09 August 2013 #Employment
The Court of Appeal issued some useful guidance as to when enhanced redundancy pay becomes a matter of contractual entitlement rather than just being payable at the employer’s discretion. In his judgment in the case of Park Cakes Ltd v Shumba & Ors  EWCA Civ 974 on 31 July 2013, Lord Justice Underhill set out some useful non-exhaustive factors to consider:
The case relates to employees who had transferred under the TUPE Regulations from the Northern Foods Group. They were subsequently made redundant and claimed entitlement to enhanced redundancy payments based upon previous payment practice.
Northern Foods operated a formal redundancy scheme under which the claimed benefits were paid, over many years, whenever redundancies occurred. The claimants believed it reflected a contractual term of their employment while the employer’s case was that the scheme was operated as a matter of policy but was not a contractual entitlement.
The Court of Appeal found that the employee must have an expectation from the employer’s conduct that the claimed benefit(s) should be paid “as of right” and previous application of the scheme, for this purpose, should have been “without exception”.
In this case, it was relevant that the claimed benefits were part of a “composite package”. The judge felt that it is incorrect to say that such a package cannot include both contractual and non-contractual benefits and it will be necessary to consider each element of a package individually.
The case is to be remitted to the ET for a fresh hearing based on the Court of Appeal’s finding of flawed reasoning by the original tribunal.
CAS Employment Law Caseworker