Agarwal v Cardiff University & Anor

An employment tribunal determining a complaint of unauthorised deduction from wages must decide every issue necessary to establish whether wages were properly payable. That includes construing the employment contract and determining whether it contains an implied term. The more limited jurisdiction concerning statements of employment particulars under Part I does not restrict that Part II jurisdiction.

In construing an employment agreement, the document must be read as a whole. A preamble may assist construction, but clear operative terms prevail over an irreconcilable statement of intended effect. Commercial common sense cannot justify rewriting clear language merely because one party made an expensive bargain.

Two appeals concerning Part II of the Employment Rights Act 1996 were heard together.

In Agarwal, a consultant surgeon claimed unpaid salary from Cardiff University and Cardiff and Vale University Health Board. The Employment Tribunal held that it lacked jurisdiction to determine the contractual issue. Slade J, in the Employment Appeal Tribunal, upheld that conclusion. The claimant had accepted below that the tribunal could not construe the contract, but sought to challenge that concession on appeal.

In the conjoined Nexus appeal, employees claimed arrears after their employer consolidated a productivity bonus into basic salary. The Employment Tribunal upheld their claim and HHJ Hand QC dismissed the employer’s appeal. The issues were whether the tribunal could construe the agreement in a wages claim and, if so, whether the revised basic salary was the basis for calculating shift allowance.

1. The appeal in Agarwal was allowed, and the conjoined Nexus appeal was dismissed. The court unanimously held that the Employment Tribunal had jurisdiction under Part II of the Employment Rights Act 1996 to resolve the contractual disputes necessary to decide both wages claims.

2. Under section 13(3), the tribunal must first decide whether the claimed sum was properly payable as a matter of legal obligation. Where that is disputed, it must determine the dispute, including a question about the construction or implication of a contractual term. It then considers whether any resulting deduction was authorised under section 13(1). [1991] 2 QB 47 was binding authority for that approach.

3. The Court rejected any analogy with the Part I jurisdiction concerning written statements of particulars. The statutory provisions have different origins, purposes and terms. [2010] EWCA Civ 1442 concerned Part I only and did not restrict the Part II jurisdiction. The contrary approach adopted below in Agarwal was plainly wrong.

4. The claimant in Agarwal could raise the jurisdiction point despite her earlier concession. The point was pure law, required no additional factual findings, and refusing it would perpetuate an erroneous refusal by the tribunal to determine the dispute.

5. In Nexus, the agreement’s words, “consolidate the productivity bonus (25.5%) into basic salary”, increased the basic pay on which shift allowance was calculated. References in the preamble to apparent cost-neutrality and to an “official” higher salary did not qualify that clear term. The employer’s construction would create two different meanings of basic pay without express wording. The employer had made a costly bargain; commercial common sense did not permit the court to rewrite it.

• Court of Appeal (Civil Division): Allowed Agarwal’s appeal and dismissed Nexus’s appeal in [2018] EWCA Civ 2084.
• Employment Appeal Tribunal: Slade J upheld the Employment Tribunal’s jurisdiction ruling against Ms Agarwal in a judgment handed down on 22 March 2017. HHJ Hand QC rejected Nexus’s jurisdiction challenge and dismissed its substantive appeal in a judgment handed down on 15 January 2018.
• Employment Tribunal: Regional Employment Judge Clarke dismissed Ms Agarwal’s wages claim for want of jurisdiction. Employment Judge Hunter upheld the Nexus employees’ claim and directed a quantification hearing.