The law says that tribunals can only hear breach of contract claims on termination of employment. In the conjoined case of Agarwal v Cardiff University and Nexus v Anderson and ors, the Court of Appeal held that tribunals can hear unlawful deduction of wages claims, even if they involve construction of the claimant’s contract of employment.
Thompsons was instructed by the RMT to represent its members in Nexus v Anderson.
Agarwal - Ms Agarwal 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,but was entitled to be reimbursed by the health board. Following a dispute which arose after she had been on sick leave, the health board refused to pay her for her clinical duties and to fund the university for that part of her salary.
Nexus - Following an agreement in 2012 between Nexus (which operates the Tyne and Wear metro system) and the RMT, an issue arose as to what basic pay was for employees in grades 1 to 3 of the pay structure (the Red Book) when calculating the shift allowance.
Tribunal and EAT decisions
Agarwal - Ms Agarwal brought proceedings for unauthorised deduction of wages under section 13 of Part II of the 1996 Employment Rights Act, but the tribunal held that it did not have jurisdiction to determine the underlying contractual dispute. The EAT upheld that decision (weekly LELR 518).
Nexus - With the help of their union, 70 employees brought proceedings in the tribunal under section 13 of Part II of the 1996 Act. The tribunal found in their favour. In the EAT a point was taken for the first time as to whether the tribunal had had jurisdiction to determine the underlying contractual dispute, but the EAT declined to follow Agarwal and held there was jurisdiction (weekly LELR 564).
Section 13(1) in Part II of the Employment Rights Act states that employers cannot make a deduction from a worker’s wages unless it:
(a) is authorised under a statutory provision or “a relevant provision of the worker’s contract” or
(b) the worker had previously agreed in writing to “the making of the deduction”
Section 13(3) states that a deduction occurs when the total amount of wages paid to the worker is less than the total amount of wages “properly payable” to them.
Decision of Court of Appeal
Relying on the decision in Delaney v Staples, the Court of Appeal held that tribunals have jurisdiction to “resolve any issue necessary to determine whether a sum claimed under Part II is properly payable, including an issue as to the meaning of the contract of employment”.
It concluded that not only was there no good policy reason to refuse to allow tribunals to hear one particular kind of dispute necessary to resolve a deduction of wages claim, it would be “incoherent and lead to highly unsatisfactory procedural demarcation disputes” to do so.
On the basis of that reasoning, it overturned the decisions of the tribunal and the EAT in Agarwal and upheld their decisions in Nexus.