Kaur v MG Rover Group Ltd.

The Court of Appeal considered whether parts of two collective agreements were incorporated into individual contracts of employment. The employee relied on (i) "Rover Tomorrow – The New Deal" and (ii) "Small and Medium Cars 'The Way Ahead' Partnership Agreement" as forming terms preventing compulsory redundancy.

The court applied the principles for incorporation of collective agreements into individual contracts (Alexander v Standard Telephones and Cables Ltd (No. 2)) and held that a document or part of it must be apt for incorporation and reflect the contractual intention between employer and employee. The New Deal was held to contain an aspirational "principles" part and a separate agreement part; only the agreement part could operate to amend individual terms and the principles were not apt for incorporation.

As to The Way Ahead, the court concluded that, although some provisions (for example notice and sick pay provisions) were apt for incorporation, paragraph 2.1 (the statement that "there will be no compulsory redundancy") expressed an objective or collective aspiration, contingent on workforce cooperation and the translation of principles into practical measures, and thus was not apt to be incorporated into individual contracts. The Court of Appeal allowed the employer's appeal, set aside the declaration that paragraph 2.1 was incorporated and dismissed the employee's cross-appeal.

This was an appeal from a High Court (Queen's Bench Division, Birmingham) decision in which Her Honour Judge Alton had held that one provision of a collective agreement (paragraph 2.1 of section 3 of "The Way Ahead") was incorporated into the respondent's contract and therefore prevented her being made compulsorily redundant. The employer appealed and the employee cross-appealed in respect of a different collective agreement.

Background and parties:

• The respondent, Mrs Kaur, was a long-serving employee at the appellant's Longbridge site and had a written contract incorporating the employer's Standard Conditions of Employment. Condition 1 stated employment was "in accordance with and, where appropriate, subject to" collective agreements. Condition 13 dealt with notice of termination.
• The respondent claimed declaratory relief that two collective agreements ("The New Deal" and "The Way Ahead") had been incorporated into her contract and prevented compulsory redundancy. The parties agreed the claim should be decided despite the immediate threat of redundancy having passed because of its wider relevance.

Issues framed:

1. Whether parts of The New Deal were apt for incorporation into individual employment contracts.
2. Whether paragraph 2.1 of The Way Ahead (stating there will be no compulsory redundancy) was apt for incorporation into individual contracts.
3. If paragraph 2.1 were incorporated, whether it could be read so as to prevail over the express notice/termination provisions in the Standard Conditions (condition 13).

Court’s reasoning:

• The court applied the accepted test for incorporation: ascertain contractual intention of employer and employee; where a document is expressly incorporated, consider whether particular parts are apt to be terms of an individual contract. Collective agreements may contain provisions (procedural, aspirational or collective) not apt for individual enforcement.
• The New Deal contained two distinct parts: an "agreement" part and a principles/"attachment 1" part. The agreement part dealt with consequential amendments to terms and conditions; the principles part was aspirational and not apt for incorporation except insofar as the agreement part translated principles into specific contractual amendments. The New Deal therefore did not create a contractual prohibition on compulsory redundancy.
• The Way Ahead was a single document containing a mix of provisions. Many provisions (such as notice minima) were apt for incorporation, but paragraph 2.1 was read in context. The introductory sentence described the aim as an "objective", the second sentence echoed the earlier New Deal position, and paragraph 2.3 made avoidance of compulsory redundancy contingent on collective cooperation and mechanisms such as voluntary severance and natural wastage. Taken together, these features showed the wording was aspirational and collective rather than a contractual promise apt for incorporation into individual contracts.
• Even if paragraph 2.1 had been incorporated, the court held that it should be construed with the notice clause; however the court ultimately decided paragraph 2.1 was not incorporated and so there was no need to construe any conflict in favour of a fetter on the employer's express termination-on-notice rights.

Disposition: The Court of Appeal allowed the employer's appeal, set aside the High Court's declaration that paragraph 2.1 of The Way Ahead was incorporated, and dismissed the respondent's cross-appeal. The court refused leave to appeal to the House of Lords.

Appeal allowed. The Court of Appeal held that the collective agreements' aspirational and collective statements were not apt for incorporation into individual contracts. The New Deal's "principles" part did not create enforceable individual contractual rights. Paragraph 2.1 of The Way Ahead, despite emphatic presentation, was an objective/aspirational, collective commitment contingent on workforce cooperation and was not apt to be incorporated as a term preventing compulsory redundancy; the High Court's declaratory relief was therefore set aside.

Appeal from the High Court of Justice, Queen's Bench Division, Birmingham (Her Honour Judge Alton). HHJ Alton had granted declaratory relief on 21 January 2004 in part; this Court of Appeal judgment overturns that decision ([2004] EWCA Civ 1507). Leave to appeal to the House of Lords refused.