Cameron v Digital Equipment Company Ltd

An employer’s personnel policy may become a contractual term where the documents and circumstances objectively indicate that it states an entitlement rather than a discretionary benefit. A policy manual may contain both contractual and non-contractual material. Its general character as a management document does not prevent a particular provision from having contractual force. The court must examine the relevant communication, the policy wording and the surrounding circumstances. Where an employer sends an employee the relevant policy as part of a formal employment process and expresses the benefit in terms of entitlement, the provision may be expressly incorporated into the contract.

The claimant had been employed by the defendant from 1974 until his summary dismissal in 1990. He succeeded before the deputy High Court judge on wrongful dismissal and received an agreed sum of damages, but failed in his claim for an enhanced redundancy payment.

The enhanced payment provisions appeared in the defendant’s Personnel Policies and Procedures Manual. The claimant argued that they had been incorporated into his contract by a letter sent in December 1983 and by the manual’s circulation and use. The judge held that the provisions were discretionary and did not create a contractual right. The claimant appealed on contractual incorporation and redundancy. The Court of Appeal first determined the construction point.

1. Appeal on construction point allowed. The Court of Appeal held that the enhanced redundancy provisions in section 2.11 of the Personnel Policies and Procedures Manual had become a contractual term for the claimant.
2. The correct question was whether the relevant documents, viewed objectively, expressed an obligation or merely a discretionary policy. The manual stated what the defendant would do in specified circumstances. The December 1983 letter referred to the claimant’s entitlement, enclosed the relevant policy and described the letter as the formal notice required by the policy. It was not expressed as a discretionary offer.
3. The fact that the manual was a substantial and diverse management document did not determine the issue. Some provisions could be contractual while others remained management information. The document Digital and You expressly directed employees to the manual for details of terms and conditions of employment and supported the contractual character of the relevant redundancy provisions.
4. The reference to Quinn v Calder Industrial Materials Ltd [1996] IRLR 126 correctly identified the need to infer objectively whether a policy had achieved contractual status, although the present case concerned express incorporation through the December 1983 letter and accompanying policy.
5. The second ground, concerning whether the claimant was redundant, was not determined and was adjourned for a further hearing. The court also indicated that transcription of the relevant evidence would be required.

• Court of Appeal (Civil Division) allowed the appeal on the contractual construction issue and adjourned the second ground.
• High Court of Justice, Queen’s Bench Division (Mr Peregrine Simon QC, sitting as deputy judge) held that the enhanced redundancy scheme was not contractually available as of right and that the claimant was not redundant.