THE INDUSTRIAL TRIBUNALS

CASE REF:	822/15

CLAIMANT:			Tracey McIlroy	

RESPONDENT:		Swinton Group Limited, t/a Open and Direct Insurance

DECISION 
The claimant was not contractually entitled to an enhanced redundancy payment and her claim for breach of contract is therefore dismissed.

Constitution of Tribunal:

Employment Judge (sitting alone):	Employment Judge McCaffrey	

Appearances:

The claimant was represented by Mr R Hermon, Barrister-at-Law instructed by King and Gowdy Solicitors.

The respondent was represented by Ms A McLarnon, Barrister-at-Law instructed by Gateley LLP Solicitors.

ISSUES

1.	The issue for the tribunal to consider was whether the claimant was entitled to an enhanced redundancy payment as a result of her transfer of employment to the respondent (“SGL”) in January 2009 or whether she was entitled only to a statutory redundancy payment as she had remained on the terms and conditions of employment offered by her previous employers Open and Direct Insurance (“ODI”).  The claimant’s claim was that the provision for enhanced redundancy payments under the respondent’s terms and conditions of employment had been implied into her contract by its conduct from 2009 onwards.

THE FACTS

2.	I received witness statements and heard evidence from the claimant and from Mrs Hilary Lavery, Human Resources Manager with the respondent until 31 July 2015.  On the basis of the evidence heard and the documents opened to me I make the following findings of relevant facts.

3.	The claimant was originally employed by ODI from 29 June 2006 as an Assistant Accountant.  ODI was bought over by Equity Insurance Brokers Ltd in January 2007 and on 9 January 2009 that company was bought over by the respondent.  It was the claimant’s evidence that following the transfer to the respondent, she received an email from the HR department, stating that she was now to follow all the respondent’s policies and procedures which were available to view through the Swinton i-link, the respondent’s intranet.  The claimant said that she believed that these policies and procedures then formed part of her contract of employment.  The email concerned could not be found by either the claimant or the respondent.  Mrs Lavery’s evidence (which I accept) was that she had written an email to all former ODI staff at this time.  She was clear however that her email did not purport to change terms and conditions of employment and to do so would have been entirely contrary to the process which took place later in 2009.  It would, of course, also have been contrary to the Transfer of Undertakings Regulations 2006 (“TUPE”) which protect employees’ terms and conditions of employment when a business is bought over by another firm.  Mrs Lavery’s evidence, which I accept as it was not contradicted in any way by the claimant, was that employees were advised that compliance with SGL policies and procedures was expected in order to assist with the organisation of employees and to ensure consistent standards in matters such as absence reporting and holiday authorisation.  Mrs Lavery was clear that SGL policies were not incorporated into the claimant’s contract of employment and did not entitle her to any additional contractual benefits.  I find as a fact that the email sent to all staff in 2009 was as described by Mrs Lavery and did not have the effect of incorporating all SGL policies and procedures into the claimant’s contract of employment.  

4.	There was a presentation to senior managers in the summer of 2009, setting out the option for former ODI staff to transfer to the respondent’s terms and conditions of employment.  A copy of the presentation slides was produced to me and it was clear from that the detail of the enhanced benefits available in relation to the respondent’s redundancy policy, sickness policy, employee offerings/discount platforms was set out to staff.  That presentation was “cascaded” down through managers to all staff in December 2009 and the claimant was clear that her manager made the presentation to her and other staff, at their offices in December 2009.  This was a departure from her assertion in her statement that the presentation was made by Donna Winrow in July 2009.  The last page of the presentation suggests that staff should “review own packages now” and “return signed P10 if wish to accept invitation else stay on existing T and Cs”.  There was also scope during the presentation for a question and answer session.  Following this presentation, staff including the claimant were sent a letter in January 2010.  That letter enclosed a template of the respondent’s terms and conditions.  The content of this letter is significant in terms of this claim and so I set it out in full.  The letter read as follows:-

			“Dear Tracey

	I am delighted to enclose with this letter a Swinton Group Limited’s statement of particulars of employment as an invitation to transfer to Swinton’s terms and conditions (please note Section 1 Induction Does Not Apply).  Our HR policies which also form part of Swinton’s terms and conditions are available on the HR page of i-link.  Please read this documentation carefully, and if you do wish to transfer please sign page 10 of the enclosed Statement and return it to the address above by your business area’s internal post.

If you transfer and you are not already participating in any relevant incentive scheme you will then be eligible to do so and your line manager will provide details of the same to you.

Also enclosed is a benefits statement, which will be effective from 1 February 2010 should you decide to accept Swinton’s contract.  This details the following:-

•	your actual salary;
•	your benefits package based on your existing salary; and 
•	your holiday entitlement.

		In January 2011 you will be given the option to make changes to your benefits packages in line with our annual flexible benefits process.  For further information please refer to the flexible benefits booklet and the flexible benefits policy, both of which are available on i-link.

		If you have any questions regarding your benefits package or the company’s flexible benefits scheme, in the first instance please refer to the flexible benefits booklet or policy or alternatively if you require further clarity you should contact the HR benefits team on 0845 1684467 or email hr.benefits@swinton.co.uk.

	If you choose at this time not to transfer you will continue to be employed on your current terms and conditions of employment.

	Yours sincerely”

5.	When it was put to the claimant in cross-examination that she had made a considered and conscious decision to stay with the ODI terms and conditions of employment rather than transferring to SGL terms because her existing terms of employment offered her enhanced maternity pay and leave, a bonus payment and enhanced sickness pay, she agreed that was correct.  She was adamant however that following the email she had received in January 2009 she was following “all the Swinton policies and procedures”.  She later agreed that she had not in fact followed all the Swinton policies and procedures in that she benefitted from ODI contractual maternity pay, but argued that she had followed “the others”.  The claimant’s evidence therefore was contradictory, but she eventually did concede that she had decided not to transfer to the Swinton terms and conditions of employment. 

6.	The claimant claimed that she was entitled to SGL’s flexible benefits policies.  The claimant had received a passcode to access details of these flexible benefits, but she never actually tried to avail of them.  The evidence given by Mrs Lavery for the respondent was that, had the claimant tried to avail of these policies, she would not be entitled to do so given that she was not employed under SGL terms and conditions of employment.  As the claimant never actually tried to use the flexible benefits policies, I accept Mrs Lavery’s evidence on this point.  The claimant would have been able to avail of childcare vouchers, details of which were set out on the i-link, had she wished to do so, but the claimant conceded in cross-examination that childcare vouchers were part of government policy and not an SGL policy under its conditions of employment.

7.	The claimant agreed that she had two periods of maternity leave, the first commencing in September 2010 and the second commencing in March 2012 and that while on that maternity leave, she received enhanced maternity pay amounting to £12,000.00 more than she would have received had she been subject to SGL maternity pay policy, which allowed only for statutory maternity pay.  From 2009 on she also benefited from bonus payments to which she was entitled under the ODI terms and conditions by a total amount of £8,414.39.

8.	In November 2014 the respondent began a consultation process as part of a restructuring of its business in Northern Ireland.  Following consultation meetings, the claimant was served with notice of redundancy in a letter dated 11 December 2014 and her employment ended on 4 February 2015.  The claimant appealed against her selection for redundancy, claiming a breach of contract by SGL in not providing her with enhanced terms for redundancy beyond what was required as statutory redundancy payments.  The claimant alleged that she was entitled to an enhanced redundancy payment under the SGL terms and conditions of employment sent to her in January 2010, which referred to the redundancy policy on the i-link intranet.  The redundancy policy (which was revised in March 2013) allowed for enhanced redundancy payments over and above the statutory minimum and was not subject to the statutory maximum amount for a week’s pay for redundancy purposes.  Mrs Lavery agreed in cross-examination that there was nothing to suggest that any part of this policy was separable from any other part.  She agreed that the procedure followed by the respondent in relation to redundancy was broadly the procedure set out in the redundancy policy but she also noted that the ODI contract did not contain any redundancy policy at all and that SGL was obliged to follow the statutory disciplinary and dismissal procedures regarding selection for redundancy.  In following the SGL policy as regards procedure, the respondent sought to comply with the statutory procedures.

THE RELEVANT LAW AND SUBMISSIONS

9.	This area of the law, relating to contractual terms, their interpretation and whether they have been implied into a contract of employment, is complex.  I wish to thank both counsel for the time and care they have taken in preparing their arguments.  

10.	The claim made by the claimant in this case was that the enhanced redundancy payment set out under the SGL terms and conditions was an implied term of her contract of employment.  Therefore, it was argued, by refusing to pay the enhanced redundancy payment the respondent had breached the claimant’s contract and she sought an award of the difference between the statutory redundancy payment and the enhanced redundancy payment of a sum of £2,265.67.

11.	Mr Hermon argued that the redundancy policy had been communicated in its entirety to the claimant and other employees through the respondent’s intranet.  What was not communicated to her (he said) was that the enhanced redundancy payment would not be made.  His argument was that as Mrs Lavery had indicated in her statement that the procedure set out in the SGL redundancy policy was applied to employees including the claimant, the policy must therefore apply in its entirety.  Nowhere in the policy (he argued) did it say that it could be severed and only part of it applied.
  
12.	In relation to the law regarding implied contract terms, Mr Hermon referred me to the judgment of Lord Justice Underhill in Park Cakes Ltd v Shumba [2013] IRLR 800 CA.  This case involved payment of enhanced redundancy payments over a period of time and the issue was whether a contractual entitlement had arisen, so that the employer could no longer refuse to pay redundancy payments at the higher rate.  There was a further similarity with the present case in that there had been a previous TUPE transfer and so the issue was whether the employer was bound by its predecessor’s custom and practice.  Underhill LJ provided a detailed review of the existing case law.  He considered the judgment in Quinn v Caulder Industrial Materials Ltd [1996] IRLR 126 EAT, clarifying that when it referred to the employer’s “intent” in making the payment, what it really meant was not whether the employer subjectively considered itself bound to pay but whether objectively what it said or did conveyed to the employees that it intended to be bound:-

		“On ordinary contractual principles, what matters must be not what the offeror actually intended but what intention his words or conduct would communicate to the reasonable offeree”.  (Paragraph 29).

13.	Underhill LJ also set out at paragraph 36 of his judgment a number of factors which may be particularly relevant where the issue is enhanced redundancy.  The first two of these were on how many occasions and over how long a period the benefits in question had been paid and whether the benefits are always the same.  He commented that the more often enhanced benefits had been paid and the longer the period over which they had been paid, the more likely it is employees will reasonably understand them to be being paid as of right.  However he commented that if, while an employer invariably made enhanced redundancy payments, he nevertheless varied the amount or the terms of the payment, that was inconsistent with an acknowledgement of legal obligation; if there was a legal right, it must in principle be certain.  Mr Hermon noted that on a previous occasion an enhanced redundancy payment had been made to non-Northern Ireland staff of EIB (Equity Insurance Brokers Ltd) who had transferred to SGL in 2009.  Mrs Lavery’s explanation for this was that the enhanced payment had been on a discretionary basis because of the fact that the employees concerned had just recently been transferred under TUPE to SGL.

14.	Mr Hermon relied very much on Lord Justice Underhill’s third factor, namely the extent to which the enhanced benefits are publicised generally.  Underhill LJ commented, 

“Where the availability of enhanced redundancy benefits is published to the workforce generally, that will tend to convey that they are paid as a matter of obligation, though I am not to be taken as saying that it is conclusive, and much will depend on the circumstances and on how the employer expresses himself.  It should also be borne in mind that “publication” may take many forms ...  Employment Tribunals should be able to judge whether, as a matter of industrial reality, the employer has conducted himself so as to create in Leveson LJ’s words, “widespread knowledge and understanding” on the part of employees that they are legally entitled to the enhanced benefits.”

15.	The fourth factor identified by Underhill LJ was “How the terms are described”.  He commented,

 “If an employer clearly and consistently describes his enhanced redundancy terms in language that makes it clear they are offered as a matter of discretion – e.g. by describing them as ex gratia – it is hard to see how the employees or their representatives could reasonably understand them to be contractual, however regularly they may be paid.  A statement that the payments are made as a matter of “policy” may, although again much depends on the context, point in the same direction.  Conversely the language of “entitlement” points to a legal obligation.”

16.	The fifth factor was, “What is said in the express contract” and the learned Judge commented, 

			“As a matter of ordinary contractual principles, no terms should be implied, 		whether by custom or otherwise, which is inconsistent with the express terms 		of the contract, at least unless an intention to vary can be understood.”

17.	Mr Hermon relied very much on the wording of the SGL redundancy policy and argued that it was the relevant “instrument” to be considered in this case.  He argued that SGL policy had been drawn to the attention of employees by being published on the intranet and the nature of this communication supported the inference that the policy was contractual.  He argued that the claimant’s evidence that she had seen the SGL policy on the intranet and had been advised in an email in early January 2009 to follow all SGL’s policies and procedures meant that the redundancy policy was incorporated into her terms and conditions of employment.

18.	Ms McLarnon referred closely to the evidence given, noting that the claimant had been invited to transfer to the SGL’s terms and conditions of employment in early 2010 but had made a conscious decision not to do so.  She noted that the claimant confirmed that she had been present at a presentation in late 2009 at which SGL’s enhanced redundancy policy had been explained to staff.  The claimant however had made a decision which Ms McLarnon described as “very savvy” to retain her original ODI terms and conditions of employment.  As a result of this the claimant benefited considerably financially by receiving enhanced contractual maternity pay and bonuses under the ODI terms and conditions.

19.	Ms McLarnon’s argument was that the respondent used i-link as a communication tool.  Not only did the intranet include all SGL’s policies and procedures but also news items, team briefings, social and business news.  It was also noted that SGL obviously had other pre-existing employees apart from the claimant and her ODI colleagues, to whom all the SGL policies, terms and conditions applied.  Ms McLarnon also rejected Mr Hermon’s argument that the SGL redundancy policy should be implied as a term of the claimant’s employment because her previous ODI claims were silent as to the redundancy policy.  It was her argument that the ODI redundancy terms and conditions were those set down in statute, and they could not be impliedly varied just because SGL put its redundancy terms and conditions on the intranet.  She argued that the claimant’s terms and conditions were clear and that the claimant’s claim was an attempt to “cherry pick” which parts of the contract she wished to apply to her.

DECISION

20.	In this case I am clear that the terms and conditions of employment which apply to the claimant are those under her original ODI contract because the claimant made a conscious decision not to accept the SGL terms and conditions in January 2010 when she was offered the opportunity to transfer.  The letter of invitation to her to transfer (see paragraph 4 above) could not be more clear: if the claimant chose to transfer, she would have the benefit of the enhanced redundancy payment and some other benefits set out in that contract; if she chose not to transfer she would retain the terms and conditions under her ODI contract, including payment of enhanced maternity pay, sickness pay and a bonus.  

21.	I do not accept that the claimant was in any way confused over the policies and procedures involved.  Indeed she agreed in cross-examination that she made a clear and conscious choice to retain her ODI terms and conditions, which SGL was obliged to maintain for her under the Transfer of Undertakings legislation.  I do not accept that the claimant was bound by the SGL policies and procedures as she has asserted.  She agreed in cross-examination that she had benefited from contractual maternity pay and a bonus under her ODI terms and conditions.  Her decision to retain her ODI terms and conditions of employment was made in full knowledge that she would not then have the enhanced redundancy payment (if made redundant) available under SGL terms.  She cannot have her cake and eat it.    

22.	The respondent honoured the ODI terms and conditions under which the claimant worked as they were bound to do, and the claimant benefited from that.  She is not entitled to attempt unilaterally to “adopt” the redundancy policy from SGL which was never part of her written terms and conditions of employment.  I do not accept that this policy was ever incorporated or implied into the claimant’s written terms and conditions.  I do not accept Mr Hermon’s argument that the SGL redundancy policy was implied into the claimant’s contract of employment by being published on the intranet: the presentation made to the claimant and other ODI staff in December 2009 made it clear that SGL terms were being offered to them, but could not be imposed on them.  I have also accepted Mrs Lavery’s evidence as to the email she sent to staff earlier in 2009 about following SGL policies and procedures and what was intended by it (see para 3 above).  Given this background, there was no evidence to show any intention by the respondent to provide former ODI staff with a legal right to enhanced redundancy pay, unless the staff concerned had agreed to transfer to SGL terms and conditions.  I am conscious of Lord Justice Underhill’s guidance in the Park Cakes case: in this case the express contract between the claimant and the respondent was the ODI terms and conditions of employment.  The letter of January 2010 made it clear that if the claimant chose not to accept the SGL terms, she would remain on the ODI terms and conditions.  The ODI terms and conditions did not include enhanced redundancy pay.  To imply the SGL redundancy policy into that contract would be inconsistent with the express terms of the contract and as per Lord Justice Underhill’s guidance, no term should be implied (whether by custom or otherwise) which is inconsistent with the express terms of the contact.  Accordingly, it is my finding that the SGL redundancy policy was not part of the claimant’s contract of employment and there can be no breach of contract for failure to comply with it.  It follows from this that the claimant’s claim is dismissed, and I so order.  

Employment Judge:

Date and place of hearing:  5 August 2015, Belfast.

Date decision recorded in register and issued to parties: