United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR R LEWIS (of Counsel) Messrs Osborne Clark Solicitors 50 Queen Charlotte Street Bristol BS1 4HE
For the Respondent	MR A CRABBE (Representative) Crabbe's Legal Consultancy Little Lodge Henting Lane Owlsbury Winchester Hampshire SO21 1LE


 


MR JUSTICE KIRKWOOD: The facts that lie behind this appeal were summarised by the Industrial Tribunal. Mrs Green had been an employee of the appellant for some ten years. In July 1996 the Company and the employee agreed that the employee's employment should terminate on 30th September 1996, and Mrs Green would work her last day on 26th July 1996, and would thereafter have unpaid leave until 30th September 1996. The Company would loan her the sum of £5,000 at the end of July and would pay a further £10,000 to make up a total payment of £15,000 on 30th September 1996. The agreement follows the normal pattern, having in it all the requirements of s.203 of the Employment Rights Act 1996 to be a proper agreement. One other clause was added, namely that the employee agreed that she would not use any confidential or sensitive information relating to the business or financial affairs of the Company or disclose such information to any person, firm or other organisation.

The employers alleged that in August or September 1996 Mrs Green had breached that clause, and they therefore did not pay her the further £10,000.

Mrs Green went to the tribunal saying either that by not paying her her £10,000 the employers had set aside the compromise agreement so that she could bring a claim for unfair dismissal. Alternatively, if that argument failed, that she could sue in the Industrial Tribunal under the Extension of Jurisdiction Regulations.

The employer's response was that s.203 did apply so that unfair dismissal and claims to the like could not be pursued. And secondly, Mrs Green could not sue on the agreement in the Industrial Tribunal because it was not a contract in connection with employment and was only justiciable in the County Court.

S.203 of the Employment Rights Act 1996 contains restrictions upon contracting out of the provisions of the Act; that is to say excluding or limiting the operation of any of those provisions. But there are exceptions in certain circumstances, and in sub-section (2)(f) it is established that the earlier provision of s.203 does not apply to an agreement to refrain from instituting or continuing before an Industrial Tribunal any proceedings in certain circumstances if the conditions regulating compromise agreements under the Act are satisfied. The tribunal found, and it is really beyond argument, that the conditions are satisfied, so that s.203 applies, and Mrs Green cannot bring a claim for unfair dismissal.

Her remedy is to claim for the liquidated sum of £10,000, and the central question that was left for the Industrial Tribunal, and upon which this appeal turns, is where she can bring that claim. She said in the Industrial Tribunal, the employer said only in the Civil Courts. It makes a difference to Mrs Green because the Industrial Tribunal is more informal in its procedures and processes, it is cheaper and is more accessible to her.

The Industrial Tribunal decided that the case could proceed in the Industrial Tribunal. Reference was made to s.3 of Industrial Tribunals Act 1996 which provides that:

"(1) The appropriate Minister may by order provide that proceedings in respect of-

(a) any claim to which this section applies, or

(b) any claim to which this section applies and which is of a description specified in the order,

may, .... be brought before an industrial tribunal.

(2) ... this section applies to-

(a) a claim for damages for breach of contract of employment or other contract connected with employment,

(b) a claim for a sum due under such a contract, and

(c) a claim for the recovery of a sum in pursuance of any enactment relating to the terms or performance of such a contract,

if the claim is such that a court in England and Wales or Scotland would the law for the time being in force have jurisdiction to hear and determine an action in respect of the claim."

...

(4) Any jurisdiction conferred on an industrial tribunal by virtue of this section in respect of any claim is exercisable concurrently with any court in England and Wales or Scotland which has jurisdiction to hear and determine an action in respect of the claim."

The Industrial Tribunal found that the compromise agreement was a contract connected with employment, so that Mrs Green could sue for the money in the Industrial Tribunal.

That preliminary point was decided by the Chairman of the tribunal sitting alone. His extended reasons were promulgated on 28th January 1997, and it is against that preliminary decision that the employer appeals.

Professor Lewis, Counsel for the appellant, seeks to argue that the tribunal was wrong in law to hold that it had jurisdiction to enforce a compromise agreement. Such agreements are only enforceable, he says, in the ordinary law courts.

Professor Lewis relies upon the section to which I have just referred, and also on the Industrial Tribunal's Extension of Jurisdiction Order 1994, and in particular Article 3. Article 3 says:

"Proceedings may be brought before an industrial tribunal in respect of a claim of an employee for the recovery of damages or any other sum ... if-

(a) the claim is one [then there is a reference to it being justiciable in the courts];

(b) the claim is not one to which article 5 applies; and

(c) the claim arises or is outstanding on the termination of the employee's employment."

Professor Lewis concedes that Mrs Green's claim arose out of, or more particularly was outstanding on the termination of her employment, but his case is that it was not a contract connected with employment, as referred to in sub-section (3)(a) of the Act to which I referred earlier. To support that argument Professor Lewis referred us to s.42 of the Act and the definition of employment, which is in these terms:

" "employment" means employment under a contract of employment and "employed" shall be construed accordingly."

We disagree with Professor Lewis about that. This compromise agreement was an agreement as to the terms upon which Mrs Green's employment was to be brought to an end, and is quite plainly connected with that contract of employment.

Professor Lewis's next point is that if in fact the Industrial Tribunal has jurisdiction to enforce, as he puts it, this compromise agreement, he argues that there will be many compromise agreements that will not be so enforceable, because they are not outstanding or do not arise from termination. He points to all sorts of compromises that may be reached in the course of employment, and argues that all should, for consistency's sake, be enforceable in the same way and in the same forum.

Professor Lewis argues that it is inconceivable that Parliament intended that some compromise rights should be enforceable in the Industrial Tribunals and some not, depending on whether they were outstanding or arose from termination.

We are not at all persuaded by that argument.

It seems to us that the scheme of the legislation is to give to the Industrial Tribunals jurisdiction to resolve disputes arising from or outstanding upon termination of employment, at least where there is a remedy in money terms and subject to certain financial limits. Furthermore, what ever may be questions of policy or inconsistency, we must go by what the legislation says.

The combined effect of s.3 of the 1996 Act and Article 3 of the 1994 Order, is that Mrs Green can proceed in the Industrial Tribunal unless that course is precluded in some other way.

It is necessary to return to Article 3(b) of the Order, and to read the relevant passage to give it its meaning.

"Proceedings may be brought before an industrial tribunal in respect of a claim of an employee for the recovery of damages or any other sum if-

(b) the claim is not one to which article 5 applies."

Article 5 applies to a claim for a breach of a contractual term of any of the following descriptions:

"(d) a term imposing an obligation of confidence."

So Mrs Green could not bring a claim for a breach of a contractual term imposing an obligation of confidence.

But Mrs Green is not claiming for breach of an contractual term as to an obligation of confidence. She is claiming simply for failure to pay the money due under the contract.

The employer too will be debarred from proceeding in the Industrial Tribunal for breach of an obligation of confidence, that is Article 4, but that does not preclude him raising the point by way of defence. It may well be necessary for the Industrial Tribunal to adjudicate upon the breach of confidence point. There is some force in Professor Lewis's submission that that would seem to undermine the intent of Articles 3, 4 and 5 in that regard. But the wording of the Article of the Order is quite plain as to Mrs Green's entitlement; and an argument based upon a supposed anomaly cannot in those circumstances take her rights away from her.

In those circumstances, we find that the careful arguments of Professor Lewis do not persuade us that the Industrial Tribunal made an error of law, so that the appeal will be dismissed.

Leave to appeal refused.