England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(Mr Peregrine Simon QC)

		Royal Courts of Justice Strand London WC2
		Wednesday, 14th November 2001

1. LORD JUSTICE HENRY: We take the view that justice requires that there be a transcription of the relevant evidence in this case. We are going to give our judgments on the contractual entitlement point. We think (subject to anything the parties say) that a day should be set aside for the remainder of the case.
2. I will ask Lord Justice May to give the first judgment on the contractual ground.
3. LORD JUSTICE MAY: This is an appeal by Mr Cameron, the claimant, against part of a decision of Mr Peregrine Simon QC, sitting as a deputy judge of the High Court, on 17th November 2000. The decision was on liability only. The subsequent money judgment was the result of agreement as to quantum between the parties so as to implement the liability judgment.
4. Permission to appeal was given on paper by Lord Justice Longmore. I do not consider that permission was limited in the way that Miss Tracy Forster, who appears for the respondent defendants, suggested at the outset of her written submissions as a possibility, and she does not pursue that point. As is to my mind obvious, there would have been no practical point in giving permission to appeal on the first ground of appeal only.
5. The defendants are part of a large international corporate enterprise. The claimant was employed by them from 1974 until he was summarily dismissed on 22nd February 1990. He apparently had an initial written contract of employment which was superseded by a later written contract of employment dated January 1977. The contract contained in clause 12 a grievance procedure. By 1988 the claimant was an information specialist in a small group within the defendant company called the Enterprise Design Group ("EDG"). Towards the end of 1988 he became concerned that he had not been the subject of formal annual appraisals, and he consulted one of the defendants' senior management, Mr Peter Thompson. Attempts were made to deal with Mr Cameron's concerns, unsuccessfully from his point of view. In September 1989 Mr Cameron made a complaint against a Mr Holland and invoked the defendants' grievance procedure. The autumn of 1989 and the first weeks of 1990 were spent in the parties operating, or attempting to operate, the grievance procedure set out in clause 12 of the claimant's contract of employment and described in fuller terms in the defendants' Personnel Policies and Procedures Manual ("PPPM") at paragraph 6.20. The full details of what happened during this period are not material, at least to that part of the appeal with which I am now dealing.
6. The judge considered the evidence in detail in his judgment. In the shortest of summaries, for present purposes, the claimant (whom the judge described as rather pedantic) followed and insisted on the letter of the grievance procedure. The defendants attempted to resolve the situation more informally. This was not successful. The defendants did not, as the judge found, follow all aspects of the grievance procedure. They dismissed the claimant for alleged gross misconduct in refusing to comply with instructions to return to work. In the result, the claimant's contention that he was, in these summarily expressed circumstances, wrongfully dismissed succeeded and he became in principle entitled to damages. The judge awarded him damages in what was, as I have described, the then agreed sum of £18,843.69 plus interest. But the largest single element of his pleaded damages claim - that is, for enhanced redundancy payment - had failed. It is against this part of the judge's decision that the claimant appeals.
7. The judge's decision, in short, was, first, that the claimant was not contractually entitled to enhanced redundancy payment and, secondly, that as a matter of fact he was not redundant anyway. The claimant challenges both of these findings in this court in two grounds of appeal, one devoted to each of those subjects. Miss Tracy Forster accepts that, if the claimant succeeds on both of these points, he would be entitled to an enhanced redundancy payment, subject to quantification. In other words, the judge's short finding in the paragraph beginning at line 11 on p.27 of the judgment (which is alluded to in the latter part of the appellant's second ground of appeal) is not an issue in this court.
8. In the context, enhanced redundancy payment embraces payment made to a departing redundant employee in addition to, or in substitution for, statutory redundancy payment. There is no mention of an entitlement to enhanced redundancy payment in the claimant's 1977 written contract. There was, however, a detailed description of what the claimant says became his entitlement in what is referred to as "Extended Employment and Redundancy", section 2.11 of the defendants' PPPM. This part of the document expressed the company's philosophy of trying to find alternative work for an employee whose job may no longer be needed. If they cannot themselves offer an alternative acceptable job, they will help find him a job elsewhere and provide appropriate financial compensation.
9. There was a three-stage policy to this end. In stage 3, under the heading "Redundancy", there is this passage in the November 1984 version of the PPPM:

"If an employee leaves the Company at any time during Stage 1 or Stage 2 due to redundancy (see guidelines for employee redundancy) then the Company will provide the following compensation:-

.Three weeks pay for every year of service completed while 40 years of age or under.

.4.5 weeks pay for every year of service completed while over 40 years of age.

.Plus pay in lieu of notice, irrespective of any period of notice actually given.

These payments are inclusive of the statutory redundancy pay and are calculated on the leaving date. Calculations are based on each full year and a percentage for any part year worked. There is no qualifying period of employment and all full time and part time permanent employees are covered by this policy."

10. The PPPM was a substantial loose-leaf document, updated from time to time. It was described in the witness statement of Mr Alastair Wright, the head of the Personnel Department of the defendant company, in these terms:

"The defendant had introduced its Personnel Policies & Procedures Manual (PPM) in order to give both managers and employees a document which provided detailed information about all of Digital's policies and procedures. The principal aim of the PPM was to ensure that everyone had a means of ascertaining how a particular matter would be dealt with, and it demonstrated that Digital had put in place procedures for the fair treatment of its employees. I did not consider the PPM to be a document which gave Digital employees enforceable contractual rights against the company. The PPM was, however, meant to be adhered to by both managers and employees. Copies of the PPM were issued to all managers and to all personnel employees. They were not issued to employees generally but employees could access them through either their manager or through the Personnel Department."

11. The claimant's case was that the terms of this document as to redundancy payments were expressly incorporated into his contract of employment or that the terms were incorporated by custom or practice. The claimant's case for express incorporation depended on a written offer made to him in a letter dated 6th December 1983 and the terms of a document entitled "Digital and You" of July 1985, which I infer the claimant received a copy of.
12. In the winter of 1983 the part of the defendants' organisation in which the claimant was employed was to be moved temporarily from Reading to Basingstoke. The letter of 6th December 1983 explained a procedure for trying to find him an alternative job within the defendant company by 31st May 1984, failing which he would be made redundant. If this happened, he would be entitled to three months pay in lieu of notice plus a redundancy payment in a stated amount. He would get a slightly reduced redundancy payment if he chose to leave the company before 31st May 1984. The letter then said:

"I enclose a copy of the company's Extended Employment and Redundancy Policy for your information. This letter is your notice referred to in Stage 2 of this Policy."

13. The evidence was that what was enclosed was in the same terms as the November 1984 version of section 2.11 of the PPPM, to which I have referred. No one could find the version current in December 1983, but the evidence was that the November 1984 version was the same. The letter invited him, at its foot, to acknowledge receipt and confirm that he had understood the contents by signing and dating it. In the event, Mr Cameron did not then leave the defendants, so the question of redundancy payment in 1983 or early 1984 did not arise.
14. The document "Digital and You" begins with the words, "This is your personal copy of Digital and You." The second paragraph of the introduction then says this:

"The handbook is for general information and guidance only and is not intended to replace the Personnel Policies and Procedures Manual as the document to which you should refer for details of terms and conditions of employment. A copy of the Personnel Policies and Procedures Manual is held by all cost centre managers and can be seen by employees on request."

15. There was at least one other document which appears to indicate that the defendants considered that they would be obliged to make a significant redundancy payment if the claimant were made redundant and a reference to making the claimant redundant "in the prescribed way" (see paragraph 3 of the memorandum of Mr Davies dated 14th February 1990 at pp.17-19 of the bundle before the court).
16. The judge's decision on this issue is contained in the following passage from his judgment (at p.24):

"There is no reference in the contract of employment ... to any redundancy scheme. In these circumstances it is difficult to see how the scheme can have been expressly incorporated.

Mr MacCabe, however, submits that, even if there is no express incorporation, the terms may be incorporated through custom and practice and relies on the decision of the EAT in Quinn v Calder Industrial Materials Ltd [1996] IRLR 126. That case is support for the proposition that a term may be implied by custom and practice where the court can conclude that, viewed objectively, a policy adopted by management was intended by both sides to have contractual force. On the facts of that particular case, the employee's case that a right to enhanced redundancy payments was incorporated into the contracts failed. It failed because the EAT found that, looking at all the circumstances, the right to the payments had not been incorporated into the contracts. One of the factors that led the Tribunal to this conclusion was the fact that the payments were not automatic, but required a decision on each occasion.

In the present case I have come to the conclusion that the terms of the enhanced redundancy scheme were terms that might be offered in a redundancy situation, but were not terms that were automatically available to the employee as a matter of contractual right. If they were offered and accepted, then they would, of course, have contractual effect. The analysis can be illustrated by reference to what occurred in December 1983. On 6th December, as a result of the defendant's relocation, it wrote to the claimant ... offering him extended employment within the meaning of the enhanced redundancy scheme and specifically referred to the terms of the scheme. At that stage the employee was entitled either to accept the offer or reject it. However, nothing in that letter suggested that the scheme was available as a matter of right.

It follows that this part of the claim must fail; and it also follows that the other points do not arise and I can state my conclusions on them relatively shortly."

17. It will be seen from that passage that the judge dealt expressly with the letter of 6th December 1983, but did not make reference to the July 1985 "Digital and You" document.
18. There was oral evidence that some 450 employees of the defendant company had been made redundant in the financial year ending June 1990. Mr MacCabe, on behalf of the claimant, says that the defendants failed to give any disclosure about this, so that the claimant was not in a position to examine what had happened in those cases.
19. In other parts of his judgment, the judge found that the grievance procedure part of the PPPM was in effect contractual. This was not surprising, since the main substance of that procedure appears as clause 12 of the claimant's written contract. He found, in another context, that a disciplinary procedure in the PPPM document was not contractual.
20. Mr MacCabe has made extended written and oral submissions in support of the contention that the judge should have found that, in the matter of redundancy payments, the terms of the PPPM became contractual. Miss Tracy Forster submits that the judge was entitled to reach the conclusion that he did. The PPPM, she submits, was a diverse and substantial publication with restricted distribution. She submits that it was, upon the evidence, a management tool rather than an individual contractual addendum. It contained a large range of information, some of which might possibly be contractual, but most of which was not. The statutory requirement at the time was for a grievance procedure and a disciplinary procedure to exist, and for their existence to be noted to employees; but it was neither necessary nor desirable to make informal internal procedures entrenched contractual provisions. She submits that the whole tenor of the PPPM is that its contents are addressed to the managers of the employer, not to employees. She accepts that at first blush the "Digital and You" document helps the claimant, but she submits that the case has to be that the whole of the PPPM was contractual, if one looks at that document, when it cannot have been. Section 2.11 was, she submits, a policy document which did not give employees an enforceable entitlement at least to redundancy payments. Those payments were extremely generous, giving, if they applied, redundancy payment even if an offer of alternative employment was refused. She submits that, commensurate with common sense, an employer should be able to offer employees in good times a generous deal without binding itself to continue that deal if economic circumstances change. As to the letter of 6th December 1983, Miss Tracy Forster submits that the judge's interpretation of the letter is entirely rational. She submits generally that the judge was able to make the judgment which he did against the background of a very full consideration of the case as a whole in that part of his judgment which deals with wrongful dismissal.
21. The reference to the case of Quinn v Calder Industrial Materials Ltd to my mind encapsulates the position when it refers, as it does, to the question whether the inference is that the policy has achieved the status of a contractual term, the policy in that instance being expressed as a policy adopted by management unilaterally. In this case, however, the first case is that the enhanced redundancy payments in effect became an express term of Mr Cameron's contract of employment by means of the letter of 6th December 1983. In my view, although the provisions as to redundancy payments in the PPPM are stated to be a policy, it seems to me to be a statement of what the defendants will do, not what they may choose to do in individual circumstances, and it was that document which was sent to Mr Cameron on 6th December 1983.
22. Contrary to the judge's finding, I do not read the letter of 6th December 1983 as making a discretionary offer individual to the claimant and to the situation in which he then was. The letter is expressed in terms of his entitlement. A copy of the Extended Employment and Redundancy Policy is enclosed, and the letter is expressed to be a formal notice referred to in stage 2 of that policy. To my mind, the letter is expressed in terms indicating that the procedure which it adopts is one which the defendants regarded themselves as obliged to adopt. It is not, as I say, expressed in discretionary terms. The reference in the 1982 version of section 2.11 of the PPPM (p.1 of the appeal bundle) to an apparently discretionary payment if there is a refusal to accept an alternative job refers to a statutory context which is not relevant to the facts of this case. If that were wrong, that document was not the document which was sent to Mr Cameron with the letter of 6th December 1983. The terms of the document "Digital and You" showed that that document was intended to be provided to all employees. It expressly refers to the PPPM as a document which contains "details of terms and conditions of employment". It also indicates that employees may see the PPPM on request. Granted that there may be large parts of the PPPM which are management information never intended to be contractual with employees, Miss Tracy Forster, as I understand it, accepts that some of its contents might be contractual, and that to my mind applies to the provisions for redundancy payment in the November 1984 version of section 2.11. However diffuse the whole document may be, it was that part of the PPPM which the letter of 6th December 1983 sent. Although there was no explicit evidence of how the defendants dealt with other employees who became redundant, it seems to me that the facts to which I have referred compel the conclusion that in the matter of redundancy payments the PPPM had, for Mr Cameron, achieved the status of a contractual term. In my judgment the judge was wrong to hold otherwise in this case.
23. As my Lord has indicated, it is necessary for there to be a further hearing in relation to the second ground of appeal, which I do not proceed to deal with.
24. SIR ANTHONY EVANS: I agree.
25. LORD JUSTICE HENRY: I also agree.
Order: appeal allowed on construction point; second ground of appeal adjourned to a further hearing.