In Keeley v. Fosroc International Limited the Court of Appeal held that the mere mention that employees were "entitled" to enhanced redundancy pay in a staff handbook made it contractually binding even though there was no methodology for calculating the enhanced redundancy payment in the staff handbook.
The Court of Appeal examined the structure and content of the employee handbook. Giving the judgment of the Court, Lord Justice Auld held it was "highly relevant to consider the importance of the provision to the overall bargain of the employees’ remuneration package." He went on to say that "provision for redundancy, notwithstanding statutory entitlement, is now a widely accepted feature of an employee’s remuneration package and as such, is particularly apt for incorporation by reference into the employee’s contract".
The Court of Appeal held that there was no problem of uncertainty arising from the need to calculate payments from time to time and on a case by case basis, but anyway there was a formal admission by Fosroc that there was an established formula for payments. Lord Justice Auld said, having regard to the decision in the Horkulak -v- Cantor Fitzgerald of the Court of Appeal in 2005, the courts will now go far to give practical effect to the reality of the bargain struck between employer and employee and so it seems he would have been prepared to have filled in the gaps anyway.
The decision is a striking example of how far the common law courts have moved in recent years to protect employees’ terms and conditions. Employers should take very careful note of how easy it may be for employees to prove contractual entitlement to enhanced redundancy pay wherever this is recorded as a written policy and referred to in a staff handbook. Perhaps the approach of the employment tribunals is rubbing off on the common law courts?
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 12/10/2006.
