The outcome of Vision Events (UK) Ltd v Paterson was, to say the least, harsh on the claimant, Mr Paterson. He worked as a multimedia producer on a flexi time basis. He enjoyed his job. He had joined the Company in 2004 and after a promotion in 2008 his salary increased from £21,000 per annum to £28,000 per annum but without overtime (as had previously been paid). However, in place of the overtime he was entitled to flexitime whereby if he worked beyond his contracted 45 hours per week he was entitled to take time off at a time to suit the employer. He did not take all the time off he could have. When he asked to take a block of flexi time off in one go to make a trip to New Zealand, his employer refused to let him. He built up over 1000 hours owing to him, at which point, in May 2012, he was (fairly) selected for redundancy. Unsurprisingly, he looked for payment for those hours, but his employer maintained that there was no obligation to pay him at all – there was nothing in his contract saying they had to. The employer did offer a part payment in respect of the extra hours. This offer was refused and it was withdrawn. He successfully made a claim for unlawful deductions from wages in the Employment Tribunal. He was awarded £12,514 for 1042.84 hours. the employer appealed.
It is worth noting that the employer had not entirely ignored the flexi-time procedure in its documentation. There was a policy in the handbook:
Although the system is intended to be flexible and beneficial to both companies and employee, the company always retains the final say in determining the hours to be worked by all employees.
Due to the nature of the company’s business, flexi-time system, without appropriate rules would result in chaos, therefore the system is based on the principles of organised flexibility and prior notification of all variations in working hours.
The basic rules of the flexi-time system are explained below with the timesheet example in the next section giving an idea of how it is administered in practice.
1. Unless otherwise stated in the employee’s statement of particulars of employment, or otherwise agreed with their direct manager no later than 17:30 the previous working day, all employees are expected to start work no later than 08:30 each day. Any employee not at work by that time without prior agreement to the contrary will be considered late for work.
2. Employees are not allowed to let the number of flexi-hours they are carrying drop below zero at any time, without specific prior agreement from the company. Where this is agreed, the employee will be required to make up the time as soon as possible, subject to the requirements of the company.
3. If an employee is carrying a number of flexi-hours greater than zero, then they may or may not be entitled to be paid overtime as defined employee’s statement of particulars of employment [sic] if overtime is payable then the employee will normally be paid 50% of their outstanding flexi-hours as overtime each month. Normally this is calculated at the end of each month but the accrued position can be calculated at any interim date if necessary. If an employee is not carrying any flexi-hours at the end of the month, then they are not entitled to be paid overtime.
4. In exceptional circumstances employees may request to be paid more than the normal 50% of outstanding flexi-time. The company will not be obliged to agree or give reasons for declining the request.
5. Overtime is calculated on a monthly basis and is not determined by the length of any work period on any particular day.
6. Flexi-time will be paid as the number of hours multiplied by the employee’s hourly salary rate.
7. Any flexi-hours not paid are carried forward to the next month.
8. The company reserves the right to instruct that all or part of an employee’s outstanding flexi-time is taken as time off, rather than being held for payment.
9. All requests to take time off using the company flexi-time system must be approved in advance by the administration manager.
However, critically in this context, no mention was made of arrangements to apply on the termination of employment. Mr Paterson contended that the employer had indicated in meetings that at least 50% was payable on termination. However there was no document confirming this.
The Employment Appeal Tribunal looked at whether a term could be implied that he was entitled to be paid accrued flexi time hours and, by a majority, concluded that it could not. Based on the principle that it was not necessary to imply such a term to give the contract business efficacy, no such term could be implied. However the EAT appears not to have looked at another accepted way of a term can be implied into a contract, the “officious bystander” test. That test poses the question: what would an “officious bystander” (a mythical person) say, if asked whether the parties would have intended to include a particular term into a contract?
If you or I were to be asked whether the parties would have intended Mr Paterson to be paid for all the hours he had worked, we might well have said “Yes, of course”. We might take into account that the employer was willing to contemplate a part payment, that the entitlement (if that is what it is) had been earned and that perhaps a helpful analogy is accrued holiday entitlement. The decision is tough on hardworking employees but the decision is a very stark reminder that it is dangerous to make assumptions, particularly in the field of employment law.
Incidentally, it is worth noting that this appeal was heard on 17 and 18 July 2013 and the judgment has only recently been published. There is a one sentence apology for the delay in the final paragraph of the judgment but there is more than a little irony in the delay, bearing in mind the strict time limits and deadlines that parties and their representatives are required to adhere to!