The recent judgment by the Employment Appeal Tribunal in the case of Turning Point Scotland v Perry and Hamilton highlights important aspects of the national minimum wage that are often overlooked by charities, and the potential cost consequences to individuals of bringing claims to a tribunal.
Turning Point Scotland is a large registered charity providing social care services to adults with a range of complex needs. Mrs Perry and Mrs Hamilton were both employed by TPS. Their contracted hours were 39 a week, but they worked 'sleepover' shifts during which they were on call. They claimed they worked 66 and 60 hours a week respectively. Their annual salaries were about £16,000 and £20,000.
In January 2011, Hamilton (who was still employed) and Perry (whose employment had ended the previous year) brought claims in the Dundee Employment Tribunal and were legally represented. They alleged that TPS had paid them less than the minimum wage for the actual hours they had worked and, accordingly, they were entitled to receive arrears of pay. TPS denied the claims, stating that Perry and Hamilton worked about 39 hours a week and that, even if they had worked longer hours, their average hourly rate of pay did not fall below the minimum wage.
In May 2011, having received a barrister's opinion on their claims, Perry and Hamilton formally withdrew them. TPS subsequently applied for expenses (in Scotland, legal costs are referred to as expenses).
The legal decisions
The employment tribunal rejected TPS's application for expenses because the claims, having been withdrawn prior to a hearing, had not been determined; and it said that, in any event, the bringing and conducting of the claims was not misconceived and/or unreasonable.
TPS appealed to the Appeal Tribunal, which in April 2012 overturned the employment tribunal's judgment because it considered that it erred in its interpretation of the rules, that Perry and Hamilton's claims were misconceived, that it was unreasonable to have brought the claims and that they were conducted unreasonably in that they failed to engage in the tribunal process. Accordingly, the claim was remitted to the tribunal to determine the amount that Perry and Hamilton should be ordered to pay.
Lessons for charities
It is rare for costs to be awarded in tribunals, but there is an increasing tendency for these to be awarded to charities. In cases where the facts on which the claims depend are in dispute, a robustly drafted response setting out the charity's position and putting the claimant on notice that an application for costs might follow can prove invaluable.
The minimum wage applies to workers and must be met, on average, for all hours worked. Charities should be alert to the risk that unpaid overtime might push lower earners under the minimum wage. Appropriate records must be maintained to demonstrate compliance. Annual pay rate increases and the dates on which younger workers will move up to the next rate should be recorded.
Victoria Willson, a partner at Levenes Employment, third sector specialists