Coors Brewers Ltd v Adcock and others: [2007] EWCA Civ 19

CA: Chadwick, Wall and Wilson LJJ: 24 January 2007

The claimants were originally employed by a company belonging to a group which operated a profit share scheme entitling employees to the allocation of shares based on a proportion of annual profits assigned to the scheme each year. The benefit to employees worked out at between 4 and 5% of each employee's annual wage. In August 2000 the company was acquired by another company, and the claimants ceased to be eligible for the profit share scheme but were promised a replacement scheme that would provide a payment of equivalent value. In February 2002 the business was acquired by the respondent employers, who announced a new and "enhanced discretionary incentive scheme" whereby a percentage incentive payment would be paid depending on growth performance of its operation, and payments were made to employees at the rate of 4.8% of their wages for 2002, but no incentive payments were made for 2003, following a failure to meet growth targets. The claimants brought proceedings in the employment tribunal under Part II of the Employment Rights Act 1996 claiming that the failure to make any discretionary payment was an unlawful deduction from their gross income contrary to section 13. The tribunal upheld the claims and made a declaratory order that for the year 2003 the employers had unlawfully deducted 4% of the claimants' gross income. The Employment Appeal Tribunal allowed an appeal by the employers on the ground that the tribunal had failed to give appropriate reasons for its conclusions and remitted the matter for rehearing, but it rejected a submission by the employers that the claims could only be for unquantified damages for breach of contract, which did not fall within Part II of the Act and which the tribunal had no jurisdiction to hear by virtue of article 3(c) of the Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994.

The employer appealed.

The Court of Appeal held:
The claimants' case at its highest was that the respondent employer was under an obligation to put in place a scheme which, properly and fairly operated, was capable of replicating the benefits of the original scheme. If the 2003 scheme, as operated, did not fulfil that obligation, the claimants would have suffered a loss but the amount of that loss was unquantified and the claimants required the tribunal to quantify it. Accordingly, the claim was one for damages for breach of contract and not a quantifiable claim for unlawful deduction of wages for the purposes of section 13 of the Employment Rights Act 1996, and the employment tribunal did not have jurisdiction.

The appeal was allowed.

Appearances: Thomas Linden QC (Berwin Leighton Paisner LLP) for the employer; Dijen Basu (Rowley Ashworth, Birmingham) for the claimants.