accordance with it. The employee subsequently returned to work 2 weeks later after presenting a further Fit Note stating “Fit for all aspects of his role – hypertension now controlled by medication.’
The Tribunal had found that the ‘situation does not seem to have been anticipated by the Company when it [was] drafted [its Hourly Time Away from Work Policy] and cannot be properly inferred from its contents.’ The Tribunal therefore found that these 3 waiting days were an unlawful deduction from wages.
Court of Appeal NI
The Court of Appeal went back to basics and first identified that it was common case between the parties that the contractual sick pay set out in its Hourly Time Away from Work Policy formed part of the employee’s contractual terms. The Appeal Court then identified the next question that was the construction of the contract before going on to answer if it applied to the employee in the circumstances he found himself. The Court of Appeal construed the contract as prohibiting the payment of Contractual Sick Pay during the first 3 days. The Court of Appeal identified that the ultimate question for the Tribunal was whether the non-payment of wages was required or authorised to be made. It found that the Tribunal did not answer this question and that there was only one answered which was in the affirmative. In other words, the non-payment for 3-day period under scrutiny was lawful and in accordance with the contract. It found that the Tribunal had reached a bare, unreasoned decision, which was unsustainable in law.
It seems at first instance the Tribunal failed to fully understand that although the occupational health nurse (OHN) (rather than his GP) found him fit for all aspects of the role except working at height, this rendered him unfit for work. The condition he had was hypertension and the Appeal Court concurred with the agreed assumption that this was an illness falling within terms of Sick Pay Policy applying illness, injury or disease. They also stated that these terms invited an expansive interpretation. The case is a reminder of the importance of having clear contractual terms.
Although the value of this case was low (£238) the potential import of the case had larger ramifications for the Company in relation to the construction of its contractual sick pay and represented an important win. The second employee had the support of the Union at both Tribunal and Court of Appeal and therefore did not incur any legal costs in pursuing his case. The Court of Appeal reminded the parties that although Northern Ireland does not have an Employment Appeal Tribunal costs still play an important role in ensuring litigation discipline particularly when both are well funded and legally represented.