A question of jurisdiction

A question of jurisdiction

The appeals were joined together as both, in part, raised an issue regarding the Employment Tribunal’s jurisdiction to resolve disputes concerning the construction of a contract of employment in relation to a claim for unauthorised deduction of wages under the Employment Rights Act 1996 (the Act). This update focusses on the education sector case of Agarwal.

The appellant is employed as a consultant urological surgeon under a “clinical academic contract” whereby she performs academic duties for Cardiff University (University) and clinical sessions for Cardiff and Vale University Local Health Board (Board). The University paid the appellant in relation to both aspects of her role but was entitled to a reimbursement from the Board for 50% of her salary.

The appellant was absent from work due to a prolonged period of sickness. The Board believed that she was not entitled contractually to payment for the clinical duties she performs for them and subsequently declined to pay the reimbursement funding to the University. Subsequently, the University withheld payment and the appellant brought a claim against the Respondents in the Employment Tribunal for unlawful deduction of wages under section 13 of the Act.

The Employment Tribunal held that they had no jurisdiction to hear the claim as it concerned contractual construction regarding whether the appellant had a right to full pay. Similarly, upon appeal by the appellant, the Employment Appeal Tribunal, using the authority of Southern Cross Healthcare Co Ltd v Perkins (Southern Cross), dismissed the case on the basis that, whist an Employment Tribunal has jurisdiction to identify relevant terms of a contract of employment, they do not have jurisdiction to construe the terms of a statutory statement.

The Court of Appeal reversed the EAT’s decision and held that an Employment Tribunal has “jurisdiction to resolve any issue necessary to determine whether a sum claimed is properly payable, including an issue as to the meaning of the contract of employment”. The Court of Appeal also stated that there was no conflict between their decision in this case and the authority laid down in Southern Cross, as the cases involved the interpretation of different provisions of the Act, with each provision differing with regards to its origin, purpose and terms. The Court of Appeal also stated that there was “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… to do so would be incoherent and would lead to highly unsatisfactory procedural demarcation disputes”.

This decision is helpful to employers and employees alike as it provides greater certainty over the appropriate forum for such disputes – particularly as the Employment Tribunal is a less formal setting for resolution.

The substantive issue was referred back to the Employment Tribunal and we will report on the outcome in due course, which will be of interest to any university which has employees who are jointly funded, particularly in a clinical academic scenario.