Double Jeopardy - Breach of Contract

The Employment Tribunal has jurisdiction to hear breach of contract claims and can award damages of up to a maximum of £25,000.  A question which has arisen in case law in recent times is whether an individual whose breach of contract claim is assessed at more than £25,000 damages in an Employment Tribunal can recover the excess over £25,000 in a claim brought in the civil courts.
 

14th July 2006

The Employment Tribunal has jurisdiction to hear breach of contract claims and can award damages of up to a maximum of £25,000.  A question which has arisen in case law in recent times is whether an individual whose breach of contract claim is assessed at more than £25,000 damages in an Employment Tribunal can recover the excess over £25,000 in a claim brought in the civil courts.
 
The Court of Appeal has now provided welcome clarity in this area in the case of Fraser v Hlmad Limited which concerned a claim for unfair dismissal and breach of contract (wrongful dismissal) which was brought by Mr Fraser in the Employment Tribunal.  The Employment Tribunal assessed Mr Fraser's claim for damages at just over £55,000 and awarded the statutory maximum of £25,000.  Mr Fraser then sought to recover the excess of £55,000 in the High Court. 
 
The Court of Appeal held on an appeal brought by Mr Fraser against the High Court's decision to strike out his claim that the tribunal's judgement in the breach of contract claim merged with Mr Fraser's original cause of action.  Therefore, Mr Fraser's original cause of action was extinguished and he could not pursue it further in the civil courts for the excess above the statutory cap awarded in the Employment Tribunal.  This was notwithstanding Mr Fraser had sought to reserve his right to bring a claim in the High Court in his ET1. 
 
Mummery LJ and Moore-Bick LJ both recommended in their judgement that the Tribunal service make it clear in their publications that claimants cannot recover the excess over £25,000 from a breach of contract claim in the civil courts and that Parliament consider raising the cap over £25,000.