COX and Ors v SECRETARY OF STATE FOR THE HOME DEPARTMENT

Policy documents may form part of an employment contract where the parties’ contractual intention is established and the relevant wording is apt to impose legal obligations. Check-off provisions stating that deductions will be made, while identifying only limited circumstances for withdrawal, can create an enforceable contractual entitlement. No term permitting termination on reasonable notice will be implied unless necessary for business efficacy or so obvious as to go without saying. Continuing to work, arranging alternative payment, or delay in bringing proceedings will not amount to acceptance of a detrimental variation unless the conduct unequivocally demonstrates that intention. Where a contractual term confers a benefit on a third party, the presumption of enforceability under the Contracts (Rights of Third Parties) Act 1999 is displaced only by contractual evidence showing that the parties intended otherwise.

The Individual Claimants were civil servants employed by the Home Office and members of PCS. Their union subscriptions had historically been collected through salary deductions under check-off arrangements. The Home Office withdrew check-off from 1 December 2014.

The claim was brought under Part 8 for determination of liability. The issues were whether check-off was incorporated into the employment contracts, whether termination on reasonable notice was implied, whether the Claimants had accepted the change by their conduct, whether PCS could enforce the term under the Contracts (Rights of Third Parties) Act 1999, and whether the Act applied to contracts or substantial variations entered into after 11 May 2000.

1. Contractual entitlement. The check-off provisions in the Codes, handbooks and related documents were apt for incorporation into the Individual Claimants’ contracts. The contractual documents referred employees to those materials, and the provisions were sufficiently certain, workable and expressed in the language of obligation. The provisions allowing withdrawal in defined circumstances, particularly official industrial action, were inconsistent with an unfettered power to withdraw the facility otherwise. The reasoning in Hickey v Secretary of State for Communities and Local Government [2013] EWHC 3163 (QB) and Cavanagh v Secretary of State for Work and Pensions [2016] EWHC 1136 (QB) was not wrong and was followed.
2. Reasonable notice. No term permitting removal of check-off on reasonable notice was implied. The contract operated effectively without such a term, so neither limb of the test in Marks and Spencer plc v BNP Paribas [2016] AC 742 was satisfied.
3. Acceptance and waiver. Withdrawal of check-off was a breach. The Claimants’ continued employment did not unequivocally accept the variation. Collective objection by PCS, the entirely detrimental nature of the change, alternative direct-debit arrangements as reasonable mitigation, and the subsequent delay all left the position equivocal. The principles in Abrahall v Nottingham City Council [2018] EWCA Civ 796 were applied.
4. Third-party enforcement. The term conferred a benefit on PCS and contained no indication that PCS could not enforce it. The presumption under section 1(2) of the Contracts (Rights of Third Parties) Act 1999 therefore applied. PCS could enforce the term.
5. Commencement. A fundamental variation of an existing employment contract may amount to entering into a new contract for section 10(2) purposes. Applying Mulchrone v Swiss Life (UK) plc [2005] EWHC 1808 (Comm), the post-2000 promotions and substantial changes to duties, hours and pay relied upon by the Second and Fourth Claimants were fundamental.
6. The agreed issues were determined in favour of the Claimants.