Alan McCormack | Senior Associate

EAT contradicts their earlier decision

EAT contradicts their earlier decision: Implied contractual terms CAN be construed in a claim for wages

The EAT has ruled in Weatherilt v Cathay Pacific Airways Ltd that a Tribunal does have jurisdiction to construe a contract of employment or any implied terms when hearing a claim in the context of Part II of the Employment Rights Act 1998 (1998 Act).

This contradicts their earlier decision on 22nd March 2017 when the Employment Appeal Tribunal (EAT) held in Agarwal v Cardiff University that it did not have jurisdiction to consider a claim for unlawful deduction of wages where they would be required to construe the terms of the employment contract and therefore, if a claim brought before the Tribunal depended on the construction and implications of the contract, it would fail. This judgment was made on the understanding that a claim requiring complex consideration of contracts would be a matter for the civil courts, not the Employment Tribunal.

In Weatherlit, a commercial pilot brought a claim for unauthorised deduction of wages under Part II of the 1998 Act, against his employer. The conditions of his service included entitlements to ‘Hourly Duty Pay’ (HDP) and ‘Excess Flying Pay’ (EFP), however this was not included within the claimants contractual sick pay while he was unfit for duty. As a result, questions of whether his contractual sick pay should include these allowances arose. In order to determine the fairness of any deduction, the EAT viewed that the answer was dependant on the meaning to be attributed to the claimants Conditions of Service.

The Respondent relied on the authority of Agarwal, arguing that the Tribunal had no jurisdiction to construe the terms within the contract of employment and therefore did not have jurisdiction to hear the claim at all.

However, the EAT declined to follow this judgment and held that the EAT in Agarwal had not been referred to the relevant Court of Appeal authority. The EAT in Weatherlit considered the Court of Appeal cases, Delaney v Staples 1991, and Camden Primary Care Trust v Atchoe 2007, which dealt directly with claims regarding the protection of wages, to be binding authorities to this effect. Delany was concerned with the scope of wages when determining how much would be payable to the claimant and in Atchoe, the Court of Appeal, ruled that in order to consider what wages were properly payable, the relevant terms of the contract must be considered together with any implied terms.

Nicholls LJ held in Delaney, that the Tribunal is required to consider a dispute “on whatever ground” is necessary in order to determine whether there has been an unlawful deduction of wages, which therefore must include the construction of a contract and its implied terms.

Nicholls LJ also noted that it would be surprising if the Tribunal could not construe a provision of the contract when considering whether it authorised a deduction as this very question is central to the operation of Section 13 in the 1998 Act.

Of course, while it has been clarified in this judgment that the Tribunal will have jurisdiction, where necessary, it remains a valuable alternative for a worker or employee to bring a contractual dispute before the civil courts, where they may seek declaration as to the meaning of an important contractual provision.

Alan McCormack

Alan McCormack

Employment Law Team

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