Calculating strike pay deductions, important decision from the Supreme Court
An important judgment has clarified how much pay an employer is entitled to deduct when a teacher takes part in lawful strike action.
The Supreme Court has issued an important judgment which clarifies how much pay an employer is entitled to deduct when a teacher takes part in lawful strike action. While the decision is fact-specific in applying to college teaching staff, it may well have implications for other employees whose contracted hours are not reflective of how they work. Phil Allen, Partner in the Employment, Pensions and Immigration team, discusses the possible ramifications…
In the case of Hartley v King Edward VI College the Supreme Court has handed down a Judgment which all employers must now consider before stopping pay when strike action occurs. It held that a sixth form college should only have deducted 1/365 of salary per day of strike action, as the teachers were engaged on an annual contract and performed work throughout the year. The college’s approach of deducting 1/260 of salary per day (based on a five day working week) was not correct.
While this case is primarily of importance to those of you working in education, it may potentially have broader ramifications.
If employees are on strike, an employer does not have to pay them for the periods during which they are not working. This case considered what the rate of deduction should be when one day’s work is lost.
The claimants were employed as teachers at a sixth form college. They were paid an annual salary in equal monthly instalments. Their contracts of employment incorporated terms from a collective agreement known as the Red Book. The Red Book provided that the teachers were required to work up to 195 days per year ‘directed time’ (mainly face to face teaching) and, in addition, an unspecified amount of ‘undirected time’ as reasonably necessary to perform the role. This ‘undirected time’ included activities such as preparing teaching materials, marking and writing reports on students. The claimants regularly performed such duties outside normal term-time hours, during evenings, weekends and holidays.
The claimants took part in one full day of lawful strike action. The college withheld 1/260 of their annual pay (260 being the number of week days in a calendar year). The claimants brought claims for breach of contract, arguing that only 1/365 should have been deducted, as their work was not confined to week days.
The Supreme Court agreed with the claimants’ position that the appropriate rate of deduction was 1/365. It reached this view because of an old piece of law, the Apportionment Act1870. That makes the default position for annual contracts accrual at the rate of 1/365 per day. Accordingly, salary will only accrue at a different rate if the contract of employment explicitly states this to be the case (or is worded in a way that is clearly inconsistent with the fallback position).
There was nothing in the teachers’ contracts which stipulated that their salary should be apportioned in any way other than on a calendar day basis.
The Court decided that it was not appropriate to use the claimants’ ‘directed’ teaching days or the number of week days in the year as the basis for this calculation, as evidence clearly suggested that they routinely worked outside these hours.
Even though their contracts distinguished between ‘directed’ and ‘undirected’ time, there was no distinction between days on which work was carried out and days on which no work was carried out. The nature of the job meant that none of the claimants were able to complete all their duties during their ‘directed’ working time. Indeed, one of the claimants, Mr Hartley, stated that work volumes meant that he had no choice but to work every weekend of the year on both Saturdays and Sundays.
What does this mean for me?
This is a very fact-specific decision applicable to college teaching staff. It means that if you are a college, when staff take part in strike action, you may only deduct 1/365 of their salary per day, rather than some higher amount. This may be disappointing news for colleges constrained by high budgets which need to plan around the inconvenience and disruption of strike action.
It is important to note that the conditions of service for school teachers (as opposed to sixth form college teachers) are set out in the Burgundy Book. Unlike the Red Book, the Burgundy Book contains an express term that salary should be deducted at a rate of 1/365 for each strike day.
It is possible that this decision may have implications outside the education sector for employees whose days and hours of work are not ascertainable, or who’s ‘core’ contracted hours are not reflective of how work is done. For example, a senior manager may have core contracted hours but also be contractually obliged to perform ‘such additional hours as are necessary for the performance of his role’. It is not entirely clear whether the inclusion of such a clause would be enough to justify a 1/365 accrual of salary, or whether the individual would need to show evidence of actual out of hours work. We will have to wait and see whether anyone in any other sector tries to run such an argument, albeit it may be that senior employees with this level of autonomy are less likely to strike in any event.
The judgment is clear in holding that contracts of employment can set out the days for which salary accrues and such a clause will override the default position. Such provisions are not uncommon in contracts in relation to holiday pay. You may wish to consider including such a clause or reviewing exactly what your contracts say. If strike action and deductions are a particular concern for you and you want advice on your contracts or approach to deductions, please get in touch and we will be happy to advise.