Court of Appeal holds that an Employment Tribunal has jurisdiction to interpret contractual terms in a wages claim

In Agarwal v Cardiff University & Anr [2018] EWCA Civ 2084 the Court of Appeal last week resolved the question of whether or not an Employment Tribunal has jurisdiction to interpret contractual terms in determining an unauthorised deduction of wages claim under s.13 ERA. There had been conflicting authorities at EAT level. In Agarwal itself, Slade J held that there was no jurisdiction applying Southern Cross Healthcare Co Ltd v Perkins [2011] ICR 285. By contrast, in Weatherilt v Cathay Pacific Airways Ltd [2017] ICR 985 and Tyne and Wear Passenger Transport Executive (t/a Nexus) v Anderson [2018] I.C.R. 1207, differently constituted panels of the EAT declined to follow Agarwal and held that there was jurisdiction. In upholding the latter authorities Underhill LJ held that Delaney v Staples (t/a De Montfort Recruitment) 1991 ICR 331 is binding authority that a Tribunal has jurisdiction to resolve any issue necessary to determine whether a sum is “properly payable” for the purpose of s.13. The prohibition on interpreting contractual terms in Southern Cross was confined to the jurisdiction of the Tribunal under Part 1 of the ERA and was of no application to Part 2: “the provisions in Parts I and II of the 1996 Act differ in their origins, purpose and terms. It is only an accident of legislative history that they are now contained in the same Act.” There is undoubted force in the Court of Appeal’s conclusion that, “There is no good – or even, frankly, comprehensible – policy reason for carving out from the jurisdiction of the ET one particular kind of dispute necessary in order to resolve a deduction of wages claim. On the contrary, to do so would be incoherent and would lead to highly unsatisfactory procedural demarcation disputes. ETs are well capable of construing the terms of employment contracts governing remuneration and have to do so in many other contexts.” However, this ignores the fact that Delaney v Staples was specifically concerned with the narrow question of whether or not a non-payment is to be treated as a deduction for the purposes of a wages claim, and arguably, establishes no broader principle concerning the Tribunal’s jurisdiction. Furthermore, pointing to the different origins, purpose and terms of Part 1 ERA ignores its potential overlap with Part 2. For instance, the ET is empowered under a Part 1 reference claim to order payment of unnotified deductions under s.12, which can amount to unauthorised deductions in a claim under Part 2 in accordance with s. 26. In this scenario, an Employment Tribunal would have jurisdiction to interpret contractual terms under Part 2, but not Part 1. David Mitchell, instructed by Eversheds Sutherland LLP, acted for Cardiff University.
5th October 2018