Hartley & Ors v King Edward VI College [2017] UKSC 39

Sixth form college teachers went on strike for one day. Their employer deducted 1/260 of their annual salary. The Supreme Court held that under section 2 of the Apportionment Act 1870, the correct deduction was 1/365, reflecting calendar day apportionment.

Facts

The appellants were teachers employed at the respondent’s sixth form college. Their contracts of employment incorporated the ‘Red Book’ (Conditions of Service Handbook for Teaching Staff in Sixth Form Colleges). On 30 November 2011 they participated in a full day of lawful strike action. The respondent deducted pay at the rate of 1/260 of their annual pay (calculated as 365 days less weekends). The appellants contended that the correct deduction was 1/365 of their annual pay under section 2 of the Apportionment Act 1870. By contrast, the equivalent contracts in secondary schools (the ‘Burgundy Book’) expressly provided for deductions at 1/365.

The teachers’ contracts required them to work 195 days a year (190 teaching days), with up to 1,265 hours of ‘directed time’ allocated by the Principal. In addition, clause 2.3 and paragraph 22 of the Red Book required teachers to undertake such additional ‘undirected’ hours as needed to discharge their duties effectively, including marking, report-writing and lesson preparation. The evidence showed that the appellants regularly worked evenings, weekends and during holidays to complete their undirected duties.

Issues

The Supreme Court identified three issues:

• Whether the contracts of employment expressly or by necessary implication provided for salary to be paid pro rata in respect of divisible obligations to perform work on each day of directed time, so that the Apportionment Act 1870 had no application;
• The meaning of ‘accruing from day to day’ in section 2 of the Act; and
• The proper construction of section 7 of the Act (which disapplies the Act where there is express stipulation that no apportionment shall take place).

Arguments

Appellants

The teachers argued that section 2 of the Act applied so that their annual salary should be deemed to accrue at a rate of 1/365 per calendar day. They contended that this followed because their contracts were annual contracts paid monthly, with no distinction between days on which they performed paid and unpaid work, and that their wide-ranging duties were performed across all days of the year including evenings, weekends and holidays. They argued that section 7 did not apply because there was no express stipulation excluding apportionment.

Respondent

The respondent argued that the Act did not apply because the contracts implicitly provided for pay to be tied to directed time and was therefore divisible. Alternatively, the respondent relied on the Court of Appeal’s reasoning that section 2 does not impose equal daily accrual, and that pay was tied to directed working days, justifying the figure of 1/260 (the total annual working days). The respondent also relied on supporting features such as the calculation of part-time teachers’ pay and the 1/195 rate for additional directed days.

Judgment

The Supreme Court (Lord Clarke giving the lead judgment, with whom Lady Hale, Lord Wilson, Lord Hughes and Lord Gill agreed) unanimously allowed the appeal.

Application of the Act

The Court rejected the respondent’s new argument that the Act did not apply. Following Item Software (UK) Ltd v Fassihi and Sim v Rotherham Metropolitan Borough Council, the Act applies in principle to employment contracts where the common law principles relating to entire contracts would otherwise operate. The contracts did not expressly or by necessary implication provide for pay to be apportioned pro rata to divisible obligations performed only in directed time.

Meaning of ‘day to day’ in section 2

Lord Clarke held that ‘accruing from day to day’ means accruing by reference to calendar days, not working days. He relied on Thames Water Utilities v Reynolds, Taylor v East Midlands Offender Employment, In re BCCI SA and Smith v Kent County Council. The use of the word ‘considered’ in section 2 indicates it is a deeming provision, and section 2 implies the principle of equal daily accrual. Although later EAT authorities such as Leisure Leagues UK Ltd v Maconnachie had departed from this approach by reference to the Working Time Regulations 1998, those Regulations were not incompatible with the calendar-day approach.

Rejection of 1/260

The Court held that the figure of 1/260 made no sense because the teachers’ work was not confined to weekdays. Much of the undirected work (marking, report writing, preparation, references) was carried out in evenings, at weekends and during holidays. The wide-ranging nature of teachers’ duties, as described by Scott J in Sim, supported the conclusion that pay related to all calendar days.

Section 7

Section 7 disapplies the Act only where there is an express stipulation that no apportionment shall take place. The contract here contained no such express provision. Reading In re Lysaght and Tyrell v Clark, there is a presumption that the Act applies, and any contractual term excluding it must be clear and unambiguous.

Disagreement with the Court of Appeal

Lord Clarke respectfully disagreed with Elias LJ’s view that section 2 did not import a principle of equal daily accrual and that pay was tied to directed time. The directed work, while important, was only part of the teacher’s responsibilities. Much undirected work was not ‘directly and inextricably linked’ to directed hours. Given the annual contract paid monthly, and the spread of duties across the calendar year, the natural construction was that pay accrued at an equal rate of 1/365 per day.

Implications

The decision establishes that, in the case of annual salaried employment contracts where the employee’s duties extend beyond defined working hours and across calendar days (including evenings, weekends and holidays), section 2 of the Apportionment Act 1870 operates as a deeming provision requiring equal daily accrual on a calendar day basis. Accordingly, the daily rate for the purposes of deducting pay for strike action will be 1/365 of annual salary, unless the contract contains an express stipulation excluding apportionment under section 7.

The judgment is significant for employers and employees, particularly in education, where strike deductions are a recurring issue. It aligns sixth form college teachers with secondary school teachers (whose Burgundy Book contracts already provide for 1/365 deductions) in respect of the daily rate for strike pay deductions.

The Court emphasised that the appropriate fraction depends on the terms of the particular contract. The 1/365 result follows specifically from the fact that these were annual contracts paid monthly and from the wide-ranging nature of professional teaching duties carried out throughout the year. The decision is therefore tied to those features and should not be assumed to apply uniformly to contracts of different periodicity or to those involving more clearly defined working hours. The Court also confirmed that section 7 requires a clear and express contractual stipulation in order to disapply the Act; ambiguity will not suffice.

Verdict: Appeal allowed. The Supreme Court held that section 2 of the Apportionment Act 1870 applied; ‘accruing from day to day’ means accruing per calendar day; section 7 did not apply on the facts; and the respondent was entitled to deduct only 1/365 of the appellants’ annual salary for each day of strike action, not 1/260.

Source: Hartley & Ors v King Edward VI College [2017] UKSC 39