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Frettens Update: Payment for overtime

  25th August 2011      
 Company News

The Court of Appeal (“CA”) has handed down its decision in Driver v Air India Ltd holding that where a contractual payment is not specified the law implies a reasonable sum with regard to overtime payments.

The principal issue in this case was whether Mr Driver was entitled to be paid for ad-hoc overtime by Air India under a contract of employment. The contract provided that the provisions regarding overtime payments were “set out in notices and circulars issued by Air India from time to time”.

No such notices or circulars were issued, but Mr Driver was paid for overtime in the past. Air India argued that in the absence of any notices or circulars there was no contractual right to payment for overtime. Air India could not explain the previous payments.

The CA, giving judgment in favour of Mr Driver, found that where a contractual payment is not specified the law implies a reasonable sum. Further, although a contract is not to be construed by subsequent conduct, the previous payment of overtime was highly relevant.

Employers should ensure that all payment provisions, whether it is basic pay, overtime, commission or bonuses, are clearly laid out in the contract of employment and that, if other documents are referred to, that these documents are also clear. It was unfortunate for Air India in that, following their acceptance that payments had been made to Mr Driver in the past for overtime, the court was always likely to say that there was an implied term, based on custom and practice, for a reasonable sum to have to be paid in the absence of any express terms to the contrary.

 

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