The Employment Appeal Tribunal (EAT) has dismissed an appeal against a decision that a consultant to a professional services firm was only entitled to be paid fees in respect of work he had personally done for one of the firm’s clients, rather than all work performed for that client.
Under the consultancy agreement between him and the firm, he was entitled to 40 per cent of ‘the fees billed which have been paid and received’ by the firm. The agreement included a clause stating that it contained ‘the whole of the terms agreed to’ and could only be varied by a supplemental agreement in writing.
He brought an Employment Tribunal (ET) claim of unlawful deduction from wages. He had carried out half of the work done for a particular client, for which he had been paid £5,000 per month. He contended that the consultancy agreement entitled him to 40 per cent of all the fees paid by the client, or £10,000 per month. Alternatively, he claimed that he had entered into an oral agreement with the firm that he would be paid a fixed fee of £10,000 per month in respect of his work for the client.
The ET found that the consultancy agreement only entitled him to 40 per cent of fees in respect of his own work for the client, which amounted to £5,000 per month, not work done by other consultants. It also found that there had been a separate oral agreement that he would be paid £5,000 for his work for the client each month. He appealed to the EAT.
In the EAT’s view, the ET had been correct to find that the consultancy agreement did not entitle him to 40 per cent of all the fees. The clause entitling him to fees stated that the sum would be paid ‘on receipt of an appropriate invoice’ to be presented by him each month. That indicated that it was aimed at work he had done personally: he probably would not know how much work other consultants had done for any given client. In addition, the construction that the clause was restricted to work he had done personally fitted much better with commercial common sense.
The EAT considered that the ET had erred in finding that there had been a separate agreement. It had not addressed whether such an agreement was permissible in view of the entire agreement provision and the no oral modifications provision in the consultancy agreement. However, its conclusion that the consultant’s entitlement under the separate agreement was the same as under the consultancy agreement rendered this academic. There had been no unlawful deduction from wages.