COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE MAYORS AND CITY OF LONDON COUNTY COURT
His Honour Judge Birtles
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE LEVESON
LORD JUSTICE PITCHFORD
| GEOFFREY GARRATT
|- and -
|MIRROR GROUP NEWSPAPERS LTD
Clive Freedman QC and Daniel Northall (instructed by DLA Piper UK LLP, Manchester) for the Respondent
Hearing dates : 24 March 2011
Crown Copyright ©
Lord Justice Leveson :
"The union has the sole bargaining right to negotiate the pay, hours and holidays for the above bargaining group and for no other areas of the relationship between the company and its employees."
The employment contract of 21 October 2005 contained a reference to this recognition agreement.
i) On 6 February 2002, it was recorded in the minutes of a meeting that:
"current redundancy formula is difficult to understand. BAJ not averse to linking the issue of notice periods with redundancy. Seeking reasonable redundancy terms. Prior consultation with FOCs regarding redundancy would help to build the union/company relationship."
ii) On 25 February 2002, in a written response to the claim made by BAJ, MGN observed that "as for redundancy payments the present terms are a direct result of the long notice periods offered to staff employed prior to December 1992" but expressed a wish for "a simplified system".
iii) On 7 March 2002, an action point was noted to the effect "Review Redundancy Formula and [Mr Budd] to put a proposal forward" which he did because, on 10 April 2002, Mr Turner welcomed the proposal to simplify the formula, but expressed concern about a weakness in the system, suggesting an alternative.
"In the event that it is necessary to make compulsory redundancies within the recognised bargaining group, the following payments will be made.
For every completed year of service, on the day the contract ceases a payment of two weeks' basic pay will be made. This will include all the entitlements to statutory payment.
The minimum payment will be one month's salary.
The total amount of money that can be paid will be capped at 18 months money; this will include any pay in lieu of notice monies, where this is paid.
In most cases, the first £30,000 (at the time of signing) will be tax-free, however it is recognised that this is subject to approval by the Company's Tax Department and the Inland Revenue. The Company will not compensate for any tax that is deemed payable on the first £30,000.
Those individuals who are in receipt of two years' notice periods will in the event of redundancy continue to receive the redundancy terms that were in force prior to this agreement."
"I am certain that there was no reason to as the company had always made clear that it required the signing of a compromise agreement. The BAJ was fully aware of this from past practice and general discussions and therefore this was not an issue. The practice of requiring a compromise agreement was so well established that there was no need to discuss this....
The BAJ at no time queried the use of compromise agreements either during the discussions regarding redundancy payment levels or following the 2002 agreement when the payments were applied. The purpose of using a compromise agreement is to bring matters out onto the table and ensure that they are resolved in exchange for an enhanced redundancy package and therefore the company would never have agreed to enhanced payments without a compromise agreement."
"They knew they had to sign a compromise agreement. That was generally talked about, you know between members of the journalist community"
To the proposition that this had been denied by Mr Garratt and his witnesses he added:
"Sorry, you are talking about journalists here. That is just not believable. They talk to each other all the time. That's what they do. It's their stock in trade."
"[T]here were existing arrangements in relation to the mechanics of redundancies and the signing of a compromise agreement as a matter of standard practice and universal application. This did not change the signing of the recognition agreement nor was it intended to. The agreement simply did not cover this aspect of an enhanced redundancy payment and was not intended to alter the condition.
There was no intention to create a free standing right for individuals to be entitled to a payment without a compromise agreement. The agreement simply related to the level of payment that would be made when a redundancy was made and a compromise agreement signed."
i) Arrangements for the payment of enhanced redundancy payments pre-existed the Collective Agreement of 2002 and had endured since 1993 (at the latest) to date; no employee had been paid an enhanced redundancy payment without signing a compromise agreement. The enhanced redundancy payment is made in consideration of the employee entering the compromise agreement: there is no other incentive for MGN in making the payment; it is not treated as a payment referable to income and is not taxed.
ii) From 1993 (at the latest) to date, the requirement to sign a compromise agreement was expressly notified to all employees identified as redundant and the signing of such an agreement was an automatic consequence of being dismissed as redundant.
iii) No employee, other than Mr Garratt, has sought to insist on a contractual right to an enhanced redundancy payment in the absence of a signed compromise agreement. Mr Garratt did not sign a compromise agreement and was not paid an enhanced redundancy payment.
iv) Although unstated by the judge in his summary (but following two of his specific findings of fact to which I have referred), before the redundancy process started, Mr Garratt (and the BAJ official) knew that Mr Garratt would have to sign a compromise agreement in order to get the enhanced redundancy payment provided by his contract.
The Judge's Approach
"[T]here was no evidence that the employers' policy of retirement for women at the age of 60 had been communicated to such employees in 1978 nor was there any evidence of any universal practice to that effect. A policy adopted by management unilaterally cannot become a term of the employees' contracts on the grounds that it is an established custom and practice unless it is at least shown that the policy has been drawn to the attention of the employees or has been followed without exception for a substantial period."
"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 fact that the employees' knowledge came from fellow-employees would not preclude the possibility of treating the enhanced terms as established, by custom and practice, as part of the contract; but it is necessary to take that knowledge along with the other circumstances, including the fact that there does not appear to have been any evidence that any employee actually entered into the employment on the faith of an expectation that those terms would be applied."
"(a) whether the policy was drawn to the attention of employees;
(b) whether it was followed without exception for a substantial period;
(c) the number of occasions on which it was followed;
(d) whether payments were made automatically;
(e) whether the nature of communication of the policy supported the inference that the employers intended to be contractually bound;
(f) whether the policy was adopted by agreement;
(g) whether employees had a reasonable expectation that the enhanced payment would be made;
(h) whether terms were incorporated in a written agreement;
(i) whether the terms were consistently applied."
i) Every employee who has been offered a redundancy package since 1993 has had the benefit of legal advice and the requirement to sign a compromise agreement has never been refused, or the subject of query let alone challenge. No employee, lawyer or union representative has ever taken issue with the requirement either at the time or prospectively: the wide ranging nature of the agreement (which Mr Short argues evidences lack of reasonableness) only serves to make this point of greater significance.
ii) The judge specifically accepted the evidence of witnesses to the effect that the practice of requiring a compromise agreement before payment of an enhanced redundancy payment was "very well established" with the workforce. It was "generally talked about" as this was the journalists' "stock in trade": he was entitled to reach that conclusion on the evidence. Although Mr Short argues that the confidentiality clause of the compromise agreement militates against the conclusion that employees of MGN talked about the requirement, in the context of this industry, it does not even start to undermine it.
iii) As evidence of its widespread knowledge, before this redundancy process started, Mr Garratt, Mr Slater and the BAJ official, Mr Turner knew that a compromise agreement would have to be signed in order to get the enhanced redundancy payment. Mr Turner's knowledge is of particular significance because of his long standing union connection and the fact that he entered into and conducted the negotiations for the Collective Agreement without once raising this as worthy of discussion.
"Further, it seems to me ... that even if a case of discriminatory impact could be made out the requirement could plainly be justified. Employers have a legitimate interest in achieving finality as regards all issues arising out of the dismissal of an employee. Offering a further payment to achieve a binding compromise of all such issues is plainly a proportionate means of achieving that aim. Its proportionality is unassailable because the choice always remains with the employee: if he thinks it is a bad deal he need not take the offer. He will of course, by definition, have access to legal advice. The fallacy in the Claimant's case is that it overlooks the fact that he otherwise has no right to this payment: although it may be described as an enhanced redundancy payment, it is in fact a payment offered to redundant employees in return for a full and final settlement of all claims. It is of course for that reason that the contention that the payment could be made while [accepting] the right to advance outstanding claims makes no sense."
"It follows that in every case in which it is said that some provision ought to be implied in an instrument, the question for the court is whether such a provision would spell out in express words what the instrument, read against the relevant background, would reasonably be understood to mean. It will be noticed from Lord Pearson's speech that this question can be reformulated in various ways which a court may find helpful in providing an answer – the implied term must "go without saying", it must be "necessary to give business efficacy to the contract" and so on – but these are not in the Board's opinion to be treated as different or additional tests. There is only one question: is that what the instrument, read as a whole against the relevant background, would reasonably be understood to mean?"
Lord Justice Pitchford:
Lord Justice Ward: