Cortel Telecom Ltd v Shah

An express contractual condition cannot be overridden by implying an inconsistent term from custom and practice. Entitlement may instead depend on a contractual variation, or on a representation which, having been relied upon, makes enforcement of the condition inequitable.

Notice pay arising on termination is not recoverable as an unauthorised deduction from wages. However, where the substance of a wrongful-dismissal claim was clear, was understood by both parties and was argued at the hearing, an erroneous procedural label does not prevent its determination. An employer's contract claim is available once the employee brings a claim under Article 3 of the Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994; its availability is not lost by a later withdrawal or abandonment of that claim.

The claimant resigned after the employer withheld his September 2017 salary. He sought, among other sums, a car allowance and notice pay. The Employment Tribunal upheld the car-allowance claim, found that the resignation was a constructive wrongful dismissal, and awarded two weeks’ notice pay. It declined to consider the employer’s contract claim, on the stated basis that the claimant’s case was limited to unlawful deduction from wages.

The employer appealed. It contended that the contractual car-allowance condition required a vehicle less than three years old, and that the Tribunal could not award notice pay on an unlawful-deduction claim. The central issues were whether the Tribunal had properly addressed the car-allowance condition and whether the wrongful-dismissal and employer contract claims had been properly dealt with.

1. The appeal was allowed in part. The car-allowance claim and the employer’s contract claim were remitted to a freshly constituted Employment Tribunal. The award for wrongful dismissal and notice pay stood.

2. Clause 16 made use of a car less than three years old a condition precedent to payment of the contractual car allowance. Since the claimant’s car did not meet that condition, a term dispensing with it could not be implied from custom and practice because it would contradict the express term. The Tribunal had to determine instead whether clause 16 had been varied, or whether the employer had represented that compliance was unnecessary and the claimant had relied on that representation so that enforcement would be inequitable.

3. The Tribunal had not made the necessary factual findings about the employer’s knowledge, its treatment of the age requirement, any discretionary payments, representations, and reliance. Its finding that the allowance had previously been paid did not justify the conclusion reached. The car-allowance decision was therefore set aside.

4. Following Delaney v Staples, notice moneys payable on termination cannot be claimed as an unauthorised deduction from wages. That point did not decide this appeal. Both claim forms, the parties’ closing submissions and the Tribunal’s findings showed that a wrongful-dismissal claim for notice pay was in fact being pursued and understood. The Tribunal’s mistaken description of the claim did not invalidate its unchallenged substantive determination.

5. The employer’s entitlement to bring its contract claim arose when the claimant brought proceedings in respect of an Article 3 claim under the Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994. It was not affected by any later abandonment or withdrawal. The Tribunal had wrongly denied the employer an opportunity to pursue that claim.

• Employment Appeal Tribunal: appeal allowed in part. The car-allowance claim and employer’s contract claim were remitted; the wrongful-dismissal determination and notice-pay award were not disturbed.

• East London Employment Tribunal: reserved judgment sent to the parties on 20 June 2018. It awarded car allowance and notice pay following constructive wrongful dismissal, and declined to entertain the employer’s contract claim.