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Unlawful Deductions: Construing Complex Contracts

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Can a tribunal construe contractual complex provisions when hearing a claim for unlawful deduction from wages?

Yes, held the EAT in Nexus v Anderson, dismissing an appeal in an area of conflicting authorities.

Nexus, which runs the Tyne and Wear Metro, introduced a purportedly 'cost-neutral' pay rise at a time of austerity, consolidating bonuses into salary. This had a side-effect of creating a dispute over the proper calculation of shift allowances, and claims for deductions from wages. Nexus argued that the tribunal had no jurisdiction to hear the claims, relying on certain authorities indicating that an tribunal cannot construe contractual provisions when considering 'wages' claims. The EAT noted that it did "not see how one can avoid construction of contractual terms in deciding whether a deduction is unauthorised" and followed a line of Court of Appeal authorities where wages claims were determined by contractual construction.

The EAT also noted that whilst 'wages' claims had been regarded as summary in nature in previous case law, Employment Judges now deal with complicated matters and there was no reason for contractual construction not to be considered by them.

The judgment contains an extensive review of the law in this area, has guidance on contractual construction, and compares the different origins and aims of Part II ERA 'wages' claims and Part I ERA references.

Thanks to Ed McFarlane of Deminos HR for preparing this case summary.