Agarwal v Cardiff University

This Court considered whether an Employment Tribunal has jurisdiction under Part II of the Employment Rights Act 1996 to resolve disputes about the construction of a contract of employment when deciding claims for unauthorised deductions from wages. It applied the decision in Delaney v Staples and held that where there is any dispute as to whether a sum is "properly payable" the tribunal must resolve that dispute, which may require construing the contract. The Court rejected the extension of the reasoning in Southern Cross Healthcare v Perkins (which relates to Part I references about written particulars) to exclude jurisdiction under Part II. The Court also allowed the appellant in Agarwal to challenge the tribunal's denial of jurisdiction despite a concession below because the point was one of pure law and the tribunal's refusal to decide the dispute was plainly wrong.

On the separate factual issue in Nexus the Court construed the 2012 collective pay agreement and held that the consolidation of the productivity bonus into basic salary increased basic pay for all contractual purposes (including the base for shift allowances). The references in the offer letter to the arrangement appearing "cost neutral" and to an "official higher basic salary" did not sufficiently qualify the plain wording that the productivity bonus was to be consolidated into basic salary. Accordingly Nexus's appeal on the construction point was dismissed.

Background and parties

• The Court heard two consolidated appeals. Agarwal: Ms Meena Agarwal (appellant) against Cardiff University and Cardiff & Vale University Local Health Board (respondents) concerning a withholding of pay following sickness absence; claim brought to the Employment Tribunal under Part II of the Employment Rights Act 1996 for unauthorised deduction of wages. Nexus: Tyne and Wear Passenger Transport Executive t/a Nexus (appellant) against a group of employees (respondents) concerning calculation of shift allowances following a 2012 pay agreement.

Procedural posture

• Both matters came to this Court by way of appeal from decisions of the Employment Appeal Tribunal (Agarwal: Slade J; Nexus: HHJ Hand QC). The Court of Appeal heard the appeals together because they raised the common "jurisdiction issue" (whether an Employment Tribunal may determine contractual construction in Part II claims).

Nature of the claims and relief sought

• Agarwal: claim in the Employment Tribunal for unauthorised deduction of wages; primary procedural question was whether the ET had jurisdiction to decide the underlying contractual issue. The claimant also faced an argument that a concession made below precluded raising the jurisdiction point on appeal.
• Nexus: claim under Part II that the 2012 Agreement required shift allowances to be calculated by reference to basic pay after consolidation of two bonuses into basic salary; issue before this Court was contractual construction of the 2012 Agreement in relation to shift allowance calculations.

Issues framed by the Court

1. Whether, on the correct construction of the Employment Rights Act 1996 and the authorities (notably Delaney v Staples), an Employment Tribunal has jurisdiction under Part II to resolve contractual construction disputes necessary to determine whether sums are "properly payable".
2. Whether the appellant in Agarwal was estopped from raising the jurisdiction issue by a concession made below.
3. On the facts of Nexus, whether the 2012 Agreement's consolidation of bonuses into basic salary required Nexus to use the increased basic pay as the base for calculating shift allowances.

Reasoning and conclusions

• Jurisdiction: The Court followed Delaney v Staples and concluded that the Employment Tribunal must resolve any dispute necessary to decide whether a sum was "properly payable"; that will include construing contractual terms where required. The Court rejected attempts to import the rule from cases about Part I (Southern Cross) that the ET cannot construe contracts: those authorities concern different statutory provisions and do not govern Part II questions.
• Concession in Agarwal: the Court permitted the appellant to raise the jurisdiction point despite a concession by counsel below because the issue was one of pure law, was plainly wrongly decided below, and the tribunal had declined to determine the dispute altogether.
• Nexus construction: the Court gave effect to the plain words of the employer's offer to "consolidate" the productivity bonus into basic salary. The surrounding references to the offer appearing "cost neutral" and to an "official higher basic salary" did not displace the natural reading that the consolidated amount was part of basic pay for all contractual purposes, including shift allowance. Commercial inconvenience or unexpected cost to the employer did not justify rewriting the agreement.

Wider context: the Court observed that allowing Employment Tribunals to determine such contractual questions under Part II avoids incoherent procedural fragmentation and is consistent with long-standing authority.

This Court allowed the appeal in Agarwal (permission granted and appeal allowed) because an Employment Tribunal has jurisdiction under Part II of the Employment Rights Act 1996 to determine any dispute as to whether a sum is "properly payable", including construing the contract; the Court exercised discretion to permit the Appellant to challenge the tribunal's jurisdiction despite a concession below because the point was one of law and the tribunal had plainly erred. In Nexus the Court dismissed the appellant's appeal on the contractual-construction point, holding that the 2012 Agreement’s consolidation of the productivity bonus into basic salary increased basic pay for all contractual purposes (including as the base for shift allowance); the surrounding language about appearing "cost neutral" did not qualify the clear terms of the offer.

Appeals to the Court of Appeal (Civil Division) from decisions of the Employment Appeal Tribunal. Agarwal: appealed from Slade J's judgment in the EAT (decision dated 22 March 2017) upholding the Employment Tribunal's view that it had no jurisdiction. Nexus: appealed from the EAT decision of HHJ Hand QC (judgment dated 15 January 2018) which rejected the jurisdiction point and dismissed Nexus's substantive appeal. Final determination by the Court of Appeal in [2018] EWCA Civ 2084 (27 September 2018).