Keeley v Fosroc International Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Dyson,Sir Martin Nourse |
| Judgment Date | 05 October 2006 |
| Neutral Citation | [2006] EWCA Civ 1277 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2005/2938 |
| Date | 05 October 2006 |
[2006] EWCA Civ 1277
The Right Honourable Lord Justice Auld
The Right Honourable Lord Justice Dysonand
The Right Honourable Sir Martin Nourse
Case No: A2/2005/2938
HQ05X00117
Mr Timothy Brennan QC & Mr Akash Nawbatt (instructed by Abel-Brown) for the Appellant
Mr Geoffrey Cox QC & Mr Richard Davison (instructed by Dechert Lip) for the Respondent
Auld LJ:
Introduction
This is an appeal by Christopher Keeley from the order of HHJ Reid QC, sitting as a Judge of the High Court, on 14 th November 2005, that he was not entitled to an enhanced redundancy payment on his dismissal for redundancy by the respondent, Fosroc International Limited ("Fosroc") on 7 th July 2004. Mr Keeley's case before the Judge and on appeal is that his contract of employment with Fosroc expressly entitled him to an enhanced redundancy payment, alternatively that such entitlement was to be implied from custom and practice.
Mr Keeley's contract of employment consisted of a written Statement of Employment Terms incorporating by reference Fosroc's Staff Handbook, entitled "Policies for People". The provision in issue was in a section under the heading "Redundancy" in the first Part of the Handbook entitled "Employee benefits and rights". It provided:
"Those employees with 2 or more years continuous service are entitled to receive an enhanced redundancy payment from the Company, which is paid tax free to a limit of £30,000". Details will be discussed during both collective and individual consultation." (my emphasis)
It is common ground that the payment referred to in that provision, which I shall call "the enhanced redundancy payment provision" consisted of two elements, first, a payment calculated by multiplying weekly salary at the date of redundancy by double the number of redundancy weeks provided by statute, and, secondly, a payment in lieu of notice on a gross basis.
The Staff Handbook contained a large number of provisions capable of having contractual force. Many were expressed in terms of rights and obligations, and were typical of contracts of employment between a large employer such as Fosroc and individual members of a largely unionised workforce. Importantly, they were not to be found in any other documentation capable of having contractual force between Fosroc and each of its employees. In particular, the Statement of Mr Keeley's Employment Terms made no express reference to redundancy, unlike disciplinary and grievance procedures, the inclusion of which was required by statute. The Judge, in paragraph 29 of his judgment, found on the evidence that the Staff Handbook "was a first point of reference for any employee who had a query". And Fosroc acknowledged as much in paragraph 7 of its defence, averring:
"… Policies for People serves a dual purpose. It is both a personnel manual and an employee handbook. It has existed for many years and was produced by and/or for the personnel department of Fosroc['s predecessor company]. It has a loose leaf format and is updated from time to time to reflect legislative changes and changes in company policies and procedures. …"
The Judge, in paragraphs 44 and 50 of his judgment, concluded that the provisions in the Staff Handbook were incorporated into Mr Keeley's contract of employment insofar as they were apt to be terms of a contract of employment, but that the enhanced redundancy payment provision was not so apt. He also rejected Mr Keeley's alternative claim that he was entitled to such a payment by way of an implied term of his employment based on custom and practice, holding that no such term could be implied.
The contract of employment
The Statement of Mr Keeley's Employment Terms provided:
"This Statement sets out the main terms of your employment with the Company. It supersedes any previous Statement of terms issued to you.
Other relevant information may be found in the Company Information Folders, and other terms and conditions of your contract may be found in your offer letter. If there is a conflict between the Company Information Folders and this Statement, this Statement will prevail. Any subsequent amendment to terms and conditions will be set out in writing to you, or in general staff notices."
Before turning to the issue whether the enhanced redundancy payment provision set out in the Staff handbook conferred on Mr Keeley an express contractual entitlement to such a payment, I should put it in context by referring briefly to its genesis and then look at the structure and content of the Handbook as a whole.
Like Gaul, the Staff Handbook was divided into three Parts; they were headed respectively: "Employee benefits and rights", "Working procedures" and "Rules and disciplinary procedures". As I have mentioned, the enhanced redundancy payment provision was in the "Employee benefits and rights" Part. It was under the heading, "Redundancy", one of a number of headings dealing with different aspects of employees' rights and benefits. These were: "Annual leave", "Equal opportunities", "Grievance", "Parental leave", "Paternity leave", "Pregnancy & Maternity rights", "Redundancy", "Retirement", "Special Leave" and "Trade Union membership". The rights and benefits to employees indicated by those headings are, by their very nature, the stuff of a modern contract of employment—part of the remuneration package. They are all part of the context in which the entitlement in the Redundancy section falls to be considered.
Before looking at the Redundancy section, I should mention that the second and third Parts of the Staff Handbook, "Working Procedures" and "Rules and disciplinary procedures", contain, as might be expected from the headings to their respective sections, many plainly contractual provisions. Those under "Rules and disciplinary procedures" are: "Absenteeism/timekeeping", " Car users", "Computer/Word Processor users", "Expenses", "People development", "Recruitment" and "Relocation". And, included under "Rules and disciplinary procedures", are: "Discipline", "Health & Safety", "Long service", "Security" and "Smoking".
Focusing now on the Redundancy section in the "Employee benefits and rights" Part, there are provisions in it, apart from the enhanced redundancy payment provision, clearly indicative of contractual entitlement, in particular those for paid time off work to look for employment elsewhere and the right to appeal against dismissal. Its genesis lay in a draft by Fosroc's human resources manager of the day, which, after circulation to other managers and to trade union representatives for consultation and consequent amendment, was inserted in the Staff Handbook. It consists of five pages and passages under various headings. The first two passages are headed respectively "Purpose" and "Introduction". They are couched in terms of aim and intention, and are clearly directed at how, from time to time, Fosroc would determine, on a case by case basis, who should be made redundant, not at entitlement to, or the manner of calculation of, compensation for redundancy once determined:
"Purpose
It is the Company's aim to ensure any redundancies are dealt with in a fair and consistent manner, with due regard to both the needs of the Company and the well being of the redundant employee and the employees remaining in the Company.
Introduction
Whilst it is the Company's intention to develop and expand its business activities and thus provide a stable work environment and reasonable security of employment for its employees, it must ensure economic viability within an increasingly competitive business environment.
Therefore, situations may arise which necessitate the need for reductions in numbers employed. In order to minimise the impact of such reductions, the following procedure will be adopted wherever possible.
However, it must be recognised that where the needs of the business so dictate, the procedure will be adapted to the particular circumstances which prevail."
Following a discussion under the third heading, "Definition", on the meaning of redundancy, the document continues, under the fourth heading, "Procedure" and its sub-headings, "Consultation", "Selection" Alternative Work", "Time off" and "Appeals", with a statement of how Fosroc would approach its task of determining redundancy when the need arose. Passages under the last two of those sub-headings contain provisions that are clearly capable of having contractual effect. Under "Time-off", it provides:
"During their final notice period, employees will be given reasonable paid time off to look for work outside the Company." 1
And, the first paragraph under "Appeals" provides:
"As with any form of dismissal, employees who have their employment terminated on grounds of redundancy will be accorded the right of appeal against dismissal."
It is only on the fourth page, under the fifth heading, "Compensation", that the document, in the two sentence enhanced redundancy payment provision, deals with compensation for redundancy, expressing it in terms of an entitlement, but without referring to the method of its calculation or amount, save only to identify the maximum payable [tax free] and to indicate that the details were for collective and individual consultation. On the evidence before the Judge, the human resources manager responsible for the draft did not...
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