Wages Disputes - Court or Employment Tribunal

Employment Tribunals have limited jurisdiction (£25,000 maximum) over breach of contract claims and even then only where the employment has come to an end.  Employees who consider that their full salary is not being paid must if the employer rejects their grievance about that, either resign to make a breach of contract claim through the Employment Tribunal or continue working and then either make a breach of contract claim through the County Court or subject first to referring  to ACAS,  make an Employment Tribunal claim for unlawful deductions from  their wages. 

The Deduction from Wages (Limitation) Regulations 2014 limit the backdating of many ET claims in this area to two years arrears but with  statutory sick or maternity pay being  among the few exceptions to  this limitation.  Breach of contract claims can still be pursued through the courts for up to six years.

An advantage of Employment Tribunals for employees is that the losing party only rarely has to contribute towards the successful party's costs although this advantage has been eroded somewhat by the imposition of fees for most ET claims. Care is therefore needed in deciding whether to refer claims for unpaid wages to the Employment Tribunal or to the County Court. 

The Employment Appeal Tribunal Decision in Mr D Rogers -v- Dorothy Barley School 2012 (UKEAT/013/12/LA) highlights the difficulties that can occur where the employee selects the wrong forum.  Mr Rogers was a long serving London Borough of Barking and Dagenham school caretaker who lived in the caretaker's house under an arrangement by which the employer paid the water rates direct.  Unfortunately, after changes to the meters, water rates bills began to be delivered to Mr Rogers for payment by him.  His complaint about this was rejected by the Employment Tribunal at first instance on the grounds that his was a breach of contract claim and as he remained employed at the school, the Tribunal had no jurisdiction.  The Employment Judge considered the possibility that the caretaker's claim may really have been for unauthorised deductions from his wages where the ET would have jurisdiction but even so, concluded that there had been no deduction from his pay because the water rates had always been paid direct by the School rather than being taken from the caretaker's wages.

The Employment Appeal Tribunal observed to illustrate the difficulty, that the Caretaker:

"…may have had a perfectly good grievance about breach of contract and sought to have aired it in, for example the Magistrates' Court.  A magistrate would have decided that the Magistrates' Court had no jurisdiction to hear such cases and no appeal from the Magistrates' Court could have succeeded on that point.  The Employment Tribunal had no more jurisdiction to deal with this case than a Magistrates Court would have had."

The caretaker's claim against the school was therefore dismissed. Had Mr Rogers initially commenced his proceedings in the County Court and claimed breach of contract rather than referred his claim to the ET, the outcome might have been rather different.

The School then applied for costs against the caretaker upon the basis that his claim was misconceived. Although Employment Tribunals have discretion to order costs upon such a basis, the Employment Appeal Judge refused the School's application saying:

"… that the Respondent employer has known for many months that Mr Rogers is acting in person and is simply not grasping the jurisdictional question that his appeal raises, yet there is no letter or other correspondence or intimation to him warning him that if he proceeds, an application for costs will be made…the Respondent, has not given any notice to Mr Rogers of the extent of the costs it would seek, so he has had no opportunity to assess or contest the amount that is proposed… The employer, in my judgment, has singularly failed to achieve a satisfactory solution with Mr Rogers that gives him the confidence that he will not face a future liability to pay for water."

The EAT judge's final point was one which could apply to any employer which does not take care when dealing with employees' concerns. He stated:

"…that the employer has brought this process upon itself. For all those reasons, I shall not make an order for costs."

Employers do not of course necessarily need to accept employees' grievances but they should consider them carefully. If the employee then takes a claim to an Employment Tribunal which is misconceived s/he should be warned of the employer's view that the claim is misconceived and that if that view is borne out by the decision of the ET, the parties could then anticipate an order for costs being made against the employee. Failure to alert the employee of the risks s/he will be taking as to costs, in advance of the hearing, may preclude the employer from being awarded costs should the employee's case in an Employment Tribunal in fact be dismissed.