PAY CONSEQUENCES FOR EMPLOYEES REFUSING TO OPT OUT OF WORKING TIME REGULATIONS

The Employment Appeal Tribunal (“EAT”) in the case of Clamp v Ariel has given a strong indication that an insistence by an employee to work a 48-hour maximum week can lead to their salaries being reduced.

Under the Working Time Regulations 1998 (“WTR”), an employee has the right to work a maximum 48-hour week. The employee can opt-out of the right if he wishes i.e. work longer hours but he cannot be subjected to a detriment if he refuses to work in excess of 48 hours per week.

In this case Mr Clamp had signed an opt out of the WTR and consequently was working a 60-hour week. His wife became ill in February 2003 and Mr Clamp decided that he no longer wished to work these hours. Mr Clamp had discussions with his employer with a view to reduce his working hours accordingly and withdraw his agreement to exclude the WTR.

The consequence of those discussions were that the parties reached an agreement to vary the terms of his employment contract to reduce Mr Clamp's working hours to 48 per week. Mr Clamp subsequently brought a claim based on alleged detriments he alleged he was subjected to as a result of the reduction in working hours. Whilst a reduction in his salary was not a term of the varied contract and not an issue to be determined by the EAT, Mr Justice Burton made a number of useful comments on this point.

The EAT stated it MUST normally be the case that where an employee is working long hours they will be paid more money and that when they reduce their obligation to work those hours it will have a concomitant effect on salary.

For example, instead of working 60 hours at £10 per hour and receiving £600, an employee might request to start working 48 hours at £10 per hour, thus receiving only £480.  

The EAT held that a reduction in salary might be a consequence of the necessary variation of the contract resulting from an employee no longer agreeing to exclude the WTR. In Mr Justice Burton’s view a reduction will not be deemed as a detriment but a consequence of the employee withdrawing consent.

As a consequence of this case, it is presumed that any reduction in salary of an employee who withdraws their agreement to exclude the WTR would have to be on a pro rata basis. The case, however, leaves unanswered the question as to how an employer deals with an employee who is paid an annual salary as opposed to an hourly rate. Further, this case would appear to confirm the practice adopted by many employers in relation to discretionary bonuses i.e. the level of the bonus awarded to an employee is affected by the number of hours they have worked.