Common law remedies and tribunal jurisdiction

In light of a recent EAT ruling, James Froud outlines the pitfalls of bringing an employment tribunal claim for unlawful deduction of wages

Workers believing they have been short-changed by their employer may wish to seek redress in the employment tribunals (ETs) through a claim for unlawful deduction from wages under Part II of the Employment Rights Act 1996 (ERA). However, they would be wise to proceed with counsel. These claims often engage tricky legal technicalities and invariably prove less straightforward than first thought. 

A spotlight was shone on this cautionary note by a recent judgment from the Employment Appeal Tribunal (EAT) in Abellio East Midlands Ltd v Thomas (2022), concerning the novel question of whether an employment tribunal has jurisdiction to consider the principle of quantum meruit in the context of an unlawful deductions claim. 

Mr Thomas had been employed by Abellio (the East Midlands Railway franchise) as the area manager for Leicester on a salary of £42,000. He subsequently agreed to take over as area manager for Nottingham, the biggest and most complex station in the franchise’s network. Thomas was promised a salary increase to reflect his greater responsibilities, but negotiations failed to conclude an agreement on the level of increase; he was offered £48,000 but held out for £52,000. He nevertheless performed the role for eight months while those conversations continued. 

Thomas’s employment terminated before there was any resolution and he brought an unlawful deduction from wages claim before the employment tribunal (for the difference between what he had been paid and what he believed he was due). He argued that: 

  • In the absence of a binding agreement over his salary, he had a right to a quantum meruit for the services he provided as Nottingham area manager. Quantum meruit is a common law remedy in unjust enrichment cases. It translates as ‘the amount he deserves’. 
  • The quantum meruit fell within the definition of ‘wages’ under Part II of ERA. 

The employment judge agreed with these submissions. He found that ‘both parties realise… and accept that… Nottingham is an entirely different position carrying a salary with it of £52,000 per annum…’ and had ‘no hesitation in… saying that Mr Thomas is entitled to payment for his labour on a quantum meruit basis… The non-payment of the difference in wages… amounts to an unlawful deduction of wages.’

Abellio appealed. 

The EAT observed that Part II ERA should be given a broad and inclusive interpretation to achieve its statutory purpose of protecting workers against arbitrary deductions which deprive them of their earnings. But it also noted that while the definition of ‘wages’ under ERA is a wide one, the concept was not without limitations.

In the EAT’s view, quantum meruit could not fall within the scope of the wages definition. This was for a variety of reasons but principally because the essential characteristic of wages is that they are paid in consideration for work done or to be done under a contract of employment. Quantum meruit, on the other hand, typically arises in the absence of a contract. Where there is a subsisting contract, the doctrine bites only when the sums claimed are for work going beyond the scope of a subcontract. Accordingly, the claim could not be advanced under the Part II ERA and the appeal must succeed. 

The EAT went on to conclude that Thomas did, on the facts, have a legitimate claim for quantum meruit because his Nottingham role was ‘entirely different’ to Leicester. However, such a claim should have been brought in the ordinary courts and not the employment tribunal. 

This begs the question of what claims can be brought in the ET. It must be remembered that ETs are creatures of statute and only have such powers and jurisdiction as have been conferred on them by statutory provision. As such, the short answer is that ETs have jurisdiction to hear the claims set out in s 4(3) of the Employment Tribunals Act 1996. They are too long to list here but generally do not involve common law principles. 

James Froud is head of employment at McCarthy Denning