Scally v Southern Health and Social Services Board
House of Lords
Citations:  3 WLR 778;  1 AC 294.
The claimants were employees of Northern Irish health boards. Their employment contracts required them to contribute to a statutory superannuation scheme. These payments entitled them to pension benefits after 40 years of service. If the employee had joined the scheme too late to work the full 40 years, they could ‘purchase’ additional years on favourable terms to ensure they received the full amount. However, this power was only usable within 12 months of the employee beginning employment. Afterwards, they could only purchase additional years on much less favourable terms. These terms were negotiated for the employees by their representative unions.
The claimants had all begun working too late, and would need to purchase additional years to get the full pension entitlement. The defendants, their employers, had failed to advice them of this. The claimants sued the defendants for breach of contract, negligence, and breach of statutory duty.
- Did the Contracts of Employment and Redundancy Payments Act (Northern Ireland) 1965 create a private cause of action for the failure to properly advise employees?
- Were the defendants liable in negligence?
- Were the defendants in breach of contract?
The House of Lords held:
- The statute stipulated the consequences of breach – a reference to an employment tribunal. As such, it did not create a private cause of action.
- The tort of negligence was not applicable here. This was because if there was no contractual duty to inform, it would be difficult to argue for a free-standing tortious duty to inform.
- The defendant was liable for breach of contract. The contract imposed an implied obligation on the defendant to take reasonable steps to publicise the term. They had breached this by failing to take any steps.
This Case is Authority For…
An employer has a duty to take reasonable steps to notify employees of a contract term if:
- The contract was negotiated between employers and representative groups;
- The contract includes a term to benefit the employee; and
- The employee could not be expected to be aware of the term unless it was brought to his attention.
Lord Bridge noted that this term is implied into the contract as a matter of law, not fact. He noted that the decision to imply a term in law involves wider considerations than the decision to imply a term in fact (which is solely concerned with discovering party intentions).
If a statute provides a remedy for a breach of its provisions, it is unlikely that the statute allows for a private cause of action for breach of statutory duty.