Southern Cross Healthcare Co Ltd v Perkins and ors
If a term is missing from a statement of terms and conditions or if it includes two contradictory terms, tribunals have the power to stipulate what the law should be or to decide the correct term. In Southern Cross Healthcare Co Ltd v Perkins and ors, the Court of Appeal has confirmed that tribunals cannot construe (interpret) contractual terms if the disputed term is not clear.
The claimants’ union, the GMB, instructed Thompsons to act on their behalf.
Basic facts
Mr Perkins and two colleagues started working for Ashbourne Homes Limited on different dates between May 1994 and February 1995. As required under section 1 of the 1996 Employment Rights Act (ERA), they were given a statement of terms and conditions (also called a statement of particulars) setting out their annual holiday entitlement of four working weeks with an uplift for long service of up to five days.
In 2006 the business was transferred to Southern Cross under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). It confirmed that their annual leave entitlement was four weeks plus their long service leave of five days, which was “frozen and protected”.
Following an increase in statutory leave under the 1998 Working Time Regulations in 2008, Southern Cross confirmed that annual leave for all employees had increased to 28 days. Mr Perkins and his colleagues claimed that they were entitled to the five days’ long service uplift in addition to the increased holiday entitlement.
Tribunal and EAT decisions
And the tribunal agreed saying that, as the long service entitlement had transferred across under TUPE, it constituted a continuing breach of contract “not to observe that right”. The claimants were therefore entitled to 33 days’ paid holiday.
The EAT agreed, saying that the tribunal had jurisdiction under section 11 ERA to “determine what particulars ought to have been included or referred to in a statement so as to comply with the requirements of the section concerned”, and had correctly construed the claimants’ contractual entitlement.
Court of Appeal decision
The Court of Appeal said that although tribunals had jurisdiction in relation to some issues concerning written statements of particulars under section 11, the question here was whether they had the power to “construe” or define contractual terms and conditions.
Relying on the case of Mears v Safecar Security Limited, the Court said that tribunals did not have the power under section 11 to interpret the agreement, nor to amend it.
Instead, they could “only amend the statutory statement to ensure that it corresponds with the agreement." The reference in section 11 about "what particulars ought to have been included", was not, therefore “an invitation to judicial creativity”.
The Court confirmed that tribunals could only consider breach of contract claims once the worker’s contract had come to an end. To do otherwise would open the door to a multitude of contractual-based cases that was “totally at variance with the consistent reluctance to enlarge the breach of contract jurisdiction of employment tribunals to embrace workplace disputes during the currency of a contract of employment. That might be regrettable but it was, as regards both law and policy, well settled”.
The Court of Appeal therefore concluded that the only forum with jurisdiction to settle the issue in question was the ordinary civil court.