United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR R LEIPER (of Counsel) Instructed By: Miss C Stokes Transco Plc Legal Services Dept Brockham House Dorking Business Park Dorking Surrey RH4 1HJ
For the Respondent	MR P MEAD (of Counsel) Instructed By: Messrs John Phillip Solicitors 340 Kilburn Lane London W9 3EF


 


MR RECORDER LANGSTAFF QC:

1. This case raises an interesting question as to the impact which the implied duty of trust and confidence may have upon an employee.
2. The appeal arises out of two hearings before the Employment Tribunal at Southampton. In a decision dated 8 February 1999, that Tribunal determined that Mr O'Brien was an employee. He claimed that he had enjoyed a contract of employment from the Respondent from 12 February 1996 until 7 August 1998, as an accountant. He had started work, however, on 1 August 1995 through an employment agency, Accountancy Personnel, who had placed him as a finance and administration manager with the Respondent.
3. Having determined as a preliminary issue that Mr O'Brien was an employee, the Tribunal proceeded in April and May 1999 to determine the question whether he was entitled to an enhanced contractual redundancy payment, which by agreement between the parties was the sole issue before them. The reasons for this decision were not promulgated until 9 August 1999. In summary, they found the Respondent employer in breach of Mr O'Brien's contract of employment by "failing to consider him for and subsequently offer him the enhanced contractual redundancy payment referred to in the document 'Financial Packages 1996 to 2002'."

The findings of the Employment Tribunal

4. The Employment Tribunal found that in mid-1996, the employees of British Gas Properties ("BGP") were asked to sign a five-year contract. It was intended that every employee so doing would be made redundant within the five-year period of the contract. This was because the BGP portfolio of properties was to be sold over that five-year period. In order to retain and motivate the employees for the interim period necessary to secure the successful disposition of the properties, the employees involved were offered a significant annual bonus based on sales results, a loyalty bonus and an enhanced redundancy package, contained in a document entitled "Financial Packages 1996 - 2002".
5. Under the heading "Eligibility" that document said:

"To qualify for the Incentive Scheme you must:

Have completed 3 months service at the end of the performance period

Be a BGP permanent employee

Have accepted BGP's terms and conditions by signing a revised contract of employment by the end of July 1996."

6. Since the finding of the February Tribunal was that Mr O'Brien was an employee and had been since 12 February 1996, he qualified under the first criterion. The majority held that the second criterion was satisfied: but the minority had regard to memoranda in December 1996, requesting a further extension of Mr O'Brien's contract for 12 months, as justifying a finding that he was truly a temporary and not a permanent employee.
7. It was common ground that Mr O'Brien had not signed a revised contract of employment by 31 October 1996. The majority held that this was:-

"because the respondents had failed to offer him the revised Contract of Employment, but in view of his status as a permanent employee they should have done so. Their failure to do so was in breach of their implied duty of trust and confidence and in particular their duty to treat employees in a fair and even handed manner. The majority say the respondents should not be permitted to rely upon their own breach of contract."

It will be observed that whereas the paragraph from "Financial Packages 1996-2002" refers to signing a revised contract "by the end of July 1996", yet the date of significance for the Employment Tribunal was 31 October 1996. They quote the document as having that date, rather than the July date which we have been shown. This difference was, however, not the subject of any submission before us, nor does it appear that the different date would be of significance in respect of our findings. We shall take the date of 31 October 1996 as the date upon which the Employment Tribunal founded their respective views.

8. The minority in the Employment Tribunal took the view that "… as at December 1996, the Applicant was not a permanent employee". The business services manager of BGP had earlier written (on 9 February 1996) to the employment agency by whom Mr O'Brien's services had first been supplied to BGP, asking them to invoice BGP for the amount necessary "to engage Paul O'Brien's services on a permanent basis". The minority took the view that the word "permanent" could not be determinative of the status of Mr O'Brien, but only indicative. Paragraphs 8 and 9 of the Extended Reasons show that the minority considered Mr O'Brien to be a temporary employee at the relevant time because (i) he had himself requested a further extension of his contract at the end of December 1996, thereby indicating his own view that his contract was for a short period, (ii) "in view of the evidence of Mr McKendry" (the relevant facts which this may have established are not detailed) and (iii) "in view of the fact that the tasks for which the applicant was responsible were coming to an end".
9. The minority further observed that Mr O'Brien was taken on for a particular project ("the Procord Contract"), albeit that he moved on to another similar project. That, in the minority's view, did not undermine the original purpose of his employment which was that he should, for a limited period, monitor these particular contracts. At all times he knew his job would definitely come to an end.
10. However, the minority took the view that those classed as temporary staff, of whom Mr O'Brien was one, were offered an enhanced redundancy entitlement in what was known as Phase II of the Financial Packages 1996-2002. This Financial Package was less favourable than the original package. The minority thought that the duty of mutual trust and confidence which it recognised, properly applied, meant that there was a chance that Mr O'Brien would have been offered Phase II and accordingly proceeded to assess damages for him on the basis of the loss of that chance.
11. The issues for us arising out of these facts were

(a) whether the Employment Tribunal were entitled to conclude that Mr O'Brien was a permanent employee within the meaning of the enhanced redundancy scheme.

(b) The proper scope of the term of implied trust and confidence (which both the majority and the minority purported to apply to the facts, albeit in different respects).

The Appellant's case

12. For the Appellant, Mr Leiper argued that the company did not regard Mr O'Brien as an employee. Paragraph 6 of the decision recognised that the Respondent was not so aware: indeed, the question of the status of Mr O'Brien in the service of the Appellant had been subject to an earlier preliminary hearing before the Employment Tribunal. That hearing had on 19 February 1999 determined unanimously that Mr O'Brien was an employee. However, it appears that the dispute as to his employment status was genuine.
13. Mr Leiper submitted that because the employer was unaware that Mr O'Brien was truly an employee, it could not have had an intention to engage Mr O'Brien on a permanent basis. The question whether the employment was to be regarded as "temporary" or "permanent" should be remitted to an Employment Tribunal for determination. He could not properly be classed as a permanent employee by applying, by analogy, the terms and conditions of others in the service of BGP. He had a specific contract. Mr Leiper pointed out that in paragraph 4 (n) and (o) of the 1999 Tribunal decision the Tribunal had found that those who were regarded as members of the BGP staff were asked to sign a five year contract. Mr O'Brien had not been included. He had discussed the position at the time because he wanted "more security". There were to be discussions about formalising his contract. Mr Leiper went on to submit that what the Employment Tribunal was saying, in effect, was that it accepted that Mr O'Brien was excluded from those offered a five year contract but that he should have been offered similar terms. In argument, Mr Leiper was inclined to accept that "permanent" might be understood in contra-distinction from "casual", "temporary", or "fixed-term".

Respondent's Case on "permanent employee"

14. For the Respondent on this point, Mr Mead contended that the question was whether Mr O'Brien was a permanent employee for the purposes of the policy in question. Since the majority had so found, this was a finding of fact which could not be disturbed on appeal. Although there were many factors which might have suggested that his status was other than permanent, those factors were balanced by the factors referred to in paragraph 5(a) of the Reasons which suggested that he was. Short of perversity, such a finding of fact could not be set aside.

Conclusions on the "permanent employee" point

15. There is little help from the wording of the scheme itself as to the sense in which "permanent" is used. It must suggest, however, some criterion distinguishing such an employee from others who lacked permanence.
16. The purpose of the incentive scheme, identified by the Employment Tribunal and not in dispute before us, was to retain staff whilst the properties which constituted the business of BGP was sold off. Accordingly, it was envisaged that no post would be permanent in the sense of a tenured post such as an academic might once have held. Permanence was likely to last no more than five years and was subject to redundancy – indeed that was the purpose of the scheme, so that BGP could control the departure of staff, and ensure that sufficient would be retained during the process of disposal of their property base. Looked at in this light, "permanent" employee means, as we see it, an employee whose service was terminable on notice, and in respect of whom it could not be said that he was either casual or temporary. We are less certain that "permanent" was necessarily used to distinguish such an employee from one with a fixed-term contract, even though the ability to give notice is not inconsistent with the description "fixed-term". However, there is no specific finding here that Mr O'Brien was engaged for a fixed-term, whatever his status (employee or other) might have been.
17. The factual difficulty is that the Employment Tribunal were attempting to decide how Mr O'Brien should be classified as in 1996, at which time he did not have any written terms of employment that might assist in categorising him.
18. Although the memorandum which Mr O'Brien wrote on 4 December 1996, to which the minority had regard, was capable of giving rise to searching cross-examination of Mr O'Brien as to his understanding of his permanence or otherwise, it does not appear to have produced any admission from him in the course of his evidence that caused the Tribunal to conclude that the offer of engagement which he accepted in February 1996 was qualified as to term. Indeed, a letter from BGP of 9 February 1996 talks about offering Mr O'Brien an "annual salary". Nothing is said as to this being on a short-term, temporary, or casual basis.
19. We conclude that, on the evidence before them, the Employment Tribunal were entitled to come to the view that Mr O'Brien was "permanent" in the sense that we have identified, and could not be said to be perverse in doing so. This ground of appeal therefore fails.

Submissions: term of duty and confidence

20. Mr Leiper submitted that there was a plain error of law at paragraph 5(d) of the decision. The majority of the Employment Tribunal identify a failure which was in breach of the employer's "… implied duty of trust and confidence and in particular their duty to treat employees in a fair and even handed manner".
21. There is no such duty, said Mr Leiper. Whilst reasonableness may be desirable, and whilst some contractual obligations must be complied with reasonably, there is no implied term that an employer will treat an employee in a reasonable manner. He identified that the issue was whether the term, as described by the Employment Tribunal, imposed an obligation to offer contractual terms consisting of the enhanced redundancy package to an employee. It was common ground that those terms were not expressly incorporated in Mr O'Brien's contract (not least because the employer did not regard him as an employee at the time). He argued that the implied term of trust and confidence was not one capable of imposing positive obligations upon the employer, but rather was one which prevented an employer acting capriciously or negatively so as to destroy or seriously damage the relationship that should exist between employer and employee. He submitted that the highest at which Mr O'Brien's own case had been put was that there was no obligation upon BGP to offer the benefits described in the Financial Packages document, but that any failure to do so should not be unreasonable, arbitrary or capricious. The Tribunal, he said, had not addressed that question. Moreover, even if a wholly capricious approach was taken by an employer to the conferring of a benefit which was not a contractual entitlement, the fact of such an approach could not convert that which was non-contractual into an entitlement. Otherwise, he pointed out, a non-contractual benefit could be sued for.
22. Mr Mead, for Mr O'Brien, argued that the decision was essentially one of fact. The expression "in particular their duty to treat employees in a fair and even handed manner" was not a statement to the effect that there was an express contractual duty to be fair, but a description of the way in which the implied duty of trust and confidence came to be applied in circumstances in which all the permanent members of staff (with the exception of one Marcus Ball) were entitled to participate in the enhanced redundancy programme. Marcus Ball was moreover, not truly a permanent employee. The only reason provided to exclude Mr O'Brien from the scheme was that BGP did not know that he was an employee: that could be neither a reasonable or proper cause for excluding him from a benefit that would have been offered to him had his employer recognised the true position.

The law

23. As part of, and in the light of, those submissions we examined the relevant law. In Malik v Bank of Credit and Commerce International [1998] A.C.20, the House of Lords recognised the existence of a term to be implied in all contracts of employment to the effect that an employer would not, without reasonable and proper cause, conduct itself in a manner likely to destroy or seriously damage the relationship of confidence and trust between employer and employee. (see the speech of Lord Nicholls of Birkenhead at p.33H to 34C; 34H to 35B; per Lord Steyn at 45E to G).
24. The early development of this term was charted, to show that there was no obligation to act "reasonably" that could be implied. We were referred to The Post Office v Roberts [1980] IRLR 347. At paragraph 49 of that decision of this Tribunal, Talbot J acknowledged that an employer's conduct might be so intolerable as to amount to a repudiation of contract. In each case, he said:

"… you have to look at the conduct of the party whose behaviour is challenged and determine whether it is such that its effect, judged reasonably and sensibly, is to disable the other party from properly carrying out his or her obligations. If it is so found that that is the result, then it may be that a Tribunal could find a repudiation of contract."

25. However, he rejected (at paragraph 28) the view that there was an implied term that an employer would treat an employee in a reasonable manner. He commented:

"So expressed, in our view, such a term is too wide and too uncertain and we could not endorse any such implied term in those terms. It is, of course, plain that there are some obligations in a contract of employment which the employer must comply with reasonably and an employee must comply with reasonably. There are other terms, such as the payment of salaries or wages due, which do not admit of any reasonable compliance, there must be compliance. …"

26. In Woods v W.M. Car Services (Peterborough) Ltd [1981] ICR 66, the Employment Appeal Tribunal presided over by Mr Justice Browne-Wilkinson, took the view that it was

"… clearly established that there is implied in a contract of employment a term that the employers will not, without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee: Courtaulds Northern Textiles Ltd v Andrew [1979] IRLR 84. To constitute a breach of this implied term it is not necessary to show that the employer intended any repudiation of the contract: the tribunal's function is to look at the employer's conduct as a whole and determine whether it is such that its effect, judged reasonably and sensibly, is such that the employee cannot be expected to put up with it: see British Aircraft Corporation Ltd v Austin [1978] IRLR 332 and Post Office v Roberts [1980] IRLR 347. The conduct of the parties has to be looked at as a whole and its cumulative impact assessed: Post Office v Roberts."

He went on to describe how an employer whose conduct stopped short of a major breach of contract but made the employee's life so uncomfortable that he resigned could not, having behaved in a totally unreasonable manner, properly deny that he had thereby repudiated the contract of employment.

27. Thus far, the authorities establish that:

(a) a term to the effect that an employer will behave reasonably toward his employee cannot be implied into a contract of employment; but

(b) this is because of the width of any such term, and not because it is open to an employer to behave in a totally unreasonable manner whilst remaining within the four corners of the contract; and

(c) if an employer behaves in an arbitrary or capricious or totally unreasonable manner toward an employee, in the exercise of his (the employer's) discretion under the contract, he will be in breach of the contract.

28. Thus it was no surprise that Mr Justice Timothy Walker should have allowed the employee's claim for a salary increase and payment of bonus in the case of Clark v BET plc [1997] IRLR 348. A contractual provision in the terms that: "the executive's salary shall be reviewed annually and be increased by such amount if any as the board should in its absolute discretion decide" conferred a contractual right in the employee to receive an annual upward adjustment in salary. The judge commented (at paragraph 11):

"Accepting the principle that a defendant in an action for breach of contract 'is not liable for not doing that which he is not bound to do' per Diplock LJ in Lavarak v Woods of Colchester [1967] 1 QB 278, 294B-C, if the board had capriciously or in bad faith exercised its discretion so as to determine the increase at nil and therefore to pay [the employee] no increase at all, that would have been a breach of contract."

29. The reasoning demonstrates that the right to a pay rise was not determined on the basis simply that it would have been reasonable for the employer to have given the employee such a rise but that in the circumstances it would have required a capricious exercise of the discretion residing in the employer, or an act in bad faith, to have denied the employee such a benefit. To similar effect was the reasoning in Hill v General Accident Fire & Life Assurance Corporation plc [1998] IRLR 641, a decision of the Outer House of the Court of Session (Lord Hamilton). An employee, entitled to qualify for long-term financial provision in the event of invalidity, with a qualifying period of 104 weeks' prior absence, was dismissed by reason of redundancy after he had been ill for one year and eight months. He claimed that it was a breach of the implied term of trust and confidence to exercise the discretionary power to dismiss him in such circumstances. Although Lord Hamilton concluded that he might fairly and properly be dismissed – and had been – by reason of redundancy, he accepted (at paragraph 20) that:

"… Where provision is, as here, made in the contract for payment of salary or other benefit during sickness, the employer cannot, solely with a view to relieving himself of the obligation to make such payment, by dismissal bring that sick employee's contract to an end. To do so would be, without reasonable and proper cause, to subvert the employee's entitlement to payment while sick. The same unwarranted subversion may occur if a sick employee were to be dismissed for a specious or arbitrary reason or for no cause at all. … "

He cited the opinion of Lord Coulsfield in Adin v Sedco Forex International Resources Ltd [1997] IRLR 280 with approval, where he rejected an interpretation of the contract, urged on behalf of the employer in that case, the effect of which would have been that rights given to the employee could be taken away at the employer's discretion, without cause. He noted:

"A similar result may be arrived at by the process of analysis of implying a term which controls the exercise of an ex facie unrestricted discretion or power (see United Bank Ltd v Akhtar [1989] IRLR 507, especially per Knox J at paragraph 44)."

30. From Malik v BCCI itself, the following propositions can be derived, which elucidate the scope to be given to the implied term.

1 It is not necessary for the conduct of which complaint is made to be targeted in some way at the employee who claims to be victim of it (see per Lord Nicholls of Birkenhead at [1998] AC 35 B – D);

2 An employee does not need to know of the employer's trust destroying conduct while still employed (at 35H – 36A) and he may claim damages for breach of the term even if he first learns of the trust destroying conduct after the employment contract has already ended for other reasons (at 36C).

Lords Goff and Mackay agreed with Lord Nicholls. Lord Steyn, with whom Lord Mustill agreed, reasoned to the same effect but usefully added approval of the approach of Morritt LJ in the Court of Appeal, who said that the obligation imposed by the implied term:

"may be broken not only by an act directed at a particular employee but also by conduct which, when viewed objectively, is likely seriously to damage the relationship of employer and employee."

Since the decision in Malik, further clarification of the way in which the term is to be applied has been afforded by case law. In University of Nottingham v (1) Eyett (2) The Pensions Ombudsman [1999] IRLR 87, the question arose whether an inadvertent omission by an employer to do some act could ever amount to a breach of the implied duty. Although Mr Justice Hart did not, on the facts of that case, consider that the term gave rise to a positive obligation on an employer to warn an employee that the way that the employee proposed to exercise important rights in connection with his contract might not be the most financially advantageous, he said nonetheless (at paragraph 23):

"It is true that the decided cases in which breach of the implied term has been established have all involved deliberate conduct by the employer, and most of them have involved situations where the conduct concerned was perceived by the court as being of a sufficiently serious nature to justify the employee in treating the conduct as repudiatory of the contract itself. Moreover, the terms in which the duty has been expressed has consistently been in the negative form of prohibiting conduct calculated or likely to produce the destructive or damaging consequences, rather than as positively enjoining conduct which will avoid such consequences.

Nevertheless, I do not think that the principle underlying the implication of the term necessarily excludes the possibility that it may, in appropriate circumstances, have a positive as opposed to a merely negative content, although I recognise that so to hold would involve an extension of the existing law."

31. In the present case, Mr Leiper says that the obligations which the Employment Tribunal recognised were positive obligations. This was the extension to which Mr Justice Hart referred. Contrary to his view, it was not permissible.
32. We interpose in this review of the case law to say that we reject that submission. It is difficult, if not impossible, to draw any satisfactory distinction between an obligation negatively expressed and an obligation positively expressed: a requirement not to take a certain course of action may be, in effect, a requirement to permit another. Moreover, our review of the case law shows that the implied term of trust and confidence has been applied in relation to the exercise of a discretion by an employer. Thus, the employer may have a discretion in respect of a mobility clause (Akhter); the refusal of a transfer (Post Office v Roberts); as to the amount of a pay rise and bonus (Clark), and even (subject now to Johnson v Unisys [2001] UKHL 13) as to dismissal (Hill v General Accident). It would not be difficult in those situations to express the right in positive terms: eg to effect a transfer, to secure the benefit of permanent health insurance (Hill), or to pay a pay rise, albeit qualified by a provision that this would be in the absence of good reason not to take such a course.
33. Accordingly, we agree with Mr Justice Hart's approach, but think that he was being unnecessarily cautious in concluding that such an approach involved any extension of the existing law.
34. The way in which the term can operate "positively" is illustrated by Clark v Nomura International plc [2000] IRLR 766. An employee was denied a bonus for a nine-month period prior to his dismissal, during which he had earned profits in excess of £6 million for his company. The bonus scheme was discretionary, not guaranteed in any way, and dependent upon individual performance. Nonetheless, the court held the employee was entitled to such a bonus. Mr Justice Burton, unhappy with the difficulty of definition of that which was "capricious" and the breadth of the phrase "without reasonable or sufficient grounds" suggested that the test for breach of the term, in respect of considering the exercise of discretion by an employer, was one of irrationality or perversity, ie that no reasonable employer would have exercised his discretion in that way. He commented (at paragraph 40):

"In reaching its conclusion, what the court does is thus not to substitute its own view, but to ask the question whether any reasonable employer could have come to such a conclusion."

35. For our part, we accept the various formulations as all having a useful part to play, though none, we think, can be regarded as determinative. The question is whether, objectively speaking, the employer has conducted itself in a manner likely to destroy or seriously damage the relationship of confidence and trust between the employer and employee. If the conduct has that effect, then the question of whether there has been a reasonable and proper cause for the behaviour must be considered. Although those words would, as Mr Justice Burton suggests, be too broad in scope if all that was being considered was an act done by an employer without regard to the consequences of the act, the words used in the formulation adopted by the House of Lords to qualify conduct are that it must be "likely to destroy or seriously damage the relationship of confidence and trust", as opposed to conduct which does not have that result. We suspect that if an employer could not show reasonable and proper cause for such behaviour he would be acting in a manner which no reasonable employer would adopt – and thus the test which Mr Justice Burton preferred would, in any event, be satisfied.
36. In the Court of Appeal in Gogay v Hertfordshire County Council [2000] IRLR 703 it is to be noted that the formulation as adopted by the House of Lords in Malik was applied. That was a case in which the employer had the power to suspend from duties in the event of an allegation of serious misconduct. On the facts of the particular case, the Court of Appeal rejected the employer's exercise of his discretion to suspend the employee where there was no reasonable and proper cause for him to take such a course, when taking it would inevitably seriously damage the relationship between employer and employee.
37. Finally, we should mention a decision of the House of Lords reported after the argument in this case had concluded. In Johnson v Unisys Ltd [2001] UKHL 13, the House of Lords by a majority determined that the implied term of trust and confidence did not give an employee the right to claim damages for losses which he had suffered as a result of the manner in which he was dismissed. This was, however, not because the implied term was in any sense in doubt: it was because of what Lord Nicholls of Birkenhead described as an "insuperable obstacle", namely the intervention of Parliament by passing the unfair dismissal legislation now contained in the Employment Rights Act 1996. It is worth noting that Lord Steyn (at paragraph 24) referred with approval to the judgment of Sir Nicholas Browne-Wilkinson: see Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd [1991] ICR 524, in which he described the implied obligation of trust and confidence as "the implied obligation of good faith". Lord Steyn continued: "It could also be described as an employer's obligation of fair dealing."
38. Although Lord Steyn was in the minority in the result, there is no reason to think that in respect of this part of his speech any of the majority would have disagreed. Accordingly, although it is of persuasive effect only, we note the alternative way in which he formulated the implied duty.

Conclusions

39. We were told that in 1996 the employer had 75 workers who were recognised as permanent employees. All of them were entitled to the enhanced redundancy package, with the possible exception of Marcus Ball (about whom there was some doubt as to whether he was truly a permanent employee). Mr O'Brien would have been a permanent employee had his status as an employee been recognised, as we have concluded the Employment Tribunal were entitled to find. Accordingly, if he was excluded from the package, he would be either the only one, or only one of two – and that other, Mr Ball, had chosen not to accept the package. Mr O'Brien had not been offered the choice.
40. The question the Employment Tribunal had to answer was whether it was a breach of contract to deny Mr O'Brien the opportunity of entering a revised contract of employment with enhanced redundancy terms. There was no reason for excluding him, other than the fact that it was not realised that he was a permanent employee.
41. The simple approach in fact is to note that if it had been appreciated that he was a permanent employee, he would have been offered the enhanced terms. If it was a breach not so to regard him, he must be placed in the position he would have been had the contract been fulfilled. He would have had the offer.
42. The analysis adopted by the majority of the Employment Tribunal is an alternative one. It was that the failure to offer Mr O'Brien such terms was in breach of the employer's duty of trust and confidence.
43. It seems to us that to offer a particular benefit to the entirety of a class of employees bar one is capable of being an act calculated seriously to damage or destroy the trust and confidence between the employer and that one employee. If, for example, seven out of eight senior employees were awarded a substantial bonus, and the eighth was awarded nothing, then he might justifiably think that he was being sent a message – at the least, expressing that the employer had no continuing confidence in him. Where such an act is done without the reasonable and proper cause to which the authorities refer, it is plainly an act that no reasonable employer could take. It would be a breach of what Lord Steyn would call the employer's obligation of fair dealing.
44. No reasonable or proper cause for singling out Mr O'Brien was suggested. The fact that the employer failed to appreciate what his true status was could not be such a cause: no other was suggested.
45. We have considered whether the Employment Tribunal nonetheless fell into error in asserting that the failure of BGP to offer Mr O'Brien the enhanced terms was "in breach of their implied duty of trust and confidence and in particular their duty to treat employees in a fair and even handed manner". If they set the wrong standard, then we would have to examine if that affected their conclusions.
46. This expression was equated by Mr Leiper with the expression of a duty to act reasonably. That, on the authorities we have cited, would be too widely expressed a duty. However, that is not the way the Employment Tribunal put it. They treat it as an aspect of the implied duty of trust and confidence, in the circumstances of the case. Moreover, the duty is not expressed as one to treat employees "reasonably": the expression is: "fair and even handed". These words do not express a requirement that the employer should treat his employees in an identical way, but is the acceptance of an obligation of fair dealing. The terms used are, we think, intended by the Employment Tribunal as the antithesis of that which is arbitrary and capricious. Although the formulation is not one which owes itself directly to any of the decided cases to which we were referred, we do not think that when seen in context and understood as we have set out, it constitutes any error of law.
47. Even if we were wrong in coming to that conclusion, we are satisfied that expressing the duty in those terms did not lead the Employment Tribunal into any error of analysis of the facts. The decision to which the majority came was plainly and unarguably right once the essential fact upon which it was based was established, namely that Mr O'Brien was properly to be classed as a permanent employee.
48. Accordingly, this appeal must be dismissed, and the matter re-listed for hearing before a full Tribunal for the consideration of remedy upon the footing that BGP were in breach of Mr O'Brien's contract of employment by failing to consider him for and subsequently offer him the enhanced contractual redundancy payment referred to in the document "Financial Packages 1996-2002".