United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR M GLAZIER (Representative) Employment Practice 17 Hartley Avenue Prestwich Manchester M25 0AT
For the Respondents	MR P KOLVIN (Counsel) Messrs Blaser Mills Winters Taylors Solicitors 1 Cambridge Street Aylesbury Buckinghamshire HP20 1RP


 


JUDGE J HULL QC: This is an appeal to us by Miss Anjali Patel who was employed by the Respondents, RCMS Ltd, as a business systems analyst. Her employment began on 3 October 1994 and ended on 20 September 1996. There was a transfer of part of a business; there was doubt and difficulty and all sorts of matters arose. Miss Patel said that she had been misled by what she had been told by accountants concerned in the transfer. There was an administrative receivership of the predecessor company, all sorts of matters, the Secretary of State was a party to her Application.

What it amounted to was this: nearly five months after the ending of her employment Miss Patel presented her Application to the Industrial Tribunal complaining of various matters including contract matters arising out of the ending of her employment. That was actually presented on 10 February, although it is dated 5 February 1997. On 12 March, the Respondents put in their IT3, their answer, making a cross-claim. They claimed, by way of defence, that she had been dismissed for redundancy or by reason of economic reorganisation but they put in a cross-claim of a contract sort for damages. They said that Miss Patel had failed to return valuable computer equipment and, needless to say, Miss Patel's claim was, on the face of it, out of time under Section 111 of the Act and the other statutory provisions; she had three months and she could only proceed after three months if it had not been reasonably practicable for her to present her complaint within that time; in which case the Tribunal would have to inquire, if it found that it had not been reasonably practicable, whether she had presented it within a reasonable time thereafter.

It was an inquiry which led, when the Tribunal sat on 29 October, under the Chairmanship of Mr Edwards, to a finding that she was not entitled to proceed with her claim. It was out of time and it had been reasonably practicable for her to present it within time.

So her claim, therefore, fell to be dismissed. But the Tribunal said "that has no effect upon the cross-claim which is, in our view, presented timeously and we propose to continue to hear that." It is from that decision that Miss Patel appeals.

The Notice of Appeal is very short indeed. It is suggested, in substance, that since the claim has been dismissed, and is therefore ineffective, it is wrong to construe the relevant regulations in a way which allows the employers' cross-claim to proceed. If the claim is bad and fails, then cross-claim - as it is called for convenience, the employers' claim - which, in effect, depends upon it, should fail with the claim. It is not right or just that the employers should be allowed to proceed in the Industrial Tribunal if the claim which starts the jurisdiction, or indeed is essential to the jurisdiction to hear the cross-claim, fails for any reason.

That is they way it is put. It would mean that there would be a quite different result in the Industrial Tribunal from the one which would obtain in the ordinary courts, because it is a very common thing for a claim to be brought and a counter-claim to be asserted, for convenience, because of course a counter-claim could always be asserted quite separately but for convenience it is asserted in the same proceedings. The claim may be struck out for some reason. It may fail for some reason. It may be compromised on terms agreeable to the parties. But if the counter-claim is not settled too then the counter-claim has a life of its own, it is a separate action and it will continue. It too, of course, may fail or succeed in due course. But the counter-claim does not fail simply because the claim fails or is withdrawn or is settled.

So that would be a quite different result in the Industrial Tribunal. That of itself is merely a point of interest, because Industrial Tribunals, in many ways, differ from the courts in their way of operating and in their nature. They have, for example, the time limit of three months, which applies generally to presenting complaints of all sorts, whereas a contract claim in the common law courts has six years. So it is a very different situation and, moreover, the rules with regard to counter-claims under the Limitation Acts have, again, a life of their own and do not apply in the same way. To look at the situation in the Industrial Tribunals we have to look at the Regulations.

The Industrial Tribunals were given contract jurisdiction by statute under what was first the Employment Protection Act, as amended, and that provision now is to be found in section 3 of the Industrial Tribunals Act 1996. Section 3 is headed 'Power to confer further jurisdiction on industrial tribunals' and it provides under that Section:

"(1) The... 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, subject to such exceptions (if any) as may be so specified, be brought before an industrial tribunal."

Then under (2):

"Subject to [an exemption for personal injuries], this section applies to-

(a) a claim for damages for breach of a 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,"

The relevant Order is the Extension of Jurisdiction Order, which is to be found at p1241 of the current edition of Butterworths Employment Law Handbook. First of all there are substantive provisions in article 3 of the Order:

"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 (other than a claim for damages or for a sum due, in respect of personal injuries)"

and then, in a rather circumlocutious way, the Order refers back to section 131 of the Act:

"if - (a) the claim is one to which section 131(2) of the 1978 Act applies..."

and then there is an exemption for claims falling under article 5, which I will come to in a minute, and:

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

Subject to those matters, the employee has a general right to proceed in front of the Industrial Tribunal.

The employer is given a very much more restricted right to sue in contract, under article 4.

"Proceedings may be brought before an industrial tribunal in respect of a claim of an employer for the recovery of damages or any other sum (other than a claim for damages...in respect of personal injuries) if-"

Then there is again a reference back to the statute and article 5 and then,

"(c) the claim arises or is outstanding on the termination of the employment of the employee against whom it is made;"

so far corresponding very much to the preceding article, but then there is in additional restriction:

"(d) proceedings in respect of a claim of that employee have been brought before an industrial tribunal by virtue of this Order."

So it is a condition precedent to the Industrial Tribunal hearing an employers' claim that the employee must have brought proceedings in front of the Industrial Tribunal - a very important limitation. Otherwise, of course, the employer will have to sue in the common law courts if he says he has a cause of action against the employee. It is not necessary to go into all the reasons but the Industrial Tribunals primarily exist to hear complaints by employees rather than employers and no doubt it is partly for that reason that there is that restriction.

Article 5 exempts certain matters from the jurisdiction. One could cite as one of them, "a term relating to intellectual property" and other matters of that sort. Then, article 6 says that:

"Proceedings on a contract claim may be brought before an industrial tribunal by presenting a complaint..."

In other words the ordinary method. Then article 7, which first of all imposes time limits with regard to the employee's complaint.

"An industrial tribunal shall not entertain a complaint in respect of an employee's contract claim unless it is presented-

(a) within the period of three months beginning with the effective date of termination of the contract giving rise to the claim,"

then there is (b) which does not concern us here,

"or (c) where the tribunal is satisfied that it was not reasonably practicable for the complaint to be presented within whichever of those periods is applicable, within such further period as the tribunal considers reasonable."

Thereby echoing what is now section 111 of the Employment Rights Act.

It does not say, of course, that such a claim is to be a nullity, it says that the claim is not to be entertained by the Tribunal; again, echoing the language of section 111 in respect of, say, unfair dismissal claims.

Then we turn to article 8, which imposes quite different time restraints on an employer.

"An industrial tribunal shall not entertain a complaint in respect of an employer's contract claim unless-

(a) it is presented at a time when there is before the tribunal a complaint in respect of a contract claim of a particular employee which has not been settled or withdrawn;

(b) it arises out of a contract with that employee; and

(c) it is presented-

(i) within the period of six weeks beginning with the day, or if more than one the last of the days, on which the employer... received from the tribunal a copy of an originating application in respect of a contract claim of that employee; or

(ii) where the tribunal is satisfied that it was not reasonably practicable for the complaint to be presented within that period, within such further period as the tribunal considers reasonable."

There, echoing the provisions for jurisdiction, the employer's claim can be said to be dependent upon the employee's claim, in the sense that the employer cannot bring a claim at all unless the employee has made a claim. Secondly, he must do so within six weeks of the service of what will normally be the IT1 on him. He will say: "here is a contract claim by the employee brought in accordance with this Order, I now have six weeks in which to present a claim under section 3 of the Act and under article 4 of the Order." In this case that is exactly what happened. The employee having presented a claim, albeit on the face of it outside the three months, the employer presents his claim timeously.

In due course the Tribunal tries the question whether it is to entertain the employee's claim. It has to consider section 111 and the other provisions, all of them similar with regard to time and, of course, article 3 and article 7 of the Order. It does so. It finds that it was reasonably practicable for the complaint to be presented within time and therefore neither the contract claim nor the claim of unfairness can be entertained by the Tribunal, it is prohibited from entertaining them.

What is the effect of this upon the employer's claim? So far the employer has proceeded in every way, on the face of it, in accordance with the Order and the Act. The cross-claim, if I may call it that, is presented within the six weeks. It does arise out of a contract with the employee and it is presented within six weeks of the employer having notice of the cross-claim.

Is it in fact, so to speak, wholly dependent on the claim? So that even if the claim fails at a late stage the employer's claim must then fail, on procedural grounds, so that the employer, like the employee, can then go to the County Court or the High Court and proceed with his claim there, just as the employee probably can, subject to any rules about abuse of process or vexatiousness which might lead to a discretionary stay?

Or is it the case that the employer has done enough, by complying with articles 4 and 8, and is entitled to say "well, now you should hear my claim". What is said here, by Mr Glazier, is essentially that the two go together and words should be read into article 8. I suggested that something like this might do, that article 8 would have to be read in paragraph (a) as saying "the employer's claim must be presented at a time when there is before the tribunal an irrefrayable complaint in respect of a contract claim." That is to say, a claim which cannot be challenged. That would mean that the employer would have to be the judge of the employee's claim.

One can consider all sorts of matters. The employee's claim might be withdrawn because the employee no longer wanted to go on with it. It might be settled; the Order itself envisages that, because the employer's claim must be presented at a time when the claim has not been settled or withdrawn. But suppose it is settled or withdrawn afterwards - does that automatically mean that the employer's claim, however valid in other respects, must fail? Does it mean that the employer's claim, although nothing whatever in the Order or the Act says so, is to be regarded as merely parasitical on the claim of the employee? That hangs on there so long as the claim exists; then, if for any reason the claim drops out, the parasite drops out too? Nothing in the Order says that. Nothing in the Act says that.

These restraints which are placed by the Act and the Order on the right of the employer to seek relief from the Industrial Tribunal do not impose any such restriction and one asks "why should it be so?" It would mean that an employer who, perhaps, had devoted expense, management time, resources of all sorts, perhaps obtaining expert evidence, instructing counsel on the matter of his claim, would, through no fault whatever of the employer, suddenly find that the claim had ceased to exist because of matter which were perhaps entirely outside his control, as here. The claim has been presented but the Tribunal finds that it must not proceed to consider it. That would mean that the employer would be, in most cases, in a very difficult position. Should he simply say "I am not prepared to risk money on speculation of this sort. I am going to instruct solicitors and counsel to go straight away in the High Court or the County Court. True there may be thereby duplication of proceedings and arguments may be heard by both the Industrial Tribunal and the High Court which are in common. It may very well be that the Industrial Tribunal proceedings will have to be adjourned pending the outcome of High Court proceedings, because the Industrial Tribunal will be told that the High Court is going to consider some highly material issues and its adjudication on those is one which the Tribunal will wish to wait to see. Vice versa may apply. The Industrial Tribunal may wish to proceed and say that its procedures are quicker than the Court and it will not wait: that may prejudice the High Court proceedings. Extra expense on any view will be run up because each of the parties will then have to appear not only in front of the Industrial Tribunal but before the Court." The same, of course, would apply if the employer said "I will proceed in the County Court". That, to say the least, appears to be an inconvenient result.

Convenience suggests strongly that employers who find themselves within the Order and the Act should be able to take advantage of them in the same way that an employee is. It seems to us that the implication which is sought, whatever words one puts it into, the suggestion that the employer's claim is simply parasitic, goes beyond anything that one can say about a counter-claim in court, is not supported by anything whatever in the Act or the Order, and it would be thoroughly unsatisfactory if we were to import it into either the Act or the Order and say that it was implicit that if the employee's claim failed for any reason, or was withdrawn for any reason, therefore an entirely regular employer's claim should fail as well.

It is not a case, as was pointed out in argument, of the employee's claim, as it was out of time, being a nullity. It cannot be said that it was something which could simply be ignored. If it is not a nullity then it is a complaint which the employer is entitled to take advantage of as giving both jurisdiction and a time limit within which he must proceed. As I perhaps should have pointed out, the employer cannot simply wait and see. He has six weeks from notice of the complaint. He cannot then say "I will wait, perhaps a year, to see the result of this and then, if it appears that all is regular, I shall present my claim in the Industrial Tribunal". He cannot do that. He has to act at once.

It seems to us, therefore, that the consequences in costs and convenience if we were to uphold this appeal would be very serious for a large number of litigants. Parliament, to this limited extent, clearly intended the employer as well as the employee to have resort to the Industrial Tribunal for a prompt and relatively cheap solution of problems which have arisen between the parties.

Since there is nothing to be found in the Act and the Order, since every consideration of convenience tells in the way I have indicated, it seems to us we cannot uphold this appeal. There is, as a matter of convenience, nothing to be said for it and we cannot find any ground in law for upholding it. We have some sympathy with Miss Patel, because what she says would, as a matter of first impression and common sense, certainly be arguable; but on analysis, it turns out to be the opposite. So the appeal falls to be dismissed. Those are the reasons of us all.