Wednesday 7 November 2012

Deductions from wages

[Thanks to Ed McFarlane of Deminos HR for preparing this case summary]
Can individual clauses in an employment contract be construed in line with the principles of Autoclenz to establish the validity of a clause?

No, says the EAT in Qantas v Lopez and Hooper.

The Claimants, airline cabin crew, won tribunal claims for unlawful deductions from wages after a dispute over the payment of expenses, which were, for tax reasons, earmarked as allowances within salary. The EAT considered whether the principles of Autoclenz v Belcher (see bulletin on this here) meant that the Claimants' contracts should be construed so as to make their allowances payable on top of salary. The EAT upheld the appeal: it was not appropriate on the facts of this case to construe the individual clauses relating to allowances as allowing the payment of the allowances on top of salary, and there had been no unlawful deductions. There was no suggestion that the clauses themselves were sham clauses, and there was no need to depart from settled principles of construction.

The EAT also held that the payments were 'expenses' within the meaning of S27(2)(b) ERA 1996 and were therefore excluded from the definition of 'wages' in S27(1), so there was no jurisdiction to hear the complaints. 'Expenses' covers a payment 'in respect of expenses', e.g. a generous mileage allowance, not only simple re-imbursement of costs incurred.

The EAT also explored the application of misrepresentation and the non est factum doctrine to employment contracts.

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