Does the six year limitation period for breach of contract apply in tribunals?

The law: Under the Employment Tribunals Extension of Jurisdiction Order 1994 (“the Order”) an employment tribunal may hear a breach of contract claim from an employee if it is one that ‘a court in England and Wales would under the law for the time being in force have jurisdiction to hear and determine’ and it arises or is outstanding on termination of the employee’s employment.

There are some exceptions to this, for example, breach of contract claims based on intellectual property terms can only be heard in the civil courts.

Save for limited exceptions, the Order states that claims for breach of contract in the employment tribunal must be presented:

• Within three months beginning with the effective date of termination of the contract giving rise to the claim, or
• Where there is no effective date of termination, within three months beginning with the last day on which the employee worked in the employment which has terminated

The law governing breach of contract claims in the civil courts states that a breach of contract claim must be bought within six years from the date of the breach.

The cases: Two years ago the employment tribunal in Taylor v Central Manchester University Hospitals NHS Foundation Trust held that a breach of contract claim in an employment tribunal had to be bought within the timeframe specified in the Order AND within the six year restriction applied in civil cases.  Tribunals would not, therefore, be permitted to hear claims relating to breaches more than six years old.  The tribunal felt that this was in keeping with the purpose of the Order (to allow tribunals to hear breach of contract claims) and with the requirement that such claims could only be heard if a court in England and Wales would have jurisdiction to hear them.  The tribunal referred to Parliamentary debates from the time which it felt made clear that Parliament’s intention was to confer concurrent rights on the tribunals and not to extend the rights of employees.

However, a different employment tribunal in Grisanti v NBC News Worldwide Inc has recently declined to follow this decision ruling that the six year limit does not apply in employment tribunal claims.  It felt that applying this limit may prevent employees from bringing claims under the Order as employees are unable to commence proceedings until their employment has ended by which time the six year limit may have been reached.  It said this would be an odd result given that the purpose of the Order was to ‘extend’ jurisdiction.  In relation to the comment made in Taylor that claims could only be bought if they were within the jurisdiction of the courts, the tribunal felt that the claims would remain within the courts’ jurisdiction even after the six year limit.  It said that the six year limit is a ‘procedural issue’ for the courts not a jurisdictional one and that there are also some narrow exceptions to its application, both of which mean that the courts have jurisdiction to hear breach of contract claims outside of the six year limit.

The difference between the cases relates largely to different understandings of Parliament’s intention when enacting the Order – was it simply to extend tribunals’ jurisdiction to allow them to hear breach of contract claims or was it to go a step further in giving tribunals greater powers than the courts in this regard?  The tribunal in Grisanti suggested that it was the latter and that the Order can, therefore, be more appropriate in employment relationships where employees are ‘notoriously and understandably unwilling to litigate whilst still employed’ and problems do not always come to light until the end of employment.

Both judgments certainly raise some interesting and persuasive points but unfortunately both were only first instance decisions and as such do not bind other tribunals.  Until there is a binding appellate decision the law will remain unclear on this point.