Implied Terms and Flexi-Hours

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The Problem

The use by employers of flexi-hours schemes is increasingly common, perhaps because of the benefits it can provide employees and employers alike. But what happens if an employee accrues time under a flexi-hours scheme but is then dismissed before such accrued hours have been used?

The Principle

This was the issue considered in Vision Events (UK) Ltd v Paterson. Mr Paterson was entitled to participate in a flexi-hours scheme which stated that if he worked beyond his contracted 45 hours per week, he would be entitled to time off at a time which suited the employer.

By the time Mr Paterson was made redundant in May 2012 he had accrued 1042.84 hours of flexi-time and sought payment for them. Vision Events was willing to pay only half of the hours (as a good will gesture) but this was rejected by Mr Paterson. He preferred to bring a number of claims in the employment tribunal, including an unauthorised deduction from wages claim.

As flexi-hour schemes are a contractual concept there is no statutory provision which governs their use. In this case the scheme did not stipulate how, for example, accrued but untaken flexi-hours would be handled upon termination. The tribunal therefore had to consider whether it was appropriate to imply a term into the contract to resolve issues the scheme did not address (i.e. to make the scheme workable and to be consistent with the obvious intentions of the parties).

The tribunal found that it should; it implied a term into Mr Paterson’s contract that payment would be made for the accrued flexi-hours on termination. Vision Events was ordered to pay the claimant £12,514 but an appeal followed.

The EAT found otherwise. It concluded the tribunal had made an error in inserting an implied term into a dismissed employee’s contract of employment to provide for payment of unused flexi-hours. Such an implied term was not necessary for business efficacy and it was clearly not a term which the parties believed should be implied.

The Practice

Whilst some commentators are surprised by the finding of the EAT in this case, the case highlights the need for the operation of flexi-hour schemes to be clearly outlined (likewise in regard to overtime and time off in lieu schemes). Employers need to give thought to likely scenarios to ensure the terms can deal with such scenarios in a clear, workable and non discriminatory way.  By way of example, the schemes should stipulate whether accrued hours can be taken during a notice period and how excessive build up of hours will be addressed.

For more information, help or advice please contact Tim Davies on 0191 211 7927.