Ghiglieri v Systech Group Employees Ltd (Contract of Employment)

Where an employment contract is silent on the timing of a personally negotiated bonus, an implied term may arise from the parties’ established practice. It is an error to require that practice to have been widely known by other employees where the alleged term concerns an individual arrangement.

An Employment Tribunal must address potentially material evidence and arguments bearing on an alleged breach of mutual trust and confidence. Silence on such matters may amount both to inadequate reasons and to failure to take relevant matters into account. An express contractual right to require an employee to work at the contractual place of work remains effective unless varied, but its exercise may still require scrutiny for an ulterior purpose.

The claimant, formerly the respondent’s Commercial Director, resigned after the respondent did not make bonus payments at the usual quarterly intervals and required him to return to London following the end of a lengthy assignment in France.

The Employment Tribunal dismissed his claims for unpaid bonus and constructive dismissal. It held that no term requiring quarterly payment could be implied by custom and practice because the practice had not been shown to be widely known by employees. It also rejected allegations of breach of mutual trust and confidence.

The claimant appealed, principally contending that the Tribunal had applied the wrong approach to the implied bonus term and had failed to address material evidence concerning the respondent’s reasons for ending the French assignment.

1. Appeal allowed. The Tribunal’s decision was set aside and the claims for unpaid bonus and constructive dismissal were remitted.

2. The Tribunal erred in treating widespread employee knowledge as a necessary condition for implying, by custom and practice, a term governing the timing of a bonus negotiated and paid on an individual basis. The contractual documents were silent as to payment intervals. They reserved discretion whether to award, and as to the amount of, bonus under the original agreement, but did not reserve a discretion as to when it was payable. The later amendment likewise provided an annual fixed bonus without specifying intervals.

3. Regular quarterly payments and the respondent’s letter acknowledging unpaid quarterly bonuses were capable of supporting an implied term. Such a term would not contradict the express bonus provisions. The remitted Tribunal must determine whether the claimed quarterly-payment entitlement existed and, if so, whether the failure to pay accordingly breached mutual trust and confidence.

4. The Tribunal also failed to address potentially material matters said to show that the stated commercial reason for ending the French assignment was not genuine. Those matters included the proposed replacement at the same rate and the instruction to terminate before the client had responded to a request for a higher rate. A Tribunal need not record every argument, but it must decide material factual issues and explain whether and why they support or fail to support the case advanced. Its silence made the decision inadequately reasoned within Meek principles and/or perverse through failure to consider relevant matters.

5. The respondent was contractually entitled to require a return to London. The claimant’s practice of working in France had not displaced that express term. However, the remitted Tribunal could consider whether that right was exercised for an ulterior motive, which might amount to a breach of mutual trust and confidence.

• Employment Appeal Tribunal: allowed the claimant’s appeal, set aside the dismissal of the claims, and remitted them for determination.
• Employment Tribunal: Employment Judge Balogun, sitting alone, dismissed the claims for constructive dismissal and bonus in a decision sent to the parties on 8 July 2016.