Tyne and Wear Passenger Transport Executive v Anderson

An Employment Tribunal determining an unlawful-deduction-from-wages claim under Part II of the Employment Rights Act 1996 has jurisdiction to determine the meaning and effect of contractual terms, including express and implied terms, insofar as necessary to decide what wages were properly payable and whether a deduction was authorised.

The restriction applicable to contractual construction in Part I claims does not extend by analogy to Part II. Contractual construction must apply the objective approach, considering the language, the contract as a whole, the relevant factual and commercial background, and commercial common sense, while disregarding subjective intention. An erroneous route to construction does not require remission where the Employment Tribunal reached the correct result on the findings made.

Employees of Nexus brought claims under Part II of the Employment Rights Act 1996 alleging that shift allowances had been calculated on too narrow a definition of basic pay following a collectively negotiated 2012 pay settlement.

The Employment Tribunal found that the settlement had not altered the contractual basis for calculating the allowances and ordered payment of the resulting deductions. Nexus appealed, arguing both that the Tribunal lacked jurisdiction to construe the contract under section 13 and that it had applied the wrong contractual-construction methodology.

The appeal required the Employment Appeal Tribunal to resolve conflicting first-instance authority, particularly Agarwal and Weatherilt, and to determine whether the Tribunal’s reasoning required remission.

1. Appeal dismissed. The Employment Tribunal had jurisdiction under Part II of the Employment Rights Act 1996 to construe contractual terms when determining the total amount of wages properly payable and whether a deduction was authorised.

2. The reasoning in Agarwal v Cardiff University and Another was not followed. The restriction in Southern Cross Healthcare Co Ltd v Perkins and Others, concerning Part I of the Act, could not be extended by analogy. Part I and Part II had different statutory origins and purposes. The decisions in Delaney v Staples, Camden Primary Care Trust v Atchoe and Anderson v London Fire & Emergency Planning Authority supported the contrary conclusion. Coors Brewers Ltd v Adcock and Tradition Securities & Futures SA v Mouradian concerned the distinct question whether an unquantified claim fell within Part II.

3. The proper task was to determine objectively whether the parties had agreed that existing contractual language, particularly basic pay, should have a new meaning. The Tribunal had wrongly approached the matter through implication of a term, used the officious-bystander construct, and treated the issue as involving a burden of proof. In a collective-bargaining context, reliance on contra proferentem was generally of very limited utility and was inappropriate here.

4. Nevertheless, the factual findings established the relevant background and disclosed no basis for construing basic pay as excluding the consolidated elements. The contemporary documents contained no such qualification, there was no evidence that it had been negotiated, and the fact that the result was a bad bargain for the employer did not justify a different construction.

5. Applying Lincoln College v Jafri, remission was unnecessary. The error could not have affected the result, or the correct construction could be determined from the existing findings without further evidence. The proposed arguments concerning estoppel, affirmation or variation by conduct were new and would have required further evidential investigation; permission to amend was refused.

• Employment Appeal Tribunal: Appeal from the Employment Tribunal’s decision sent to the parties on 21 December 2015 dismissed.