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Adams v John Wright & Sons (Blackwall) Ltd
[1972] ICR 463, 7 ITR 191
Court: NIRC
Judgment Date: circa 1972
EMPLOYMENT - CONTRACT OF EMPLOYMENT - CALCULATION OF NORMAL WORKING HOURS AND A WEEK'S PAY - WEEK'S PAY - AVERAGE HOURLY RATE - REMUNERATION APPORTIONED TO HOURS ACTUALLY WORKED
By written contracts of employment the employees ships' painters worked a 40 hour week and were paid at the rate of 8s 6d per hour. In practice a price was agreed for each job in terms of hours and they were paid for the job accordingly. The number of hours fixed for the job consistently over-estimated the time needed to complete the jobs, so that in fact the employees were paid at twice their hourly rate. The employees worked a five hour day. When there was no work to do or when an employee earned less than an agreed minimum he received fall-back pay of £20 a week and when there was no work to do an employee was free to go home. The industrial tribunal dismissed an application by the employees for additional redundancy payments under Redundancy Payments Act 1965 holding that the average hourly rate of remuneration for the purposes of para 2(4) of Sch 2 to Contracts of Employment Act 1963 should be calculated by dividing the total week's pay including fall-back pay by the total hours, namely, 40, that the employee was liable to work under his contract of employment. On appeal by the employees on the ground that the average hourly rate must be calculated by dividing the week's pay for actual work excluding fall-back pay, by the week's actual working hours excluding hours when the employees were not on a job: Held the court was required by para 2(4) of Sch 2 to Contracts of Employment Act 1963 in calculating the average hourly rate of remuneration to have regard only to the hours when the employee was working and only to remuneration apportionable to those hours; it would be incorrect to treat the employees as 'working' within para 2(4) of Sch 2 when they were not on the employer's premises although they were receiving fall-back pay, and, accordingly, the hours when the employees were not working on a job and the amount of fall-back pay should not be included in the calculation of redundancy payment.