The Employment Appeal Tribunal (EAT) recently had to consider an interesting question: was an employee entitled to be paid for hours he had earned under a flexi-hours scheme when his employment came to an end?
In the majority of flexi-hours or time off in lieu (TOIL) schemes, the scheme itself deals with the question of what would happen to excess hours or TOIL worked under a flexi-hours scheme when the employment comes to an end. The scheme would also normally expressly deal with the question of what happens when the employee has not worked sufficient hours under the scheme.
In the recent case of Vision Events (UK) Ltd v Paterson , the EAT had to consider whether an Employment Tribunal was right to imply a term into Mr Paterson’s contract of employment that he would be paid for unused flexi-hours which had accrued at termination. Mr Paterson had started his employment with Vision Events as an event technician. In that role he was paid at an hourly rate and received payment for overtime worked. He was promoted in 2008 to the role of multimedia producer. His salary increased on the promotion, but he no longer received overtime. Instead, he was entitled to participate in a flexi-hours scheme whereby, if he worked beyond his contracted 45 hours per week, he would be entitled to time off at a time which suited the company. In 2012 Mr Paterson was made redundant and at that time he had accrued over 1,000 hours of flexi time and asked for payment for them. The company refused, but did offer to pay half. Mr Paterson was not happy with this and took his former employer to an Employment Tribunal claiming unpaid wages. The Employment Tribunal agreed that he should be paid for these hours and implied a term that he would be paid for them on termination.
The EAT disagreed. They said that there was no implied term as this was not necessary for business efficacy and it was clearly not a term which both parties in this case believed should be implied. Mr Paterson therefore failed in his claim.
Whilst this decision does seem somewhat harsh, it is a reminder that the courts and Employment Tribunal should only imply a term into a contract where it is necessary to do so for business efficacy, where they are implied through custom or practice, or where it is clear that both parties would have agreed the term at the time the contract was entered into. In this case, the refusal by the EAT to imply the term worked in the employer’s favour; presumably had Mr Paterson worked less than the 45 hours per week and “owed” hours to the company, the company would have lost out.
It is always best not to have to rely on implied terms. Their existence can be uncertain, and even where their existence is not in dispute, the precise extent of the implied terms is often uncertain and ripe for litigation. It is therefore best to ensure that the contract expressly deals with these types of issues.
We can help with the drafting of schemes for flexi time or TOIL so that questions like the ones raised in this case are dealt with from the outset to avoid disputes later on.
If you need help with drafting employment documentation, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).