Factual and Procedural Background
The Plaintiff brought a claim against the Defendant for breach of contract arising from dismissal by redundancy effective 9 November 2018. The Plaintiff did not contest the fairness of the dismissal process or selection but asserted a contractual entitlement to an enhanced redundancy payment based on two collective agreements incorporated into his contract of employment. The Defendant denied any entitlement to enhanced redundancy payments and contended that two contract variations in January and June 2018 had removed any such entitlement. The dispute involved the interpretation and incorporation of collective agreements into the Plaintiff's contract, the effect of employment transfers under TUPE regulations, and whether contractual variations were valid.
The Plaintiff's employment history included starting with Company A in 1978 as a manual worker, transferring to Company B in 1989 under TUPE, and subsequently transferring to the Defendant in 2018. Collective agreements between the Plaintiff’s former employers and the trade union were alleged to provide enhanced redundancy payments. The Defendant issued statements of terms and conditions prior to and after the transfer in 2018, which the Plaintiff signed, stating no collective agreements applied. The Plaintiff was made redundant in 2018 and claimed breach of contract for failure to pay the enhanced redundancy payment.
Legal Issues Presented
- Whether the Plaintiff was contractually entitled to the enhanced redundancy payment scheme under the first collective agreement with Company A.
- If so, whether that entitlement was effectively removed or varied prior to the 1989 TUPE transfer to Company B.
- Whether the Plaintiff was contractually entitled to the enhanced redundancy payment scheme under the second collective agreement with Company B.
- If so, whether that entitlement was effectively removed or varied prior to the 2018 TUPE transfer to the Defendant.
- Whether any such contractual entitlement transferred to the Defendant pursuant to TUPE.
- If so, whether that entitlement was effectively removed or varied prior to the Plaintiff’s redundancy in November 2018.
- Whether the Defendant breached the Plaintiff’s contract by failing to pay the enhanced redundancy payment.
- If breach is found, what is the measure of damages to which the Plaintiff is entitled.
Arguments of the Parties
Plaintiff's Arguments
- The Plaintiff asserted that two collective agreements were incorporated into his contract and conferred an entitlement to enhanced redundancy payments.
- He argued that no valid variation removed this entitlement prior to the transfers or redundancy.
- The Plaintiff maintained that the statements of terms issued in 2018 did not intend to vary his contractual rights but merely recorded existing terms.
- He contended that the Defendant was mistaken or unaware of the collective agreements, and thus the contract containing a denial of collective agreements was mistaken and should not deprive him of the enhanced payments.
- The Plaintiff claimed damages for breach of contract based on the amount of enhanced redundancy payments due in addition to statutory redundancy pay.
Defendant's Arguments
- The Defendant denied any contractual entitlement to enhanced redundancy payments under the collective agreements.
- It argued that any such entitlement was lost due to changes in the Plaintiff’s role from manual to administrative work before the 1989 transfer.
- The Defendant relied on the January and June 2018 statements of terms, which stated no collective agreements applied, as valid contract variations removing the entitlement.
- It contended that the June 2018 variation was effective and binding, given the Plaintiff’s signature.
- The Defendant maintained that the contractual terms transferred under TUPE but that no enhanced redundancy entitlement survived to the Defendant.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Marley v Ford Trust Group Ltd [1986] IRLR 369 |
Collective agreements, although unenforceable per se, may be incorporated into individual contracts of employment and thus enforceable. |
The court relied on Marley to confirm that collective agreements can form part of an individual’s contract of employment and be legally binding when incorporated. |
| Alexander v Standard Telephones & Cables Ltd (No 2) [1991] IRLR 286 |
Principles for incorporation of collective agreements into contracts depend on ascertaining contractual intention objectively, considering express incorporation and the aptness of terms. |
The court applied these principles to determine whether the collective agreements were incorporated and which parts were apt to form contractual terms. |
| Sparks v Department for Transport [2016] ICR 695 |
Endorsed the principles from Alexander regarding incorporation of collective agreements into contracts. |
The court cited this case to support the approach to incorporation and contractual intention. |
| Hare Wines v Kaur [2019] IRLR 555 |
Interpretation of TUPE regulation 4(4) and the principle that variations of contract principally due to transfer are void. |
The court used the reasoning in Hare Wines to conclude that contract variations close to transfer, lacking explanation, were principally due to the transfer and thus void under TUPE. |
| Nosworthy v Instinctif Partners Ltd (unreported) |
Employment tribunal jurisdiction to set aside or rewrite contractual provisions in certain circumstances. |
The court noted this case in relation to possible rectification of contracts mistaken in their terms. |
Court's Reasoning and Analysis
The court first established that the first collective agreement was incorporated into the Plaintiff’s contract with Company A to the extent that its terms were apt for incorporation, particularly the enhanced redundancy scheme in Appendix E. The court rejected the Defendant’s argument that the absence of a union list of manual workers excluded the Plaintiff, finding it more likely than not that the Plaintiff was covered given his manual worker status at the relevant time.
However, the court found that by the time of the 1989 transfer to Company B, the Plaintiff had ceased to be a manual worker and thus lost entitlement to the first collective agreement’s enhanced redundancy scheme. The contractual entitlement to enhanced redundancy did not transfer because it no longer existed.
The second collective agreement with Company B was also incorporated into the Plaintiff’s contract to the extent apt, including the enhanced redundancy scheme despite the use of the term "ex gratia," which the court interpreted as a voluntary legal obligation rather than a mere gratuity.
The court found no valid variation removing the enhanced redundancy entitlement prior to the 2018 TUPE transfer to the Defendant. The January 2018 statement of terms was deemed a record of existing terms without intention to vary, and even if it were a variation, it was principally due to the transfer and thus void under TUPE regulation 4(4).
Regarding the June 2018 statement signed by the Plaintiff, which stated no collective agreements applied, the court was provisionally inclined to accept the Plaintiff’s argument that no variation was intended. Alternatively, if it was a variation, the court concluded the principal reason was the transfer, rendering it void under TUPE.
Consequently, the enhanced redundancy entitlement transferred to the Defendant under TUPE. The Defendant breached the contract by paying only statutory redundancy pay and not the enhanced amount. The court interpreted the collective agreement’s wording to mean the enhanced payment was in addition to statutory redundancy pay.
Holding and Implications
The court held in favour of the Plaintiff, finding that the Defendant was in breach of contract for failing to pay the enhanced redundancy payment.
The Defendant is ordered to pay the Plaintiff £25,000, representing the enhanced redundancy payment amount in addition to statutory redundancy pay.
The decision directly affects the parties by requiring the Defendant to make the enhanced payment. No new precedent was established beyond the application of established principles on incorporation of collective agreements and TUPE variations.