Albion Automotive Ltd v Walker and Others
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE PETER GIBSON,LORD JUSTICE POTTER,SIR MURRAY STUART-SMITH |
| Judgment Date | 21 June 2002 |
| Neutral Citation | [2002] EWCA Civ 946 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 June 2002 |
[2002] EWCA Civ 946
Lord Justice Peter Gibson
Lord Justice Potter
Sir Murray Stuart-Smith
IN THE SUPREME COURT OF JUDICATURE A2/2001/2119
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM AN EMPLOYMENT APPEAL TRIBUNAL
(Her Honour Judge Wakefield)
Royal Courts of Justice
Strand
London WC2
MR I TRUSCOT (Instructed by Arnander Irvine Zeitman) appeared on behalf of the Appellant
MR TIMOTHY BRENNAN QC and MR PETER EDWARDS (Instructed by Rowley Ashworth) appeared on behalf of the Respondent
Friday, 21st June 2002
This is an appeal by the employer, Albion Automotive Ltd ("Albion"), from the order made by the Employment Appeal Tribunal on 12th October 2001, dismissing Albion's appeal from the decision of an Employment Tribunal sitting in Manchester. By that decision sent to the parties on 2nd February 2000 the Employment Tribunal held that 22 employees ("the Employees") of Albion who had been made redundant were contractually entitled to the benefit of enhanced redundancy terms in lieu of their statutory redundancy entitlement. The specific issue determined by the Employment Tribunal in favour of the Employees was whether by custom and practice there was a term of the Employees' contracts of employment that they would be entitled to such enhanced redundancy terms. The EAT refused permission to appeal, but such permission was granted by Pill LJ.
The background to this dispute is as follows. The employees were all employed at Albion's Farington site. The site was bought by Volvo in March 1989. Albion bought the site in October 1995 and took over the undertaking, including the work force employed there. From 1990 to 1994 there were six redundancy exercises carried out at the site. The first involved the closure of what was called the BX facility. Enhanced redundancy terms were the subject of extensive negotiations against a background of industrial and political action, and the terms which were accorded to the redundant employees were found to have been authorised by the parent company. Those terms were that each redundant employee would receive 12 weeks pay at £1,000 per annum of service. 292 employees were made redundant on those terms. Subsequent redundancy exercises involving 177, 200, 70, 32 and 12 employees respectively were carried out with the redundant employees receiving the BX terms. Two other redundancy exercises in that period were announced on the same terms but in the event did not proceed.
In 1996 after Albion acquired the site five employees were made redundant but did not receive the enhanced redundancy terms. They, or some of them, were advised to take legal action but did not do so.
The redundancy exercise involving the Employees commenced in January 1999. For the Employees their representative stated to Albion that he expected what he called "the contractual redundancy entitlement" to be applied. But for Albion it was indicated that only the statutory redundancy entitlement applied.
None of the Employees had a written contract of employment, nor a statement of his terms and conditions of employment. The collective agreements, negotiated each year with the trade unions, are recorded in writing, but the redundancy terms had never formed part of the annual negotiations, and so the collective agreements say nothing on the issue. All the Employees commenced their employment prior to 1990.
It was agreed before the Employment Tribunal by the legal representatives of both sides that the main authorities on whether a contractual entitlement arose by reason of custom and practice were two EAT decisions.
In Duke v Reliant Systems Ltd [1982] ICR 449 the question for the EAT was whether a normal retiring age had been established for the particular employment, and a question arose whether any policy in regard to a retiring age had been communicated to employees or whether there was evidence of any universal practice to that effect. Browne-Wilkinson J giving the judgment of the EAT said at page 452:
"A policy adopted by management unilaterally cannot become a term of the employee's contracts on the grounds that it is an established custom and practice unless it is shown that the policy has been drawn to the attention of the employees or has been followed without exception for a substantial period."
In Quinn v Calder Industrial Materials Ltd [1996] IRLR 126 the EAT was faced with a question similar to that in the present case, whether there was a contractual right to enhance redundancy payments. The EAT, Lord Coulsfield presiding, applied the reasoning in Duke, saying at page 128, paragraph 7:
"In a case such as the present, the factors to which Browne-Wilkinson J referred are likely to be among the most important circumstances to be taken into account, but they have to be taken into account along with all the other circumstances of the case. Thus, for example, in our view, the question is not whether the period for which a policy has been followed is 'substantial' in some abstract sense, but whether, in relation to the other circumstances, it is sufficient to support the inference that that policy has achieved the status of a contractual term. Again, with regard to communication, the question seems to us to be not so much whether the policy has been made or become known directly to the employees or through intermediaries, but whether the circumstances in which it was made or has become known support the inference that the employers intended to become contractually bound by it."
The Employment Tribunal expressed their conclusion that the enhanced redundancy terms whereby redundant employees would receive £1,000 for each complete year of service and £90 for each further completed month of service had become a term of the Employees' contracts of employment on the ground that it was an established custom and practice. Accordingly the Employment Tribunal held that Albion was in breach of contract.
In reaching their conclusion, the Employment Tribunal said this:
"12.In deciding whether the enhanced redundancy terms have become a term of the applicant's contract of employment on the grounds that it is an established custom and practice we have had regard to all of the relevant evidence in this case. However, we consider it appropriate to highlight certain issues which we have had particular regard to, namely:—
(a)we are satisfied that the availability of the enhanced redundancy terms has been drawn to the attention of...
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