Southern Cross Healthcare Co Ltd v Perkins

The Court of Appeal held that employment tribunals do not have jurisdiction under sections 11 and 12 of the Employment Rights Act 1996 to construe or interpret contractual terms contained in or referred to in written statements of particulars. Tribunals may determine what particulars ought to have been included in a written statement but may not rewrite, amend or judicially construe the substantive terms of a contract; that function remains for the ordinary civil courts. The decision applied a line of authority (including Leighton, Mears and Eagland) and statutory analysis of sections 1 and 4 (mandatory and non‑mandatory particulars) and sections 11 and 12 (remedies and tribunal powers).

The appeal arose from respondents' claims that a pre‑transfer long‑service holiday uplift had been preserved after a TUPE transfer and after statutory increases in holiday entitlement under the Working Time Regulations; the employment tribunal had found for the respondents on construction of the employer's written statement but the Court of Appeal held the tribunal and the Employment Appeal Tribunal lacked jurisdiction to make that contractual construction and quashed their decisions.

Background and parties: The respondents were employees of Ashbourne whose contracts provided a basic holiday entitlement plus a long‑service uplift (five days). After Southern Cross took over the business (a TUPE transfer) it issued written statements and amendment documents describing holiday entitlement as four weeks plus the frozen/protected five days long‑service uplift. Subsequent amendments to the Working Time Regulations increased statutory annual leave (regulations 13 and 13A), and Southern Cross issued memoranda adjusting entitlement in light of the statutory changes.

Nature of the claim: The respondents applied to the employment tribunal asserting that their contractual entitlement included five days long‑service leave in addition to the new statutory entitlement (effectively claiming 33 days), and they sought a determination in the tribunal process of their written particulars and contractual entitlement. The employment tribunal found for the respondents; the Employment Appeal Tribunal upheld that decision (UKEAT/0276/09/JOJ).

Issues before the Court:

• Whether employment tribunals have jurisdiction under sections 11 and 12 of the Employment Rights Act 1996 to construe contractual terms contained in or referred to in written statements of particulars.
• Whether, on the facts, the respondents retained a contractual long‑service uplift on top of the increased statutory entitlement.
• An alternative contention that a section 4 failure to provide updated particulars after the 1 April 2008 statutory change gave rise to a tribunal reference.

Court's reasoning: The Court analysed the statutory scheme of the Employment Rights Act 1996 (particularly sections 1, 4, 11 and 12) and relevant authorities (Leighton, Mears, Eagland and others). It concluded that while tribunals may determine what particulars ought to have been included in a written statement they do not have power to interpret or amend the parties' contract; interpretation and construction of contract terms is a matter for the ordinary civil courts. The Court also rejected the respondents' alternative argument based on a late section 4 complaint because (a) the point had not been raised in earlier proceedings and it would be inappropriate for the Court of Appeal to act as first instance under section 11, and (b) the Working Time Regulations entitlements are statutory and, where an agreement already provided the relevant leave, regulation 13A did not itself create a contractual change requiring a section 4 statement.

Disposition: The Court allowed the appeal, quashed the decisions of the employment tribunal and the Employment Appeal Tribunal for want of jurisdiction, and indicated that the substantive contractual dispute remains for determination in the ordinary civil courts.

Appeal allowed. The Court held that employment tribunals lack jurisdiction under sections 11 and 12 of the Employment Rights Act 1996 to construe contractual terms contained in or referred to in written statements of particulars; tribunals may determine what particulars ought to have been included but cannot interpret or rewrite contract terms, which is a matter for the ordinary civil courts. The employment tribunal and the Employment Appeal Tribunal were therefore wrong to resolve the contractual construction and their decisions were quashed for want of jurisdiction.

Employment Tribunal decision in favour of the respondents (finding five days long‑service holiday in addition to statutory leave); appeal to the Employment Appeal Tribunal (UKEAT/0276/09/JOJ) which upheld the tribunal's decision; further appeal to the Court of Appeal ([2010] EWCA Civ 1442) which allowed the appeal and quashed the decisions for want of jurisdiction.