Amdocs Systems Group Ltd v Joel Langton

The Court of Appeal dismissed the employer's appeal and upheld the Employment Tribunal's and Employment Appeal Tribunal's conclusion that the claimant had a contractual entitlement to a 5% annual escalation in income protection payments. The court held that the offer letter, the attached Summary of Benefits and the signed contract of service, read objectively, incorporated the Summary of Benefits into the contract. The employer could not rely on the absence of the underlying insurance policy, nor on an unproduced Manual, to defeat the clear promise in those documents unless the limiting terms had been expressly and unambiguously brought to the employee's attention. The court therefore concluded there was an unlawful deduction from wages to the extent of the unpaid escalator in the two-year tribunal period.

Background and parties. The claimant, Joel Langton, commenced employment in 2003 with Cramer Systems Limited (later Amdocs). He went on long-term sick leave in 2009 and received income protection payments under the employer's scheme. The payments did not receive the 5% annual increases that a document entitled 'Summary of Benefits' had stated would apply after 52 weeks. The employer said the escalator had been removed from the insurer's policy in 2008 and that any entitlement was governed by the staff Manual/Handbook or the insurer's terms.

Nature of the claim. The claimant issued a claim for unlawful deduction of wages, seeking the benefit of the 5% annual escalation under the income protection scheme, limited by the tribunal's two-year jurisdiction (Employment Rights Act 1996, section 23(4A)).

Procedural history. The claim was heard at first instance by the Employment Tribunal (EJ Harris) which found on 13 August 2019 that the Summary of Benefits formed part of the contractual terms and conferred entitlement to the escalator. The employer appealed to the Employment Appeal Tribunal; Judge Auerbach dismissed the employer's appeal. The employer appealed to the Court of Appeal.

Issues framed by the court.

• Whether the Summary of Benefits attached to the offer letter was incorporated into the claimant's contract of employment and therefore created a contractual right to the escalator.
• Whether the Manual/Employee Handbook was the sole source of entitlement and, if so, whether its unproduced terms limited entitlement to the terms of any insurer policy.
• Whether reference to insurance policies in the Summary of Benefits limited the employer's obligation unless the policy terms had been expressly communicated to the employee.
• Whether any unilateral variation or later notification had validly removed the escalator entitlement for the relevant period.

Court's reasoning and resolution. The Court of Appeal reiterated that the contract existed in the documents actually given and signed by the parties in July 2003. The offer letter promised an income protection plan and expressly referred to the attached Summary of Benefits, which set out clear, precise terms including the 5% escalator. Those documents were "apt for incorporation" and, read objectively, created a language of entitlement. The absence of the 2003 Manual and the fact that later employee handbooks or insurer policies were not produced to the claimant meant the employer could not rely on those uncommunicated documents to displace the express contractual promises. Any limitation by reference to insurer policy terms had to be unambiguous and brought to the employee's attention. Questions about the effectiveness of subsequent unilateral variations were not determinative of this appeal. The Court therefore dismissed the appeal and upheld the tribunal's decision that an unlawful deduction had occurred for the tribunal's compensatable period.

The appeal was dismissed. The Court held that the offer letter, the attached Summary of Benefits and the signed contract of service together incorporated the Summary of Benefits as contractually binding, including the 5% annual escalation after 52 weeks. The employer could not rely on an unproduced Manual or insurer policy to limit that obligation unless those limiting terms had been expressly and unambiguously communicated to the employee.

First instance: Employment Tribunal (EJ Harris), liability judgment promulgated 13 August 2019 (liability found for unlawful deduction of wages for the two-year tribunal period). Appeal to Employment Appeal Tribunal (HHJ Auerbach) - employer's appeal dismissed (EAT reference EA-2019-001237-AT). Appeal to Court of Appeal: [2022] EWCA Civ 1027, appeal dismissed 22 July 2022.