Stenhouse & Ors v. First Edinburgh Ltd

Factual and Procedural Background

This appeal arises from a decision of the Employment Tribunal sitting in Edinburgh concerning whether the contracts of employment of certain employees included a redundancy agreement that would have entitled them to enhanced redundancy payments. The employees were made redundant following the closure of the paint shop at the respondents' premises in Dalkeith. The Tribunal concluded that the redundancy agreement was not incorporated into the employees' contracts, and thus dismissed their applications for enhanced redundancy payments.

Legal Issues Presented

1. Whether the terms of the alleged redundancy agreement were incorporated into the employees' contracts of employment by implication through custom and practice.
2. Whether the Employment Tribunal erred in law or misdirected itself in concluding that the evidence did not support incorporation of the redundancy agreement into the contracts.
3. The applicability and relevance of prior voluntary redundancy schemes and whether they conflicted with the alleged agreement.

Arguments of the Parties

Appellant's Arguments

• The respondents' witness confirmed that Clause 5 of the redundancy procedure agreement had been applied in the past.
• Evidence from a previous Tribunal decision supported the requirement to seek volunteers before compulsory redundancy.
• A union representative testified that volunteers were initially sought in previous redundancy situations, following the relevant clauses of the agreement.
• Respondents' policy documents confirmed that compulsory redundancy would only be used if insufficient volunteers came forward.
• A letter from the respondents to the union representative confirmed that redundancies were to be conducted first by volunteers, then by selection criteria.
• No evidence was presented contradicting the inference that the redundancy procedure agreement was incorporated into individual employment contracts.

Respondent's Arguments

• The appellants failed to prove the existence of a custom and practice sufficient to incorporate the redundancy agreement into the contracts.
• The agreement was of doubtful status, being undated, described as a draft, and incomplete.
• Other voluntary redundancy schemes existed, which were inconsistent with the alleged agreement.
• Even if a voluntary scheme existed, the employer was not obliged to accept applications under it.
• The past use of voluntary schemes was irrelevant because the current situation involved compulsory redundancy due to closure, which was distinct from reductions covered by the agreement.

Table of Precedents Cited

Court's Reasoning and Analysis

The court reviewed the evidence and submissions, focusing on whether the redundancy agreement was incorporated into the employees' contracts by implication through custom and practice. It noted the Tribunal's finding that the evidence was insufficiently detailed and specific to establish such incorporation. The court acknowledged the existence of other voluntary redundancy schemes that conflicted with the alleged agreement, and the undated, draft status of the agreement itself. Although the procedures adopted by the employer were found to be unsatisfactory and might have led to perceptions of poor treatment of employees, the court emphasized that it was not its role to re-interpret the evidence. The legal standard requires that any implied term based on custom and practice must be clear and obvious to both parties. The court concluded that the appellants did not meet this threshold and that the Tribunal's decision was within its proper discretion and not perverse.

Holding and Implications

The appeal was REFUSED. The court upheld the Employment Tribunal's decision that the redundancy agreement was not incorporated into the employees' contracts of employment. Consequently, the respondents were not in breach of contract and were not liable for enhanced redundancy payments. This decision directly affects the parties by denying the appellants' claim but does not establish any new legal precedent.