IBM United Kingdom Holdings Ltd & Anor v Dalgleish & Ors

An employer with a discretionary power to determine an early-retirement policy is not subject to an implied requirement to give members a specified period of notice before changing that policy. The exercise of the discretion may instead be challenged for breach of the employer’s Imperial duty. However, members must be told that a new policy has been adopted where they might otherwise make decisions in reliance on the previous policy. Communication to lawyers, submissions in litigation, or statements made at a hearing will not ordinarily suffice as communication to the membership as a whole. A financial remedy for loss caused by an earlier breach may be appropriate; the court should not impose a new retirement window which gives members benefits to which they would not otherwise have become entitled.

The judgment concerned points left open in an earlier remedies judgment arising from IBM’s introduction of a new early-retirement policy. The defendants argued that IBM was required to make a fresh decision, give members a period of notice before the new policy took effect, and continue applying the former policy during that period. They also argued that these steps were necessary to remedy the earlier breach of duty.

The court had to determine whether a fresh decision was required, whether notice specifying a future effective date was necessary, and whether IBM had sufficiently communicated the policy change to members.

1. Fresh decision. After 31 March 2014, IBM was entitled to decide to implement the new early-retirement policy. Its conduct was consistent only with a decision having been made, and the court found that such a decision had been made.
2. No implied period of notice. There was no implied restriction requiring IBM to give members a period of notice during which the pre-existing policy would continue. The exercise of the discretion could be challenged only for breach of the employer’s Imperial duty. That duty did not require notice of this kind and it would not be perverse or irrational, in the relevant sense, to refuse it. The court referred to the approach to implication discussed in A-G of Belize v Belize Telecom [2009] 1 WLR 1988.
3. Communication required. IBM could not implement a new policy without informing members of the change. Members might otherwise leave service believing that the former terms remained available. The communication had to be made to the membership generally. The 2009 email, IBM’s skeleton argument served on the Trustee and representative beneficiaries, and statements made at the remedies hearing were insufficient.
4. Remedy. The court rejected the argument that a new retirement window applying the former terms was the only proper remedy. Such a remedy could give members benefits they would not have obtained absent the breach. Individual financial claims remained available for members who could establish that they would have retired under the former terms.
5. Conclusion. No new early-retirement policy had yet been validly introduced. Accordingly, at the date of judgment, members were entitled to retire under the pre-existing policy, subject to the outcome of any appeal concerning the earlier judgments.

The judgment records that the earlier Breach Judgment and Remedies Judgment were subject to proposed appeals. It did not itself determine an appeal.