breach of contract employment tribunals jurisdiction time limits

Six year time limit for contract claims does not apply in tribunals

NBC_NewsPursuant to section 5 of the Limitation Act 1980 there is a time limit of six years to bring a breach of contract claim, running from the “the date on which the cause of action accrued”. However, in Grisanti v NBC News Worldwide Inc, an employment tribunal has held that the six year time limit does not apply to breach of contract claims brought in an employment tribunal. In doing so it has declined to follow an earlier decision in which it was held that the six year limit did apply.

Employment Judge Wade, sitting in the Central London Tribunal, was asked to consider the issue at a preliminary hearing on 11 June. The judgment has recently been handed down. Ms Grisanti claims (among other things) that her employer deducted national insurance contributions from her salary between 1996 and 2003. However, when she came to claim her pension in 2015 she was told by HMRC that no payments were made for those seven years. The result is that she is entitled to a greatly reduced pension.

The deductions were calculated correctly and Ms Grisanti does not allege that her employer has kept the money. However, at the time of the hearing it was unclear what had happened to it. However, HMRC had commenced an enquiry.

NBC took the opportunity at the hearing to argue that the claim should be struck out in any event on the basis that the breach of contract claim was out of time, as was a claim under Part II of the Employment Rights Act, commonly referred to as a “Wages Act claim”. It was contended that not only was the claim not brought within three months of termination (as extended by the ACAS early conciliation scheme), it was also subject to section 5 of the Limitation Act 1980 so that it was barred on the basis that more than six years had passed since the cause of action accrued in 2003.

The Employment Tribunals Extension of Jurisdiction Order 1994 allows breach of contract claims to be brought in an employment tribunal. The objective was to avoid duplication of claims in courts and tribunals. NBC submitted that, logically, the time limit of six years must also have been imported otherwise there was the risk of a flood of old claims and claimants would have the right to pursue claims in tribunals that could not be pursued in courts. More particularly a tribunal only has jurisdiction if “the claim is one…which a court in England and Wales would under the law for the time being in force have jurisdiction to hear and determine”. It seems to be a pretty compelling argument, not least because it was successful in the 2012 employment tribunal case of Taylor v Central Manchester University Hospitals NHS Trust.However, the tribunal judge noted that while the time limit is a jurisdictional question for an employment tribunal, it is a procedural one in the civil courts. Accordingly there are circumstances, albeit very limited, in which the time limit can be disabled in the civil courts. Article 3 of the 1994 Order could still apply in other circumstances so it is not redundant. Judge Wade continued:

Whilst it is indeed true that it is hard to do justice if a claim is very old it would be odd to say the least if the Limitation Act, which is not mentioned at all in the Order, were to trump Article 7 (three months’ time limit from termination of employment). This case is a good example of Article 7 being more appropriate than the Limitation Act in an employment case. First, claimants are notoriously and understandably unwilling to litigate whilst still employed and secondly problems often do not come to light or crystallise until the end of the employment.

Further, since Article 3(c) prevents a party from starting a claim until the end of their employment the Limitation Act would stop a party from ever pursuing a claim in the Tribunal if it had arisen more than six years ago thus considerably restricting the ability to litigate under the Order. This would be an odd outcome since (the) purpose of the Order was to extend jurisdiction.

It should be emphasised that this is not an appeal decision and it is therefore not binding on other tribunals. However, Judge Wade did note that there has not been a flood of old cases that are therefore hard to deal with. A separate argument by the employer concerning the Wages Act claim was also unsuccessful (see the judgment linked above for details). The result is that the claim stand and is adjourned to allow HMRC to complete its investigation. the claim is listed for a full hearing in January 2016.

Martin Malone

By Martin Malone

I'm a solicitor and the chief operating officer at Canter Levin & Berg. I was formerly head of the employment department.
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