The EAT has held in Abellio East Midlands Ltd v Thomas that a worker cannot use the employment tribunal claim of “unlawful deduction of wages” for what is known as a “quantum meruit” claim (meaning the amount deserved for the work done). Instead, it has to be brought in the civil courts.
Basic facts
Mr Thomas started work with Abellio on 25 February 2019 as the area manager for Leicester at an annual salary of £42,000. In March that year, he agreed to take over the role of area manager for Nottingham, the biggest and most complex station in the network.
Although he was told that his salary would be increased to reflect the greater responsibilities, no specific sum was agreed at that stage. At a meeting on 2 May 2019, it was agreed that Mr Thomas' salary should be increased to £52,000 per annum, subject to confirmation from the HR department. HR did not agree, however, and instead wrote to Mr Thomas on 12 June, offering him £48,000 with effect from March, subject to review in July 2020. He refused to sign the letter.
He then received a further letter dated 11 September, offering him a starting salary of £48,000 with the promise that it would increase to £52,000 from September 2019 as long as he successfully completed his probationary period. Mr Thomas again refused to sign the letter and his employment terminated on 12 November that year.
He brought a claim for unlawful deductions from wages under Part II of the Employment Rights Act 1996 (ERA) on the basis that he had an oral agreement with his managers that he would be paid £52,000 per annum when he took over the new role.
Tribunal decision
The tribunal judge rejected the argument that Mr Thomas had an express oral agreement with his employer to pay him £52,000 as this had clearly been subject to ratification by HR. He also rejected the submission that Mr Thomas was entitled to a salary of £48,000 based on the June and September letters as they both required his acceptance to have legal effect.
However, the judge acknowledged that the new job was an entirely different position with a salary of £52,000 which had been paid to the previous incumbent and which had also been advertised at that salary. He therefore had “no hesitation” in saying that Mr Thomas was entitled to a remedy known as a “quantum meruit” payment. In other words he was entitled to be paid for the services he had provided to his employer from March to November 2019 for the “entirely different” job of area manager, Nottingham.
Abellio appealed on the basis that “quantum meruit” claims cannot be brought under Part II of the ERA.
EAT decision
Allowing the appeal, the EAT held that the tribunal was wrong in law to hold that it had jurisdiction to allow a “quantum meruit” claim under Part II of the ERA in these circumstances. The tribunal judge did not grapple with the issue of whether a claim for a quantum meruit could fall within Part II – he just assumed that it could.
Following the decision of the House of Lords in Delaney v Staples, it was clear that the “essential characteristic of wages is that they are consideration for work done or to be done under a contract of employment”. In other words, they relate to an obligation under an existing contract.
However, an individual engaged under a contract (and therefore entitled to bring a claim under Part II ERA) can only bring a quantum meruit claim in respect of additional work that went beyond the scope of their existing contract. This is because that work could be valued by reference to that contract. In effect, the claim can only be made to get paid for work that has been done, but for which there is no agreement about how much the individual should earn.
These claims are, therefore, typically only brought where there is no contract (as in the case of Mr Thomas) or where claims for payments due under it are void due to statutory illegality. If the individual does not bring such a claim, it follows that the beneficiary of the work would be “unjustly enriched” by it.
Comment
This case deals with a technical and narrow point about where to bring a wages claim which cannot be valued by reference to an existing contract. Since an unlawful deduction from wages claim requires individuals to be able to do just that, and to show that payment of it is late, these claims cannot be brought in the employment tribunal.
Instead a claimant must take their complaint to the civil courts to sort out by assessing the market value of the services, based on objective evidence. Since it becomes due only when the court has reached that quantification decision, it cannot be “late” any sooner than that.
Although he lost the battle, hopefully Mr Thomas won the war since the EAT gave the employer a clear steer that whilst his claim was brought in the wrong place, he was nevertheless legally in the right.