Law in Flux – Time Limits for Bringing Contractual Claims in the Employment Tribunal

The Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994 (the 1994 Order) gives an Employment Tribunal jurisdiction to hear common law claims made by employees for damages arising out of breaches of contract. Claims made under the 1994 Order must be brought within three months of termination of the contract giving rise to the claim. Under Section 5 of the Limitation Act 1980, a breach of contact claim cannot be brought after the expiration of six years of the date the breach of contract occurred.

In Taylor v Central Manchester University Hospitals NHS Foundation Trust, the Respondent had failed to initially inform the Claimant of her right to join the Respondent’s pension scheme, resulting in the Claimant losing over four years’ pensionable service during a period of employment in the 1980s. The Claimant subsequently only opted into the pension scheme in 1991. One of the issues to be determined at a pre-hearing review held in March 2013 was whether Article 3 of the 1994 Order should be construed so as to incorporate Section 5 of the Limitation Act 1980 i.e. must a Claimant comply with both sets of time limits under the 1994 Order and the Limitation Act 1980. Employment Judge Bright concluded that it did, meaning the claim was out of time. The Judge directed the Claimant to the “ordinary courts” where she could make an application for an extension to the time limit.

In Grisanti v NBC News Worldwide Inc, the Employment Tribunal took a different view on how the 1994 Order and the Limitation Act 1980 should be interpreted. At a pre-hearing review held in June 2015, the Respondent attempted to have a breach of contract claim struck out on the basis that the Claimant was out of time. The Claimant had sought to draw her pension on termination of her employment and had been informed by HMRC that her former employer, NBC News, had failed to pay national insurance on her behalf from 1996 to 2003 with the effect that the Claimant’s pension would be greatly reduced. Consequently, the Claimant brought a claim in the Employment Tribunal for breach of contract within 3 months of her termination date which made the claim in time under the 1994 Order. Relying on Taylor v Central Manchester University Hospital NHS Foundation Trust, the Respondent submitted that limitation had expired under the Limitation Act 1980 as it was more than six years since the cause of action had accrued. The 1994 Order should be read as incorporating the earlier primary legislation. The Respondent argued that to disregard the earlier primary legislation would result in the floodgates opening for “old claims”.

Employment Judge Wade concluded that the Limitation Act 1980 does not apply to contract claims brought in the Employment Tribunal. Given that Claimants are normally “unwilling to litigate” while in employment and that issues such as this may only “crystallise” once employment has ended, the 1994 Order would take precedence over the 1980 Act. Furthermore, Article 3(c) of the 1994 Order prevents a party from commencing proceedings until the employment is terminated. To place a restriction of six years from the date on which the cause of action accrued would be contradictory, given that the purpose of the 1994 Order was to “extend jurisdiction”. Employment Judge Wade noted that there was no appeal level authority on this point and was of the view that if the Respondent’s position was so robust, there would have been authority the Respondent could rely on. She also had no experience of the 1994 Order opening the floodgates for large numbers of other cases, as alleged by the Respondent.

Given the wealth of legal authority clarifying the law relating to time limits under the Limitation Act 1980, it is surprising that there are only two tribunal decisions and no higher court authority clarifying the law relating to time limits under the 1994 Order.

The bottom line is non-performance or breach of a contract of employment which occurred more than six years ago may result in a claim being brought under the provisions set out in the 1994 Order. Employers need to be mindful of this and simply not assume that the limitation period has expired if the date of the breach is more than six years previous.  Only when employment comes to an end and a period of 3 months from the termination date has lapsed, as per the 1994 Order, can an employer have some comfort  that a claim will out of time  for historic breaches of contract.

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