Appeal No. EAT/46/01

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 23 March 2001

Before
MR RECORDER BURKE QC
MR H SINGH
MRS R A VICKERS

CTC AVIATION GROUP PLC	APPELLANT

MR A J FOAN	RESPONDENT

Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING 

Revised

	APPEARANCES

For the Appellant	MR PETER WARD
(of Counsel)
Instructed by:
Messrs Levenes
Solicitors
125-133 Camden High Street
London NW1 7JR	

MR RECORDER BURKE QC

1	This is an appeal by the employers CTC Aviation PLC, against the Decision of the Industrial Tribunal at Southampton, by the Tribunal Chairman considering the matter alone, that the Tribunal had no jurisdiction to entertain a counterclaim by the employers in the proceedings before the Tribunal, which were commenced by the employee, claiming that he had been unfairly constructively dismissed.  

2	No application for Extended Reasons has been made; if it was intended to appeal to this Appeal Tribunal, the seeking of Extended Reasons was a step which those acting for the employers ought to have taken; but Counsel, Mr Ward, on behalf of the employers, has asked us to proceed on the basis of the Summary Reasons which appear in the Tribunal’s letter, dated 2 November 2000, in which it communicated the Decision; and because it would, in reality, have been difficult to enlarge on the reasons set out in that letter we think it right to proceed on the basis of that letter, as containing the Summary Reasons, without Extended Reasons.  

3	It is not necessary to go into the nature of the claim or counterclaim in detail in particular because neither has yet been heard on the merits.  In brief terms, the employee was employed by the employers as a pilot with training responsibilities.  He asserts that he was constructively dismissed.  In a lengthy set of particulars to his Originating Application, he asserts, in clear terms, that the employers were in fundamental breach of the contract of employment, entitling him to treat the contract as repudiated and to resign.  

4	The employers, on receipt of that Originating Application put in a Notice of Appearance in which they, in turn, responded in detail to the employee’s claim, and set out their grounds of resistance to it.  

5	At the conclusion of the Notice of Appearance, the employers added a counterclaim.  They claimed to have suffered inconvenience and costs as a result of the employee’s leaving without notice, and as a result, they wished to counterclaim for three months’ salary.  

6	This is not the occasion for anybody to adjudicate upon the merit of that counterclaim, although one must regard the way in which it is quantified with considerable hesitation, to put it at the lowest.  What we are concerned with is whether the Tribunal, in this case, had jurisdiction to hear the counterclaim or rather, to put it more accurately, because this is only a preliminary hearing of the appeal, whether it is arguable that the Tribunal erred in deciding that it did not have such jurisdiction. 

7	It is necessary to return to the Originating Application.  It is not argued by Mr Ward, on behalf of the employers, that there is in that Originating Application, a separate contract claim from the unfair dismissal claim; and it is of course, quite plain from the document itself that there is no such separate claim.  Whereas it has become increasingly customary, in many unfair dismissal claims, for the Applicant also to make a specific contract claim, that was not done in this case.  What Mr Ward says, on behalf of the employers, is that a constructive dismissal claim necessarily involves, if it is to succeed, the establishment by the employee that the employer has committed a fundamental breach of contract.  

8	In his skeleton argument, Mr Ward refers to numerous authorities to support that proposition, but we have indicated to him that it is a proposition which this division of this Tribunal, and we suspect any division of this Tribunal, is content to accept without citation of authority.  

9	Mr Ward goes on to say that because a constructive dismissal claim necessarily includes a claim that the employer was in breach of contract, then, for the purposes of considering whether a counterclaim can be entertained by the Tribunal, it should be treated as a breach of contract claim, falling within the terms of the Employment Tribunals Extension of Jurisdiction Order 1994 or should be treated as including such a claim.  

10	We do not regard these points as arguable.  When an employee claims unfair dismissal, he is not claiming damages or compensation for breach of contract; he is claiming one or more of the statutory remedies available under Part X Chapter II of the Employment Rights Act 1996 reinstatement, re-engagement, compensation or otherwise.  He makes that claim not under the Employment Tribunal’s Extension of Jurisdiction Order but by reason of the right not to be unfairly dismissed, now couched in section 94 of the Employment Rights Act and under section 111 of that Act which provides that a complaint of unfair dismissal may be presented to an Employment Tribunal.  

11	Paragraph 4 of the Employment Tribunal’s Extension of Jurisdiction Order 1994 entitles an employer to make a claim to an Employment Tribunal for the recovery of damages or any other sum if four conditions are satisfied.

12	The first condition is that the claim is one to which section 3(2) of the Employment Tribunal Act 1996 applies; and we will return to that in a moment.The second is that the claim is not one to which Article 5 applies, and the counterclaim here is not one to which Article 5 applies.  The third is that the claim arises or is outstanding on the termination of the employment of the employee, against whom it is made, and this counterclaim is such a claim.  Fourthly, proceedings in respect of that employee have been brought before an Employment Tribunal by virtue of this Order.  

13	We return to whether the counterclaim is one to which section 3(2) of the Employment Tribunals Act 1996 applies.  That section applies to the claim for damages for breach of a contract of employment by subsection 2(a) of that section; and therefore the counterclaim satisfies that requirement.  

14	The vital question for the purpose of this preliminary hearing of the employer’s appeal, as Mr Ward immediately accepts, is whether or not the employee’s claim has been brought before the Tribunal, “by virtue of this Order” i.e the fourth of the conditions we have set out is satisfied.  What claims may be brought before the Tribunal by virtue of this Order?  The answer to that question is to be found in Paragraph 3 of the 1994 Order, which requires that the employee’s claim should be one to which section 3(2) of the 1996 Employment Tribunals Act applies; and that claim must be:
 “(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”

It is not suggested that the employee’s claim here comes under either of the latter two of those three alternatives.  Thus the question is, is the employee’s claim for unfair constructive dismissal a claim for damages for breach of a contract of employment or other contract connected with employment.  

15	For the reasons which we have already set out, it is quite clear to us that the employee’s claim is not a claim for damages for breach of a contract of employment, or other contract connected with employment, although, in order to establish the unfair dismissal claim, it is necessary for him to establish a breach of contract.  The fact that it is necessary for the employee to establish breach of contract as a necessary pre-requisite to establishing her unfair dismissal claim does not mean that this claim is one for damages for breach of contract; it is not.  The two are distinct and different claims.

16	Mr Ward has asked us to consider and we have considered the Decision of this Employment Appeal Tribunal in the case of Patel v RCMS Ltd  [1999] IRLR 161 in which this Employment Appeal Tribunal set out the manifest advantages of an employer’s counterclaim, arising out of the termination of the employment of the employee, being dealt with by a Tribunal which is seized of matters relating to the termination of the employment, rather than having to go if pursued at all, before some other Court; and we readily understand those advantages; but that was a case in which the employee had made a contract claim, to which the employers responded by counterclaim, but in which the employee’s claim could not proceed because it was out of time.  The Employment Appeal Tribunal decided in that case that there was a contract claim falling within the 1994 Order and thus there was jurisdiction to hear the counterclaim, even though the claim itself was out of time.  

17	However the situation in this appeal is different.  In this case there never has been a contract claim within the 1994 Order; and for that reason, in our judgment, the Tribunal cannot have jurisdiction to hear a counterclaim under Article 4 of the Order; and thus this appeal must be dismissed.