Breach Of Employment Contract - Advice greatly appreciated

[muzzy17]

Hi,

 

This is my first post so thanks for taking the time to read this. To give you a brief overview of my circumstances I was employed by a government organisation who will remain anonymous for fear of reprisals at this time. I resigned from the organisation in 2009 so that I could facilitate a move to New Zealand on a permanent basis.

 

To give you a brief outline I was employed by the organisation initially as a Support member of staff back in September 2003 leaving to take up a new position within the same organisation in August 2008 again with the same organisation. The dispute with surrounds my salary whilst employed as a Support member of staff with the organisation between the above aforementioned dates.

 

In October 2013 I was made aware by an ex colleague that the organisation had made some mis-calculations with their pay formulas and that some members of staff had been underpaid as well as overpaid. I wrote a letter to the payroll department and was asked to wait until payroll had looked into my pay to decipher if I had been underpaid. In December 2013 management informed me that I was to be paid just £1001.40 (for 1 year's erroneous back pay) without any further consultation of the matter, I duly responded stating that I did not accept this amount and if the organisation did pay this into my bank account It was by no means an acceptance of the matter, I also asked not to be taxed on this amount as I was a foreign resident for tax purposes but they went ahead and taxed the payment again without any further consultation.

 

The organisation along with all other similar government departments across the country have to adhere to the Pay And Conditions Handbook which is a government document, and is also written into employee's contracts. On this occasion along with many other people who were employed by the organisation as support staff, this was not adhered to since 2003 due to an 'administration error' on the organisations behalf. The head of the organisation I used to work for has since replied to me stating that this could be considered as a breach of contract.

 

The reason the organisation are making it difficult for me to recover all outstanding monies owed is because they are applying The Limitations Act 1980 to make reduced payments to all staff affected which I feel is appalling and immoral.

 

This issue has made the local news and the head of the organisation has gone on record stating the organisation "had both moral and legal duties to correct the pay errors" what the head doesn't go on record to say is that the organisation would be applying The Limitations Act 1980 to make reduced payments to staff.

 

The key part I feel, is if I would have knowingly known at the time I was being underpaid I would have acted to recover the money owed its only natural. The organisation have clearly put myself and others at a disadvantage by only realising this error as a mistake in August 2013 and then applying The Limitations Act 1980 to make reduced payments.

 

I believe that section 32 subsection © The Limitation Act 1980 provides a valid argument to postpone the 6 year time limit in recovering the monies owed as I did not knowingly know that a mistake had occurred and I would have quite naturally sought to remedy the problem straight away had I known my pay and pension had a monthly shortfall dating back to 2003. Does anyone know if this would be a good legal argument in court? Here's the S.32 definition (see subsection c):

 

32.--

• (1) .... where in the case of any action for which a period of limitation is prescribed by this Act, either-

(a) the action is based upon the fraud of the defendant; or

(b) any fact relevant to the plaintiff's right of action has been

deliberately concealed from him by the defendant; or

© the action is for relief from the consequences of a mistake;

 

The period of limitation shall not begin to run until the plaintiff has

discovered the fraud, concealment or mistake (as the case may be) or

could with reasonable diligence have discovered it....

 

The report that I have obtained puts the errors down to "Inconsistent practice and poor communication between the operational teams, the Resources Management Unit, Human Resources and Payroll. These issues stemmed from the lack of end to end process, control and written procedures governing shift pattern changes. The risk of reoccurrence although much reduced following the discovery of this error, will remain until procedures are formally documented and communicated"

 

In closing there are around 250 members of staff affected I believe.

 

I along with 7 other former employees (That number is likely to increase) are looking to take collective legal action as we are all in the same situation with regards to our pay arrears the only difference is our lengths of service differ. I am the nominated spokesperson for our group.

 

My only questions are:

 

1. Do this organisation have a case to answer with regards to a breach of contract?

2. Would S.32 subsection © The Limitations Act (See above definition) be a good argument in a court as a mistake has been made?

3. Can an application be lodged to instigate employment Tribunal proceedings regardless of the 3-month timeframe, as I did not knowingly know our pay was erroneous?

4. Would a civil case be more likely to succeed for a breach of contract?

5. Could we also charge the organisation interest on any monies owed in my own case I believe that i'm owed around £10,000 and above?

6. Lastly if there was any future action taken could an application be put to the courts requesting that all our associated costs and legal fees be met by the organisation in the event they lost the case?

 

I hope this all makes sense, I apologise if there was any ramblings.

 

I look forward to hearing from anyone who has experienced similar problems or anyone who specialises in this area of employment law.

 

Thank You

 

Muzzy17

Edited February 20, 2014 by muzzy17

[steampowered]

1. Yes

2. The term 'mistake' has a specific legal meaning which is narrower than you probably think it is. See http://en.wikipedia.org/wiki/Mistake_(contract_law). It is more to do with a situation the parties to a contract are fundamentally mistaken as to the underlying nature of that contract (e.g. you contract to buy a painting both sides think is a Picasso but it turns out to be a fake) rather than one party paying the wrong amount. I don't think section 32 of the Act fits neatly in your situation, unfortunately I think you will have difficulty claiming back more than 6 years.

 

The other limitation problem you have is that the exception doesn't apply if you could have discovered the mistake with reasonable diligence. Now I don't know on what basis you were paid, but in most situations I think it would be difficult to argue that you showed reasonable diligence if you did not check whether you were being paid the correct amount.

 

3. No, you are time barred from bringing ET proceedings. You'd need to bring proceedings through the court system.

4. Yes.

5. Interest should be applied at the statutory rate of 8% unless otherwise specified in the employment contract.

6. As the amount is more than 10k this would not be small claims track, and thus legal fees can generally be recovered from the other side if successful. Similarly you would be liable to pay the employer's legal fees if for any reason you were not successful.

 

 

The other point to make is that, as far as I am aware, you would be subject to tax on this since you were UK resident at the time the money was due.

[honeybee13]

Hello there.

 

In case it's relevant to your situation, New Zealand has a double taxation agreement with the UK.

 

http://www.hmrc.gov.uk/taxtreaties/in-force/n.htm

 

HB

[muzzy17]

Thanks for your advice steampowered and for providing a legal definition of a mistake in contractual terms, it much appreciated and has clarified things further.

 

To summarise:

 

1. There are an estimated 250 employees / former employees involved who have all only found out in October 2013.

 

2. All employees salary is paid on a monthly basis with pension contributions paid on this amount by the organisation at 6.5%

 

3. I note your comment that the exception doesn't apply if you could have discovered the mistake with reasonable diligence, and consider it would be difficult to argue that you showed reasonable diligence if you did not check whether you were being paid the correct amount.

 

My argument in putting a case forward to point 3 would be that I did in fact demonstrate reasonable due diligence in checking my wage slip each month in line with my contractual obligations of reporting if there were any errors immediately after I realised any mistakes (Which I have now done, albeit a little late) the fact 250 other members of staff didn't realise their pay had a monthly shortfall shows the extent and complexity of the issue in my opinion.

 

I have obtained a copy of the auditors report into the errors and to clarify the mistakes have come as a result of the organisations failings as follows:

 

The error was perpetuated as terms and conditions were copied from the original incorrect calculation for subsequent staff appointments and shift pattern changes instead of reassessing the allowances against the qualifying criteria.

 

The calculation would have been made by Human Resources (HR), but there have been numerous staff changes since 2003 and there is no paperwork to support the original workings. A theory suggested by the current HR employees is that weekends may have been excluded from the calculation due to a misinterpretation of the Staff Handbook. This meant that less than half the shifts would have included unsociable hours and consequently, only the 7.5% (irregular hours) allowance was awarded.

 

As current HR staff were not involved in the original calculation we were unable to substantiate this theory; however it is a feasible explanation. This error was applied to all staff and as more staff were recruited they were placed on the same terms and conditions without revisiting the qualifying criteria, thus compounding the error.

 

We found that over time different shift patterns were developed to accommodate flexible working requests – these were agreed at a local level and implemented without considering the potential impact on the shift patterns.

 

The lack of end to end process and written procedures covering shift pattern changes exacerbated the problem and reduced the possibility of discovering the original error at an earlier opportunity. This control weakness also resulted in the development of over 70 different shift patterns during the ten year period – a complication which has been addressed through the recent consultation process.

 

As you can see from the auditors findings as summarised above it shows the problem (In my opinion) to be a complex one using complex workings out to ensure all staff are paid correctly, i'm not sure anyone would have been able to decipher if a mistake had been made just on the basis of checking their pay slip each month. The problems goes deeper than that.

 

What are your opinions? Do you think that:

 

1. I have a good argument on the due diligence part of the S.32 definition and the fact there are 250 other staff members who had not realised the mistake up until October 2013?

 

2. What chance do you think I have if I took court action? i.e Excellent, Good, Ok, Poor, No chance

 

3. Does anyone know of any relevant case law which would be relevant to the circumstances?

 

4. Finally a bit of a long shot... but does anyone know if this case would be of interest to a solicitor who would take this on a no win no fee basis?

 

Thanks again for taking the time to respond and for passing on your thoughts.

 

Muzzy 17

Edited February 21, 2014 by muzzy17

[muzzy17]

Thanks HB much appreciated, just about to retire for the evening but will certainly have a look at this in the morning, thats the 12 hour time difference for you! Muzzy 17

[steampowered]

No worries, glad to help.

 

1. Yes, sounds like you have a reasonable argument on the due diligence part.

 

2. I'm still a little sceptical about whether you could bring this within 'mistake' within the meaning of s32 unfortunately. However I'm sure there are arguments which could be raised and its not immediately clear either way. Further research into case law would be required.

 

3. I don't see why not, provided the amounts involved are high enough and there is a reasonable argument to made on the limitation act aspect. I'm not sure whether you could get insurance to cover the risk of having to pay the other side's legal costs if you lose though.

[muzzy17]

No worries, glad to help.

 

1. Yes, sounds like you have a reasonable argument on the due diligence part.

 

2. I'm still a little sceptical about whether you could bring this within 'mistake' within the meaning of s32 unfortunately. However I'm sure there are arguments which could be raised and its not immediately clear either way. Further research into case law would be required.

 

3. I don't see why not, provided the amounts involved are high enough and there is a reasonable argument to made on the limitation act aspect. I'm not sure whether you could get insurance to cover the risk of having to pay the other side's legal costs if you lose though.

 

Thanks HB - It would seem the due diligence part is ok, just the 'Mistake' part of S.32 subsection © which is the grey area and could prove a problem.

 

Any forum members on here reading this that would be able to point me to any good legal arguments / case law it would be greatly appreciated and would help me to consider further a potential case against my former employers.

 

Thanks Again,

 

Muzzy 17

Edited February 21, 2014 by honeybee13
Asking for lawyer contact.

[honeybee13]

Sorry, muzzy, I've removed the paragraph about finding legal representation, it's not how we operate. You could have a look at the Law Society website for employment lawyers who operate on a NWNF basis, there's a find a lawyer facility.

 

HB

[muzzy17]

Thanks HB and apologies on that.

[honeybee13]

It's OK, you're new.

 

HB