The Limitation Act says that contract and statutory claims to recover sums taken as unauthorised deductions from wages are limited to six years from when the claim is brought, unless another statutory period of limitation applies. In Bath Hill Court (Bournemouth) Management Co Ltd v Coletta, the Court of Appeal held that the “period of limitation” under the Employment Rights Act trumps the time period of six years for claims of arrears pre-dating 1 July 2015 under the Limitation Act.
Basic facts
Mr Coletta was employed from February 2000 until his dismissal in August 2015 as a live-in porter for a block of flats managed by Bath Hill Court (BHC). In 2014, he started tribunal proceedings for unlawful deduction of wages against the company, claiming that under the National Minimum Wage he was entitled to be paid for the periods when he was “on-call” at night.
Relevant law
Section 9 of the Limitation Act 1980 states that claims for sums of money are limited to six years from “the date on which the cause of action accrued”.
However, section 39 of the Limitation Act states that section 9 does not apply to a claim “for which a period of limitation is prescribed by or under any other enactment”.
Section 23(2) of the Employment Rights Act (ERA) 1996 sets a three-month time limit from the last deduction or payment in a claim involving a series of deductions.
Tribunal and EAT decisions
The tribunal agreed with Mr Coletta, but at a subsequent remedies hearing, it held that under section 9 of the Limitation Act, his award could only be backdated to six years prior to the start of proceedings and not the full 15 years that he claimed.
He appealed successfully to the EAT (weekly LELR 574) on the basis that the provisions of the 1980 Limitation Act were disapplied by section 39 since the “period of limitation” of six years was prescribed by section 23 of the ERA.
Decision by Court of Appeal
The question for the Court of Appeal was whether the three-month time limit set down in section 23 of the ERA could be described as a “period of limitation” for the purposes of section 39 of the Limitation Act. If so, section 9 would not apply.
The Court of Appeal held that it could, as “a period of limitation” simply meant a period following the expiry of which a person with a legal right was unable to assert that right in legal proceedings. In other words, as section 23 stipulated a time period within which claimants had to bring their claim, it came within the remit of section 39 such that the period of limitation set out in section 9 did not apply.
Even though that meant that different limitation periods would apply in different jurisdictions, the Court held that this was not unusual. For instance, a worker could bring a contractual claim in the ordinary civil courts (with a limitation period of six years) or in the tribunal under the 1996 Act (with a limitation period of three months from the relevant deduction or the last in the series of deductions). Although this might give rise to difficulties for employers (say, in terms of retaining records) that was no reason not to adopt the clear legal construction of section 39.
As such, the Court concluded that section 39 was engaged meaning that the provisions of the Limitation Act did not apply in this case and Mr Coletta could claim for the full 15 years of his employment. However, this conclusion would not apply to later claims due to the introduction of the Deductions from Wages (Limitation) Regulations 2014 which brought in a two-year limit.
Comment
The judgment is significant for historic holiday pay and sleep in cases pre-dating 1 July 2015, but is not applicable to unlawful deduction from wages claims presented after that date.