Lynam & Anor (Contract of Employment)

Whether an employment benefit has contractual force depends on the objective meaning of the employer’s communications to employees. That inquiry is not displaced by the terminology of custom and practice where the claim rests on a communication concerning a particular scheme.

A communication which states that all employees in an identified affected group will be invited to apply for voluntary redundancy cannot, without clear wording, be construed as making eligibility depend on a further individual invitation or as excluding employees whose job group is to be deleted. A right to apply is distinct from any right to have an application granted. The latter question, and the chance of approval, ordinarily concern damages.

The Claimants, employed by Birmingham City Council as Review and Monitoring Officers, were identified as affected employees in a redundancy process. The Council’s intranet guidance for 2014/15 stated that employees in the second phase who were eligible would be invited to apply for voluntary redundancy, and that communications would go to all affected employees.

In September 2014 the Council told the Claimants that voluntary redundancy was unavailable because their whole job group was being deleted. They were later compulsorily dismissed for redundancy. The Employment Tribunal dismissed their breach of contract claims, holding that they had no contractual right to apply for voluntary redundancy.

The Claimants appealed only that contractual ruling. The central issue was whether the Council’s communications, objectively construed, gave affected employees a contractual right to apply for the enhanced voluntary redundancy package.

1. Appeal allowed. The Employment Judge made material errors of law and her decision dismissing the contractual claims could not stand.

2. The claim was not founded on a policy, custom or practice established by repeated past payments. It was founded on what the Council communicated about the 2014/15 scheme. The number of previous occasions on which voluntary redundancy had been offered was therefore irrelevant. Applying Park Cakes Ltd v Shumba [2013] EWCA Civ 974, the proper inquiry was the objective meaning of the Council’s communications to affected employees.

3. The Employment Judge’s construction of the intranet guidance was unsustainable. Read as a whole, it said that the voluntary redundancy process was open to all affected employees and that they would be contacted and invited to apply. It stated no eligibility criterion other than being an affected employee. In that context, “eligible” was used as a synonym for “affected”, not as a separate condition depending on a discretionary invitation.

4. The absence of any guarantee that an application would be granted did not answer the Claimants’ complaint. Their alleged contractual right was a right to an opportunity to apply. If that right existed, the likelihood of an application and of its approval went to damages. The Council would also be under an implied obligation not to decide an application unreasonably.

5. Nor did the guidance support an exclusion for an affected employee in a job group whose role was being deleted. No such restriction had been communicated, and it was inconsistent with the stated aim of reducing compulsory redundancies.

6. The matter was remitted to a differently constituted Employment Tribunal to determine whether the properly construed communications created a contractual right to apply and, if so, any resulting damages.

• Employment Appeal Tribunal: Appeal allowed and the contractual claims remitted to a differently constituted Employment Tribunal.
• Employment Tribunal, Birmingham: Judgment sent on 27 May 2016 dismissed the Claimants’ breach of contract complaints concerning the opportunity to apply for voluntary redundancy.