Southern Cross Healthcare Co Ltd v Perkins & Others

Employment Tribunals are attracting much criticism at present and it looks as if government is preparing a shake­ up, which will be directed at cutting down the ease with which claims can be made. There are however other changes which should be made which would reduce complexity and one is flagged up in the decision of the Court of Appeal in Southern Cross Healthcare Co Ltd v Perkins & Others [2010] EWCA Civ 1422.

What has to be remembered about tribunals is that they have no power to do anything beyond the range of actions permitted by the statutes that give them jurisdiction. This limitation can and does get overlooked.

In this case the complaint made by three employees concerned their entitlement to holiday. A previous employer had given them 20 days with additional days for long service. This entitlement transferred to the respondents on a TUPE transfer and they confirmed the holiday entitlement as 4 weeks plus 5 days long service leave “which is frozen and preserved.” The position was subsequently complicated in 2007 when amendments were made to the Working Time Regulations, which provided for additional days as minimum holiday. A dispute then arose whether the long service leave was contained within the 28 days provided by the new regulations or whether they were additional to that period. The claim for the employees was that they were entitled to maintain the differential they had over other employees who did not have their length of service.

The employees applied to a tribunal to resolve the dispute. They relied on the provisions in the in the Employment Rights Act 1996 entitling them to particulars of employment as these rules require inclusion of any terms relating to holidays. The tribunal decided that the employees were entitled to the 5 days in addition to the 28 days minimum. To reach this conclusion the tribunal applied the TUPE regulations and also construed the meaning of the words “frozen and preserved”. The Employment Appeal Tribunal made a similar decision. The employers remained dissatisfied and appealed again.

The decision of the Court of Appeal was that both the Tribunal and the Appeal Tribunal had reached an improper conclusion. The error had been that they had acted on the assumption that employment tribunals had the power to construe the contract when this was not what the statute empowered them to do. They can determine whether an agreement on terms exists and then require that term to be included in the statement. What they are not permitted to do is to interpret the agreement or to amend the agreement. So in this case it was clear that the words “frozen and preserved “ were properly included but exactly what they implied or were originally intended to mean had to be decided not by a tribunal but in a civil court.

For this reason the Court of Appeal held that the tribunal had no jurisdiction to decide as it had and therefore the employers succeeded with their appeal. That of course may not be the end of the story as nothing prevents the employees making an application to the County Court, which undoubtedly has the power to interpret a contractual term.

No one considering this saga could conclude that it is very rational. Even the Court of Appeal said it was ‘regrettable’. A lot of money and time has been wasted because of some detailed rules, which make little sense. Since 1971 the statutory rules have permitted government to provide that tribunals might determine contractual issues. In 1994 regulations were passed allowing tribunals to determine contractual claims arising at the end of but not during employment. Why this is the rule is unclear. When the review of tribunals takes place shortly it is to be hoped that this anomaly will be addressed.

First published in The Grapevine Magazine

February 2011

Further Information

Please contact Sejal Raja, sejal.raja@rlb-law.com


Disclaimer

This briefing is for guidance purposes only. RadcliffesLeBrasseur accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.