Construing the contract
Labour & European Law Review Weekly Issue 518 03 May 2017
The law says that tribunals can only hear breach of contract claims on termination of employment. In Agarwal v Cardiff University and anor, the Employment Appeal Tribunal (EAT) held that tribunals cannot therefore hear unlawful deduction of wages claims if they depend on construction of the claimant’s contract.
Ms Agarwal, a urological surgeon, was employed under a “clinical academic contract” which involved carrying out lecturing duties for the university as well as clinical duties for the local health board. The university paid her salary for both sets of duties.
Following a period of sickness absence in October 2014 because of stress resulting from difficult relationships with her clinical colleagues, Ms Agarwal returned to perform her academic duties. Due to concerns about patient safety, however, the local health board asked her to agree to mediation with her colleagues and to consent to an occupational health assessment before allowing her to return to her clinical duties. She refused, insisting that she was fit and able to carry them out. The board did not agree and she was subsequently paid only half her salary.
Ms Agarwal brought a claim under section 13 of the Employment Rights Act 1996 (ERA) alleging that she had suffered unauthorised deductions from her wages in respect of clinical sessions since October 2014.
Relying on the decision of Somerset County Council v Chambers (LELR 323), the employment judge ruled that her claim involved issues relating to the construction of her contract. This included deciding whether the health board was required to pay Ms Agarwal (or ensure the university had the funds to pay her) for her clinical work when she was ready, willing and able to perform it; and whether there was an implied term that she should co-operate with an occupational health referral by the health board and/or submit to mediation with her clinical colleagues.
As this was not within the jurisdiction of an employment tribunal, it had to be heard in a civil court.
The EAT held that the judge was correct to state that tribunals have limited jurisdiction with regard to contracts in that they can only hear claims for a specific sum or for damages on termination of an employee’s employment. He had therefore come to the correct conclusion but, rather than rely on Chambers, he should have relied on the decision by the Court of Appeal in Southern Cross Healthcare Co Ltd v Perkins and ors which states that “the only forum with jurisdiction in relation to the construction issue was and is the ordinary civil court”.
In the EAT’s judgment, it was central to Ms Agarwal’s claim to decide whether she was contractually obliged to consent to mediation with her clinical colleagues and/or to undertake an occupational health assessment. This required “construing its terms including whether it included implied terms requiring her to take part in mediation with her clinical colleagues and to co-operate with the [health board] in enabling them to obtain their Occupational Health report”.
The EAT therefore concluded that the venue for pursuing her claim for the alleged shortfall in her wages was in the civil courts. It accepted that this “may be regrettable”, but was established law and policy.
This decision has not, however, been followed by the EAT in the recent case of Weatherilt v Cathay Pacific Airways Ltd. Instead it held that tribunals are entitled to determine issues about the construction of the contract or the implication of any term of the contract when resolving a dispute about unlawful deduction of wages under Part 11 ERA. The EAT distinguished this case from Agarwal on the basis that it was concerned with provisions applicable to written particulars in Part I ERA. In something of an understatement, the judge noted “a degree of tension” between the approach in Southern Cross and the approach in the much older cases of Delaney v Staples and Camden Primary Care Trust v Atchoe, although he said this could be explained by reference to the different origins, purpose and terms of the statutory provisions.