Leisure Employment Services Ltd v HM Revenue & Customs

This appeal from Elias J, as President of the Employment Appeal Tribunal, who was hearing an appeal from a Chairman of an Employment Tribunal, concerns issues arising under the “Minimum Wage” provisions. Those provisions are to be found in the National Minimum Wage Act 1998, which is implemented by the subordinate legislation with which we will be principally concerned, the National Minimum Wage Regulations 1999 [the Regulations]. The appellants before Elias J, respondent in this court, are the Commissioners for Customs and Revenue [the Revenue], who are charged with the duty of enforcing the minimum wage regime. The appellant in this court, whom I will call LES, is a wholly owned subsidiary of Bourne Leisure Limited, which operates holiday resorts (which are greatly improved and enhanced versions of what people of my generation knew as holiday camps), under the well-known Butlins and other brands. Although various relevant functions are distributed amongst different companies in the Bourne Leisure group, it was sensibly agreed that the issues in this case can be properly considered on the assumption that LES is for all purposes the employer of Bourne Leisure staff.

The facts and issues are set out in helpful detail in the judgment of Elias J. I give here only the minimum necessary for an understanding of this appeal. Anyone who thinks that further information is required can safely turn to the judgment below.

The workers with whom the case is concerned are seasonal staff employed as bar staff, shop assistants, receptionists, security staff and the like, and also in some cases as electricians and plumbers, in LES resorts in various parts of the country. These are fairly humble posts, as is demonstrated by the fact that if the sum of £3 per week that is in issue in this case were to be deducted from their wages, that would reduce their remuneration below the national minimum wage level. It is possible for employees, at their own choice, to be accommodated on site, in shared caravans or chalets. At the time of the hearing before the Employment Tribunal about 41 per cent of the total workforce had chosen that option. That is provided for in the employee’s particulars of employment, clause 11 of which indicates that if permitted to reside in accommodation owned or occupied by the company the employee will be required to enter into an “Accommodation Agreement” with the company and to abide by its terms and conditions. The Accommodation Agreement makes clear that the employee has a licence only, and must vacate the accommodation as soon as his employment ceases.

When an employee occupies this accommodation, and as a condition of his occupation, the employee is required to pay to LES £6 per fortnight for the supply of heat and light to his caravan or chalet. There is no doubt that the foregoing is both the practical and the legal position, but how that obligation is expressed in the Accommodation Agreement is a matter of importance in this case, to which we will have to return. The mechanics of this supply are that the caravans and chalets occupied by the workers receive heat and light by the same means, whatever they may be, as the rest of the buildings on the resort. The workers’ caravans and chalets are not separately metered, nor is the sum charged for heat and light of £6 per fortnight an accurate, or indeed any, estimate of the cost of the energy actually consumed, whether the actual cost to LES or what would be the cost to the employees if they had to purchase energy separately and directly from the supplier. It was indeed accepted in the present case that the sum of £6 per fortnight was less than what would be the cost to an employee of direct purchase.

The legal significance of that charge of £6 is as follows (at this stage, stated only very broadly). It is a clear principle of the minimum wage regime, underlined in regulation 9 of the Regulations, that the required wage should be paid in money, and not by way of benefit in kind; and that the employer should not be permitted to make compulsory deductions from pay, so as to bring the worker’s pay below the minimum level, for the provision of goods and services. There are all sorts of good reasons for those requirements, which have their ancestry in the Truck Acts, not least the danger of exploitation of workers on low pay, and the right of the worker to decide for himself how he shall use his remuneration. Almost the only exception to that prohibition is that the employer may make deductions from the worker’s pay, or require payment from the worker, in respect of the provision of living accommodation for the worker. That exception is itself limited in terms, the accommodation deduction only being permitted to reduce the total remuneration to a fixed (and modest) level below the minimum wage.

LES apply the total permitted deduction for accommodation, so that workers are paid the amount of the minimum wage less the accommodation charge. That is entirely in accordance with the statutory scheme. However, if the £6 per fortnight is added to the accommodation charge, that will take the total package below the statutory minimum. The issue in this appeal is, therefore, whether the legislation requires the £6 charge to be taken into account in calculating the permitted accommodation deduction; or alternatively forbids a charge of this type from counting against the minimum wage. That requires a detailed consideration of the legislation. It will be convenient to mention here that, in order to ensure that all aspects of the legislation were properly considered, the parties very sensibly agreed that in one case, instead of the normal practice of deducting the £6, an employee should be paid her full wage less the accommodation allowance, and then be required to hand back the £6.

The structure of the Regulations is fairly complex. There is good reason for that. The legislator plainly thought that, in order to ensure that workers did indeed obtain the minimum wage, permitted deductions should be clearly defined and limited, without leaving room for the exercise of discretion either by the employer or by the court. As Elias J, with his experience of this field, said at §56 of his judgment, the legislation has to take a strong line to ensure that the statutory minimum wage is properly secured for workers. We set out that legislation for ease of reference in an annexe to this judgment, but how it actually works cannot be better explained than in §§ 11-19 of Elias J’s judgment, which I gratefully set out:

The Revenue contended that the requirement to pay the £6 per fortnight brought the employee’s remuneration below the level of the minimum wage for two quite different reasons. First, it had to be counted as part of the accommodation charge. Since LES were already imposing the maximum permitted deduction in respect of accommodation, the £6 had to be discounted. Second, the £6 was a charge that had to be discounted in any event because it was imposed for the use and benefit of the employer. Mr Bowers QC, for LES, properly accepted that he had to succeed on both of these points if his clients were to be permitted to continue to make the £6 deduction from the minimum wage. I deal with those complaints in turn.

Regulation 31 lists amounts that must be deducted from the employee’s wages when calculating whether those wages attain the required minimum level. Regulation 31(1)(i) requires there to be brought into account in that calculation

Before the judge, and before us, much time was expended in exploring whether the provision of heat and light constituted or was part of the provision of living accommodation. That looked back to the conclusion of the Chairman of the Employment Tribunal, who had said at § 6.1 of his Determination that

That view, and how far, if at all, the ET’s understanding of “accommodation” extends beyond the limits suggested by the Employment Tribunal, is obviously capable of a good deal of debate. But Elias J was, with respect, correct to hold that that is not the relevant question. The Regulation does not speak of payments “for”, or “as a charge for”, the provision of living accommodation, but rather of charges “in respect of” the provision of living accommodation. It therefore on its natural meaning encompasses any charge that is levied in connection with, and certainly any charge that is levied as a pre-condition to access to, the provision of living accommodation. As Elias J put it in §36 of his judgment:

I respectfully agree, and it is difficult to see that there is more to say. The employee cannot obtain the accommodation (however in detail the latter may be defined) without agreeing to pay the £6. Although that payment is in respect of heat and light, agreement to make the payment is still a pre-condition to the obtaining of the accommodation: just as it would be a compulsory charge for cleaning, or for the hire of furniture or a television. The payment may or may not be in respect of some things other than the provision of living accommodation, depending on how the latter is defined, but there is no doubt that, on any view of that question, it is also in respect of the provision of the accommodation.

However, I add some comment on two further matters that were discussed before us. First, it is nothing to the point that the employee has a free choice whether to apply for accommodation in the first place. The issue with which we are concerned arises out of the fact of the provision of accommodation, and it is only that fact that enables the employer to make any deduction at all. The legislator was careful to write the rules on that basis, and not to limit them to the type of case, of which he must have been aware, where an employee such as a caretaker is required to live on site.

Second, and quite apart from the wording of the Regulations, a further strong policy objection to LES’s argument is that to permit an employer to levy charges that are not controlled by the legislation, because they are not subject to the accommodation limit, leaves open serious possibilities of abuse. It was argued that tribunals would be astute to check such instances. But before they could do that, evidence would be needed of whether the charge was reasonable, or was indeed in relation to a real benefit obtained by the employee. Take the present case. It is accepted that LES themselves are not open to this criticism, because the £6 charge is less than would be incurred if the employees made their own arrangements. That fact has been established through meters installed in some caravans or chalets by LES, in a voluntary step that the Revenue is in no position to investigate. But say that an employer declined to enter into such calculations, and said that the Revenue and the court must rely on his integrity. It is very doubtful whether the tribunal could compel further evidence, whether of the type adduced in this case or more widely in respect of market charges. And if a tribunal were asked to go down that road, it would or should be asking itself at an early stage why it was becoming embroiled in elaborate investigation, and possibly market and economic arguments, when it was administering a detailed statutory scheme that was designed to provide a simple answer to the simple question of whether the worker was receiving his minimum wage. As Elias J put it in his §56:

The appeal from Elias J therefore fails on the first point. As is accepted, it is therefore not necessary to go on and consider the Revenue’s second objection, but like Elias J I review that point also out of respect for the arguments that we heard.

There has in any event to be left out of account in determining the relevant remuneration both, by regulation 32(1)(b),

First, Mr Bowers submitted that the regulations required the payment to be entirely for the use and benefit of the employer before it could be disqualified under them. That was not this case, because there was a finding of fact in § 6.7 of the Determination of the Employment Tribunal that

Second, and a much more far-reaching and elaborate argument, LES contended that the payment was indeed for the use and benefit of the employee and (as I understood it) not at all for the use and benefit of the employer. That latter contention would seem inconsistent with LES’s espousal of § 6.7 of the Employment Tribunal Determination, which may be another reason why the latter was not much persisted in. The argument that the payments were not for the use and benefit of the employer had two, different, sides to it. First, the obligation to pay the supplier for the gas or electricity was in law that of the employee, who used the gas and electricity, and not that of the employer who was merely the conduit pipe through whom supply was made and by whom collection was arranged in a purely ministerial way. The arrangement for collection through the accommodation agreement was therefore a service that the employer provided for the benefit of the employee. Second, the reality was that, as the Employment Tribunal had suggested, the employee benefited from the general arrangements as to provision of utilities, since he obtained them (in the present case at least) at a cost less than he would otherwise have to pay; and avoided the trouble of making his own arrangements, securing credit facilities, and so on.

The argument that it was the employee who was the utility providers’ debtor was supported by reliance on clause 6.20 of the Accommodation Agreement. That reads as follows:

I shall have to return to the effect of this clause, but I will be forgiven for saying at this stage that it is difficult to think that the straightforward operation of paying for electricity would have been surrounded with these terms if the draftsman had not had one eye, and probably both eyes, on the provisions of the minimum pay legislation.

There were also put before us letters to LES from various utility suppliers that were said to support the approach of clause 6.20. These were in very similar terms. I need only set out the first two paragraphs of the letter from Calor Gas of 21 April 2004:

I return to clause 6.20, important as it was before the judge and important as was the weight placed on it before us. Leaving for the moment the lawyers’ constructions, and looking at the reality as was revealed by other parts of the letters from the utility companies, LES, as one would expect, has “bulk” contracts, on commercial and not domestic terms, for supply to the whole of a given site. The cost is for the total of units received by LES. The obligation to pay, as the utility companies were unsurprisingly at pains to point out, rests with LES. Despite those terms of their letters that were inserted at the behest of LES’s lawyers, the utility companies made clear that they were not in any sort of contractual relationship with LES’s employees. Powergen underlined that point by saying:

Clause 6.20 tries to rewrite that reality. It does not succeed in doing so. That is for two main reasons. First, to quote Elias J in his §43,

We have to proceed on the basis of the reality, and not of the artificial contract. LES is the debtor of the utility companies, and the £6 payment that it obtains from its employees enables it to discharge an undefined part of that debt. The payment is therefore without question for the use and benefit of LES.

LES sought in this connexion to contend that the latter part of clause 6.20 imposed on it a Quistclose trust (Barclays’ Bank Ltd v Quistclose Investments Ltd [1970] AC 567) only to use the £6 for the purpose envisaged by clause 6.20: that is, in discharge of “the Liability”. As I understood the argument, since the monies were therefore not at LES’s free disposal it did not hold them for its own use or benefit. But none of this alters the position unless the employee does indeed owe the Liability, which for reasons already given he does not. And consideration of how LES would discharge the trust obligation only reinforced the finding that liability to pay for the utilities rests with LES, and the £6 payments assist LES in discharging that obligation. Since utilities are provided to the site by various suppliers, and no separate charge is made in relation to supply to the employees’ accommodation, the money in the separate account can, consistently with the trust, be distributed by LES at its discretion amongst its own utility bills. If LES has £6 from the employees to use for that purpose it does not have to use other sources of funds for that purpose, and its overall financial position is accordingly improved. Even in obeying the trust obligation, therefore, LES is undoubtedly using the £6 for its own use and benefit.

Nor is it relevant to contend that the arrangement for collection of the £6 benefits the employees in a general sense, and therefore (it would seem to be contended) does not benefit the employer. There are two reasons why that argument is not open to LES. First, the question, specifically limited by the Regulations, is whether the deduction is for the use and benefit of the employer. The question is not whether the arrangement in the context of which that deduction is made benefits the employee. That is why we have to concentrate on the effect on the employer’s position of his making the deduction. Second, and more generally, it is not surprising that the Regulations exclude this line of argument. For reasons already indicated, the legislator will have wanted to avoid endless debate about the general equity and the benefit of arrangements made by the employer, and the legislator has done that by drafting the Regulations in specific and limited terms.

Nor, to address another aspect of the argument based on general equity, is it relevant that the employer could have simply left the employees to make their own arrangements for heat and light, or that it was up to the employee to decide whether to accept the accommodation in the first place. For reasons that seemed good to him in the running of his business the employer decided to offer accommodation, and to make the arrangements that he did for the supply to that accommodation of heat and light. As pointed out in §13 above, the Regulations are concerned with the fact of the arrangements made by the employer, and the charges that he makes within those arrangements; and not with some other arrangements that he could have made but in the event did not make.

I therefore conclude, in agreement with Elias J, that the £6 is deducted from the employee’s wages for LES’s own use and benefit. Separate arguments were however raised in relation to the position where the wage is paid in full, but the employee is obliged to hand back £6 as payment for the provision of heat and light. It would be surprising if that arrangement were permitted when a deduction is forbidden, but LES argued that that was the case. I deal with that in the next section.

LES took two points. First, Mr Bowers drew attention to the wording of regulation 34(1)(c), set out in §16 above, and said that whatever might otherwise be the position about “use and benefit”, it could not be said that when the employee handed over the £6 LES was entitled to retain that payment for its own use and benefit; under the terms of clause 6.20, LES had to hand the sum on to the utility suppliers. I agree that this wording is not altogether easy, and we were not given any help about it in the course of argument: though, so far as the Revenue is concerned it is fair to note that the point does not appear to have been raised by LES before Elias J, and did not feature in the Grounds of Appeal. The shortest explanation would appear to be that the wording excludes both the case where the employer retains the payment for the employee’s use and benefit (for instance, in a savings scheme); and the case where the employer transfers the payment to a third party for that purpose. Those provisions may be technically unnecessary in view of the overall controlling consideration of whether what is done is for the employer’s use and benefit; but what I cannot accept is that the wording of regulation 34(1)(c) has somehow produced a different meaning for that latter phrase from that which carries in regulation 32(1)(b).

Second, Mr Bowers relied, as he had done below, on the specific terms of regulation 35(e), which exempt from deduction in calculating the relevant wage

Elias J accepted that the payment of the £6 was for the purchase of services. For present purposes I am prepared to agree with that. He was however clear that the purchase was in the relevant sense “required” of the employee. In his §35 he said:

I would dismiss this appeal. I have reached that conclusion for myself, and for the reasons set out above. However, I do not hesitate to say that I would have been concerned had I reached a conclusion on this matter different from that of the President of the Employment Appeal Tribunal. He leads the specialist court to which adjudication on the minimum wage regime has been assigned, no doubt because the EAT has knowledge of the realities of industrial practice and relations that other courts cannot claim.

I have read the judgments of Buxton and Wilson LJJ in draft. I agree that the appeal should be dismissed.

On the first issue, namely whether the deduction or charge of £6 per fortnight in respect of heat and light is a deduction or charge made ‘in respect of the provision of accommodation’ within regulation 31(1)(i), I agree with Buxton LJ that it is for the reasons that he gives. In my view, the words of the regulation plainly encompass this charge which is compulsory once the employee has opted to occupy the employer’s accommodation. I sympathise with Wilson LJ’s regret that an employer who provides heat and light for his accommodated employees at bargain rates must nonetheless include the charges in the accommodation allowance; the effect may be to deter the employer from providing the services in that way and, instead, to install meters. However, it cannot have been Parliament’s intention that a charge for services should be excluded if the provision is on beneficial terms and excluded if it is not. The intention was to have a clear rule that all charges made in respect of the provision of accommodation should be taken into account, whether beneficial or not.

On the second point, whether the deductions are made by the employer for his own use and benefit and must therefore be left out of account under regulation 32(1)(b), I agree with Buxton LJ that they were for the employer’s use and benefit because it was the employer who was liable to pay the supplier. The employer made what Wilson LJ described as a ‘clumsy attempt’ to create a liability on the employee but this was ineffective. The employer was liable to pay the supplier’s bill and the employee could not have been liable to the supplier. Wilson LJ considers that the beneficial arrangement for the provision of services for accommodated employees and charging for them at less than the cost to LES meant that the charging or retention was not for the benefit of LES but for the employees. I would accept that, as the ET held, the overall arrangement was for the mutual benefit of employer and employee. However, I agree with Buxton LJ that the focus of the statutory provision is on the deduction or retention of part of the wages and not on the overall arrangement. The only party to benefit from the deductions was LES, as, if the deductions had not been made, it would have had to pay the whole of the supplier’s bill instead of only part of it. This situation is to be contrasted with the position where an employer deducts a sum from wages, for example, to pay a trade union subscription or a donation to charity, at the request of the employee and on his/her behalf. In such circumstances, the employer has no interest in whether the payment is made; it is done by him only as a matter of administrative convenience.

I am satisfied that this conclusion is in accordance with the policy objective behind this legislation. As Elias J said, the policy is to ensure that the statutory minimum wage is properly secured. Permitted deductions should be clearly defined and recognisable. The question whether a deduction is or is not permitted should not be a matter of calculation; it should not be dependent upon the assessment of the value of a benefit derived from the provision of a service for which a deduction is made; nor should it be reliant on the inferring of a trust. It should be obvious on the face of the transaction. Here, without any enquiry into the value to the employee of the gas and electricity provided to him/her, it is clear that the employer benefits from the deduction.

On the remaining points, on which Wilson LJ did not express any view, because, on his analysis, they did not arise, I content myself with saying that I agree with Buxton LJ for the reasons that he gave.

As an alternative to the arrangements which fall for examination in this appeal, LES might have explained to such workers as chose to be provided with free living accommodation that, for example by their direct purchase of cylinders of Calor Gas and/or by their payment into a pay-as-you-use meter and/or pursuant to other contractual arrangements to be made by them directly with cable suppliers, the workers would be responsible for the purchase out of their own resources of a supply of gas and electricity to the accommodation. On that basis LES would have included the sum of £6 per fortnight in the net wages paid to the workers, and would not, as it did (save in the case of Miss Keenan, to which I will turn in §42 below), have deducted it from their wages. It is agreed that such alternative arrangements on the part of LES would have had two consequences:

LES would not have paid to such workers less than the national minimum wage (“the NMW”) required by the Act of 1998. In respect of its provision of free accommodation, LES would have been entitled, for the purpose of the calculation as to whether it complied with the NMW requirement, to add into the total remuneration no less an amount by way of “accommodation offset” (being in the present cases the sum of £3.75 per day) than it was entitled to add into it pursuant to the arrangements which in the event it made; and the extra sum of £6 per fortnight in the pay packet would have raised the total remuneration above the NMW.

Such workers would on average have spent more than £6 per fortnight in the purchase of gas and electricity. Even LES has on average to pay more than £6 per fortnight for the gas and electricity consumed by each such worker; so within the arrangements made it was providing a genuine subsidy for them in this regard. Furthermore LES can purchase gas and electricity at a cheaper rate than could the workers, particularly if the latter were to do so by payment into a meter.

In the above circumstances I have found myself strongly resistant to a construction of the NMW Regulations 1999 (1999 No. 584) which would lead to the dismissal of this appeal. I have, however, ultimately been persuaded of the validity of one of the Revenue’s arguments, even though, with the greatest respect to my two colleagues and indeed to Elias J., the President of the E.A.T., I cannot subscribe to the other.

It is by reference to Regulation 31(1)(i) that I agree that the appeal should be dismissed. This sub-paragraph requires the subtraction from the total remuneration, for the purpose of the calculation, of

We had an interesting discussion in court about the breadth of the words “the provision of living accommodation”. Although firmly submitting that the provision of gas and electricity fell within them, Mr Clarke was hesitant as to whether, for example, the provision of logs for the hearth would do so, I find it hard to see why, for example, the supply of a cylinder of Calor Gas and that of a load of logs should fall on opposite sides of the line. But what in my mind now clinches the argument is the different point stressed by Buxton L.J. at §§ 11 and 12 above, namely that LES made the deduction of £6 per fortnight compulsory for those who elected to be provided with accommodation. By a contractual condition it thus created such a link between the deduction and the provision as leads to the conclusion that the former is “in respect of” the latter.

It is important to note that this conclusion also leads to the dismissal of the appeal in relation to Miss Keenan who, in order for LES to raise an alternative test case, did not suffer the deduction from her wages of £6 per fortnight in respect of “heat and light” but was required to – and did – repay an equivalent sum to LES in that respect. For the words of the sub-paragraph refer to a payment which the employer is entitled to receive from the worker as well as to a deduction which he is entitled to make. It is elsewhere in the argument that the alternative case referable to Miss Keenan raises interesting discrete questions.

Regrettable though I consider the dismissal of the appeal on its particular facts to be, it may be justified as the sort of price which Parliament thinks to be worth paying for adherence to the long-standing principle, also reflected for example in Part II of the Employment Rights Act 1996, that save in closely confined circumstances a worker should receive his wages in cash. Another feature of the regulations, referred to by Elias J. in the passage of his judgment set out by Buxton L.J. at §7 above, affords an analogous example of its thinking. The general principle, demonstrated in regulations part of which I need to set out at §§ 45 and 46 below, is that both a deduction made by the employer for his use and benefit and a payment by the worker to the employer for the latter’s use and benefit fall to be subtracted from the total remuneration for the purpose of the calculation. But Regulation 35(e) provides an exception to that principle in the case of certain payments, namely “any payment in respect of the purchase by the worker of any goods or services from the employer, unless …”, whereas there is no corresponding exception in Regulation 33 (or elsewhere) in the case of any deduction. At one level such different treatment of a payment and a deduction seems illogical; but, as Elias J suggests in the passage quoted, the rationale is presumably that, once the worker has received the money in his hands, his deployment of it in making a purchase from his employer is more likely to be the product of real choice.

The Revenue’s argument to which I cannot subscribe is that founded upon Regulation 32(1)(b) or, in the case of Miss Keenan, upon Regulation 34(1)(c).

Regulation 32(1)(b) provides that any deduction from wages must be subtracted from the total remuneration for the purpose of the calculation if it is a

Regulation 34(1)(c) provides that any payment due from the worker must be subtracted from the total remuneration for the purpose of the calculation if it is a

The Revenue’s argument is that the deduction from wages made by LES in the sum of £6 per fortnight was for its own use and benefit and that the due payment of that sum by Miss Keenan was retained or entitled to be retained by LES for its own use and benefit.

At first sight the argument seems odd, indeed almost lacking in common sense. For LES applied the sums deducted by it (or paid to it by Miss Keenan) towards the payment of bills referable to gas and electricity supplied for the use and benefit of the workers who suffered the deduction (and of Miss Keenan). Moreover, although the bills were no doubt also referable to gas and electricity supplied for the use and benefit of others, such sums applied by LES towards them as represented the deductions from the wages of such workers (and the payments by Miss Keenan) did not exceed, indeed did not match, the increase in the amount of the bills referable to gas and electricity supplied for their overall use and benefit.

A comparison of Regulation 32(1)(b), set out at §45 above, with Regulation 34(1)(c), set out at 46 above, reveals at once that the former contains words which are not replicated in the latter. I refer to the words in parenthesis, namely “(and accordingly not attributable to any amount paid or payable by the employer to any other person on behalf of the worker)”. Elias J. described the absence of replication as ‘surprising’. Mr Clarke submitted to us that it was “a drafting oddity”. Mr Bowers attempted to explain it to us in a way which, with respect, I found entirely unconvincing.

Unfortunately the words in parenthesis in Regulation 32(1)(b) have given birth to what in my view is a large red herring. For, clearly with those words in mind, LES made a clumsy attempt to contrive a situation in which it could represent that, in remitting to the utility providers the fund which represented the deductions from the wages of the workers (and Miss Keenan’s payments) of £6 per fortnight, it was making a payment to those providers “on behalf of [each such] worker”. The clumsy attempt took the form, as Buxton L.J. has explained at §§19 to 23 above, of including in the Accommodation Agreement between LES and each such worker a provision that the worker agreed to pay £6 per fortnight to the utility providers and that, in order to assist him in making that payment, he requested LES to make a deduction in that sum from his wages and to pay it to the providers in discharge of his liability. By reference thereto LES sought to argue that it was making the payment to the providers “on behalf of” the workers. The attempt was clumsy because no agreement between LES and its workers could alter the fact that the liability to pay the providers fell upon itself rather than upon them.

In my view, however, it by no means follows that the Revenue’s reliance upon Regulations 32(1)(b) and 34(1)(c) is well-founded. What follows from exposure of the clumsiness of the above attempt is merely that LES has failed to establish that the case falls within the words in parenthesis in Regulation 32(1)(b). In relation to those words, three features should be borne in mind:

They are not replicated in Regulation 34(1)(c). Mr Clarke in my view correctly submitted that there was no need to imply them into that sub-paragraph and that there was “no real difference” between the two sub-paragraphs, as drawn, in that in both the test was whether the sum was deducted or retained for the “use and benefit” of the employer.

They certainly mean that, if a sum deducted is paid by the employer to another person on behalf of the worker, it follows that the deduction has not been made by the employer for his own use and benefit. Following careful study, however, I conclude that they do not also mean that, if a sum deducted is not paid by the employer to another person on behalf of the worker, it follows that the deduction has been made by the employer for his own use and benefit.

In any event they are only in parenthesis. The words not in parenthesis are likely to be more important. One would not expect words in parenthesis to alter the meaning of words not in parenthesis unless they made clear that such was their effect.

The question therefore remains whether the sums of £6 per fortnight deducted by LES (or paid by Miss Keenan to LES) were deducted (or retained) for its own use and benefit. Mr Clarke argued that it was of “benefit” to LES to be enabled by such deductions (and retentions) more easily to discharge its liabilities to utility providers; and that at any rate the requisite focus upon the deductions (and retentions), as opposed to upon the arrangements in the context of which they were made, should lead to a conclusion that they were for the use and benefit of LES. I hope that I do not offend Mr Clarke, or indeed the Jesuits, when I say that these arguments are too jesuitical to find favour with me. I venture to suggest that the natural conclusion, the validity of which every reasonable worker would be likely to concede, is that the deductions (and retentions) were neither for the use nor for the benefit of LES.

The contrary conclusion of my colleagues on this latter point has required them to proceed to consider the interesting discrete question raised by the case of Miss Keenan, which Buxton L.J. has addressed at §§ 30 and 31 above. But when the dissenting part of a judgment reaches the logical end of its lonely path, it is probably inappropriate for it to move across to address a question which does not arise on the analysis within it.