Southern Cross Healthcare Co Ltd v Perkins & Ors

Employment tribunals have only the statutory jurisdiction conferred on them. Under the Employment Rights Act 1996, they may identify contractual terms in order to ensure that a statutory written statement records them accurately. They may not construe disputed written contractual terms in order to decide the parties’ competing contractual rights. That task belongs to the ordinary civil courts.

The written-statement jurisdiction does not permit the creation, rewriting or interpretation of terms already given. A statutory increase in minimum holiday leave does not itself create a contractual change requiring a fresh statement where an agreed entitlement already provides the prescribed leave and the relevant statutory additional-leave provision does not apply.

The respondents were long-serving employees whose employment transferred to the appellant under TUPE. They claimed that a document describing five days’ long-service holiday leave as “frozen and protected” entitled them to retain those days in addition to the later statutory entitlement of 28 days’ annual leave.

The Employment Tribunal held that they were entitled to 33 days’ paid leave. The Employment Appeal Tribunal upheld that result, holding that the tribunal had jurisdiction and construing the document in the employees’ favour: UKEAT/0276/09/JOJ.

The employer appealed. The central issue was whether an employment tribunal, exercising its written-statement jurisdiction under the Employment Rights Act 1996, could construe disputed contractual holiday terms.

1. Appeal allowed. The court quashed the decisions of the Employment Tribunal and the Employment Appeal Tribunal for want of jurisdiction. The tribunal and the EAT had decided the dispute by construing the meaning of the 5 July 2006 document. That was a contractual construction issue for the ordinary civil courts, not an issue within the tribunal’s statutory written-statement jurisdiction.

2. Sections 11 and 12 of the Employment Rights Act 1996 permit a tribunal to determine what particulars ought to appear in a statutory statement and to amend the statement accordingly. They may require the tribunal to identify the actual contractual terms so that the statement corresponds with them. They do not confer a power to interpret disputed particulars already given, rewrite a binding contract, or create contractual terms.

3. The court treated the restrictive line of authority as established and correct. It followed the proposition in Mears v Safecar Security Limited [1982] 1RLR 83 that the statutory provision gives no power to interpret given particulars. It also relied on Leighton v Construction Industry Training Board [1978] ICR 577 and Eagland v British Telecommunications PLC [1993] ICR 644. The suggested power to invent terms, expressed obiter in Mears, had been displaced by Eagland.

4. The jurisdiction objection was properly permitted although it had not been raised in the Employment Tribunal. The court applied Lipscombe v Forestry Commission [2007] EWCA Civ 428, recognising that a less rigorous approach may be appropriate for a jurisdiction point.

5. The employees’ new alternative case also failed. The Court of Appeal could not act as a tribunal of first instance on an unadvanced section 11 claim. In any event, the increased leave under the Working Time Regulations 1998 was statutory. As the agreed 28-day entitlement already provided the prescribed leave, regulation 26A meant that regulation 13A did not apply and there was no contractual change requiring a statement under section 4.

The underlying contractual dispute remained justiciable in the ordinary civil courts.

• Court of Appeal (Civil Division) — Allowed the employer’s appeal and quashed the lower decisions for want of jurisdiction: [2010] EWCA Civ 1442.
• Employment Appeal Tribunal — Held that the Employment Tribunal had jurisdiction, permitted the claims to proceed despite pleading deficiencies, and upheld the contractual construction favourable to the employees: UKEAT/0276/09/JOJ.
• Employment Tribunal — Held that the employees’ contracts entitled them to five days’ long-service holiday in addition to the statutory minimum, resulting in 33 days’ paid holiday.