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Breach of contract claims in the employment tribunal are not limited to six year time limit (five years in Scotland)

In the case of Grisanti v NBC News Worldwide an employment tribunal has ruled that the six year time limit applicable to breach of contract actions in the civil courts (five years in Scotland) does not apply to breach of contract claims brought in the employment tribunal.

This judgement is in direct conflict with an earlier tribunal decision that the six year limit did apply. With no appellate decision on the issue there is now uncertainty over whether the limits do apply in tribunal cases.

Background facts

Ms Grisanti sought to claim her pension at the end of her employment with NBC. When she did HMRC told her that there was a six year period between 1996 and 2003 where no contributions had been made. These contributions had been deducted from her pay by NBC. Whilst an investigation into the issue was ongoing Ms Gisanti lodged claims against NBC to protect her position. One of these claims was for breach of contract under the Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994. There are comparable provisions in Scotland.

NBC argued that the breach of contract claim was out of time because s.5 of the Limitation Act 1980 held that any breach of contract claim has a six year time limit (five years in Scotland). Ms Grisanti said that this limit was not incorporated in the 1994 Order and it should not be implied as you can only raise a breach of contract claim in the employment tribunal on termination of employment. There is no opportunity to raise such a claim during employment and therefore an employee could lose the right to bring a claim if the six year time limit was imposed.

Decision

The tribunal agreed and confirmed that the six year time limit does not apply to claims brought under the 1994 Order.

Practical impact

This decision creates uncertainty and gives rise to a two tier system where breach of contract claims in the courts can only go back five or six years whereas the same claim brought in an employment tribunal is unlimited. Employers could face historic claims going back a great number of years where the passage of time means that they have little or no evidence with which to defend the claims.

Further, this decision could lead to a challenge to the limitation on arrears of pay available to employees who bring equal pay claims under the Equality Act. At the moment the five or six year time limit applies to such claims. However the European Court has established that whilst there is no provision in EU law which prohibits the imposition of time limits on arrears of pay, such time limits must not be any less favourable than those governing similar domestic rights. There could be scope for challenge to the time limit on equal pay claims if it can be shown that the equivalent breach of contract claim in the employment tribunal (a strictly domestic right or claim) has a more favourable time limit (i.e. none). This uncertainty will remain until we have an appellate authority.

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Legal news, views, trends and tools for HR Professionals. Stay ahead. Go further