Scicluna v Zippy Stitch Ltd & Ors

An agreed list of issues generally limits the claims and defences that an employment tribunal must determine. It serves as the road map for the hearing and binds respondents as well as claimants. Although exceptional cases may justify departure from its precise terms, a party cannot ordinarily introduce on appeal an issue which was outside the list and would have required further evidence and factual findings.

Where the agreed basis of the hearing establishes that remuneration is contractually due on termination, that amount is also “properly payable” for the purposes of the unlawful deduction from wages provisions.

The claimant worked as managing director of a small family company under an agreement providing for remuneration of £100 per day, with payment deferred until the business could afford it. After he resigned, he claimed outstanding salary as a contractual debt and as an unlawful deduction from wages.

The Employment Tribunal found that the salary had been agreed. It allowed the contract claim but rejected the unlawful deduction claim. The Employment Appeal Tribunal dismissed the company’s cross-appeal on the contract claim and allowed the claimant’s appeal on unlawful deduction.

The company appealed, arguing that no sum became payable on termination unless the business could afford it and challenging the implication of a term requiring payment on termination. The central issue was whether that argument could be advanced when the agreed list of issues had confined the dispute to whether any salary agreement existed.

1. Appeal dismissed. The agreed list of issues constituted the road map for the Employment Tribunal. As a general rule, it limited both the claimant’s complaints and the respondent’s defences. Although a tribunal may exceptionally depart from the precise terms of an agreed list, this was not such a case.

2. The professionally represented parties had framed the relevant issue as whether there was an agreement to pay the claimant a salary. The company’s case was that no salary agreement existed. It did not put in issue whether payment remained conditional on affordability after termination or whether a term requiring payment on termination should be implied.

3. Having found that the salary agreement existed, the Employment Tribunal was entitled to decide the contractual claim on the basis that the outstanding amount became due. The company could not introduce on appeal a different defence based on continuing inability to pay. Had that issue been raised at trial, evidence and findings would have been required concerning the company’s ability to pay and the proper construction or implication of the contract.

4. The Employment Appeal Tribunal correctly upheld the contractual award. Consistency then required it to allow the unlawful deduction claim because the amount due on termination was “properly payable” within section 13(3) of the Employment Rights Act 1996.

5. The court expressed no view on whether, had the point properly arisen, a term should have been implied making deferred salary payable on termination irrespective of affordability. There were arguments both ways, but the question was outside the agreed issues.

6. The company was ordered to pay the claimant’s costs of the appeal, summarily assessed at £13,000 inclusive of VAT.

1. Court of Appeal (Civil Division): The company’s appeal was dismissed. The court held that the company could not raise an issue excluded from the agreed list of issues and upheld the Employment Appeal Tribunal’s disposition: [2018] EWCA Civ 1320.

2. Employment Appeal Tribunal: HHJ Peter Clark allowed the claimant’s appeal on unlawful deduction from wages and dismissed the company’s cross-appeal against the contractual award, while preventing double recovery.

3. Employment Tribunal: Judge Balogun upheld the contractual claim for deferred salary, subject to the £25,000 jurisdictional cap, but dismissed the unlawful deduction claim. The unfair dismissal claim was also dismissed and was not appealed.