Cavanagh & Ors v Secretary of State for Work and Pensions

A check-off provision in an employer’s salary policy may form part of an employment contract even where it appears on an intranet and is not expressly incorporated in historic contractual documents. The question is whether the employer and employee objectively intended the provision to have contractual effect, assessed by its language, context, certainty, workability and importance to the employment bargain.

Where the provision gives an employee a choice to use check-off, the employer must continue the arrangement after that choice is exercised. A term permitting withdrawal on reasonable notice will not ordinarily be implied. Under the Contracts (Rights of Third Parties) Act 1999, the relevant provision may confer an enforceable benefit on the trade union, and the employment-contract exclusion does not apply where the employee remains free to stop the deductions.

Two civil servants employed by the Secretary of State and their trade union claimed that the Department was contractually obliged to continue deducting union subscriptions from the employees’ salaries and paying them to the union. The arrangements had been withdrawn following a Government review and consultation.

The claim raised three issues: whether the check-off provisions in the Department’s salary policy were contractual; whether the obligation could be ended on reasonable notice; and whether the union could enforce the provisions under the Contracts (Rights of Third Parties) Act 1999. The court decided the legal issues on documentary evidence without live evidence.

1. Contractual effect. The check-off provisions in the salary policy were intended to bind the Department. Contractual intention was to be inferred from the available contractual and non-contractual materials. The staff intranet could be a source of contractual terms, particularly because older documents were unavailable and the Department’s current written particulars directed employees to the intranet. The historical continuity of the provisions, their clear and certain language, their workability, their location alongside contractual provisions, and their importance to the pay and work bargain all supported incorporation.
2. Meaning of the provision. The expressions that employees could choose to make voluntary deductions and could pay subscriptions through deductions meant that an employee could choose the arrangement and, once the choice was made, the Department was required to comply. The express power to withdraw check-off during official industrial action was inconsistent with an unfettered power to withdraw it in other circumstances.
3. Reasonable notice. No term permitting termination on reasonable notice could be implied. The Department’s cost or inconvenience did not make such a term necessary for business efficacy, and the term was not so obvious as to go without saying.
4. Third-party enforcement. The provision purported to confer a benefit on the PCS because its purpose included enabling union subscriptions to be paid directly to the PCS. The fact that employees and the Department also benefited did not prevent the provision from conferring a benefit on the union. There was no contractual material showing that the parties intended to exclude enforcement under section 1(2) of the Contracts (Rights of Third Parties) Act 1999.
5. The exclusion in section 6(3)(a) did not apply. Enforcement by the PCS was not enforcement against the employees: each employee remained free to withdraw consent and ask the Department to stop the deductions.
6. The court therefore concluded that the Department remained obliged to provide check-off to the two employees and that the PCS could enforce the arrangement. Questions of damages were not determined. The provisional view was that declaratory relief should be granted, subject to further written submissions.