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Employers: Tribunals May Construe Contract Terms in Unlawful Deduction Claims

The Court of Appeal has held that employment tribunals have jurisdiction to rule on the terms of an employment contract when hearing claims of unlawful deductions from wages under Section 13 of the Employment Rights Act 1996 (ERA 1996). This ruling goes against the decision of the Employment Appeal Tribunal (EAT) in the same proceedings and affirms the Court of Appeal authority Delany v Staples [1991] ICR 331.

In Argarwal v Cardiff University and others [2018] EWCA Civ 2084, Ms Argarwal brought a claim to the EAT for unlawful deductions from wages. At a preliminary hearing, the tribunal decided that it had no jurisdiction to hear the case as it was not permitted to rule on the terms of the contract. This decision was upheld by the EAT.

The Court of Appeal reversed this decision, referring to Delany v Staples (above), commenting that it is “a binding authority that an employment tribunal has jurisdiction to resolve any issue necessary to determine whether a sum claimed…is properly payable”, including in relation to the terms of an employment contract.

Claims for unlawful deductions are important because they offer protection to employees. Employees may claim unpaid or underpaid wages in the employment tribunal while the employment relationship exists. Workers may also bring an unlawful deduction claim in order to enforce their right to the National minimum wage.

This bulletin is for general guidance purposes only and should not be used for any other purpose.

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