Khatri v Cooperatieve Centrale Raiffeisen-Boerenleenbank BA [2010] EWCA Civ 397

Appeal by claimant against refusal of summary judgment concerning a bonus due under an employment contract. Summary judgment was made.

The claimant, who had been employed as a trader at a bank, claimed that his contract of employment specified that he should receive a guaranteed bonus. He had been moved from his position and by letter the employer changed the terms though the claimant did not sign an acceptance as required by that letter and the nature of the work did not change. He was later made redundant and claimed the sum due for his bonus.

In this judgment Jacob LJ first reviews the principles for making a summary judgment and then reviews the wording and construction of the various contracts and the bonus payments. He concludes that he can make summary judgment, as there was no need for a trial, decides that the contract did confer a right to a bonus and adds that

"If banks decide to reward their employees by means of purely discretionary bonuses then they should say so openly and not seek to dress up such a bonus with the language of entitlement qualified by a slight phrase which does not make it absolutely clear that there is in fact no entitlement at all."

He then also goes to comment that as the claimant had not signed the new offer letter, and following Solectron Scotland v Roper, it would "be quite wrong to infer from all the circumstances that the claimant had accepted changes to his contract". He therefore allowed the appeal and granted summary judgment.


Case No: A2/2009/2379
Neutral Citation Number: [2010] EWCA Civ 397
The Hon Mr Justice Penry-Davey
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 23/04/2010




**Saleem Khatri (Claimant/Appellant)

Cooperatieve Centrale Raiffeisen-Boerenleenbank BA (Defendant/Respondent)

James Goudie QC (instructed by Gannons) for the Claimant/Appellant
David Craig (instructed by Allen & Overy) for the Defendant/Respondent

Hearing date: 25 March 2010


**Lord Justice Jacob (giving the first judgment at the invitation of Lord Justice Rix):
**1.This appeal is from a judgment of Mr Justice Penry-Davey of 12 October 2009 [2009] EWHC 2606 (QB).  He refused the claimant summary judgment in respect of his claim for a bonus which he says is due under his employment contract with the defendant bank.

2.The Judge gave two reasons for refusing summary judgment.  Firstly, he held that there was "considerable force" in the bank's contention that the contract did not entitle the claimant to the claimed bonus and, secondly, even if that had been otherwise, there was an arguable, fact sensitive, defence.  This was that the claimant had consented to a variation of his contract so as to displace the contractual term under which he made his claim.

**Applicable principles for summary Judgment
*3.There was no dispute as to the principles applicable to a claim for summary judgment.  Counsel agreed the recent convenient summary by Lewison J in Nigeria v Santolina Investment* [2007] EWHC 437 (Ch):

  1. The court must consider whether the defendant has a "realistic" as opposed to a "fanciful" prospect of success.
  2. A "realistic" defence is one that carries some degree of conviction.  This means a defence that is more than merely arguable.
  3. In reaching its conclusion the court must not conduct a "mini-trial".
  4. This does not mean that the court must take at face value and without analysis everything that a defendant says.  In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents.
  5. However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial.
  6. Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without a fuller investigation into the facts at trial than is possible or permissible on an application for summary judgment.  Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case.

4.I would only add this – that one has to be careful not to take the last point too far when the case concerns construction of a written contract.  The factual matrix is key to understanding what the parties must have intended by the words they used.  But it far from follows that the need to know what that matrix was requires a full trial with discovery, evidence and cross-examination of witnesses. If there is no actual conflict of evidence on a relevant point of background matrix, it is only when there really are reasonable grounds for supposing that a fuller investigation of the facts as to the background might make a difference to construction that the court should decline to construe the contract on a summary judgment (including strike out) application.

5.The court should not be over-astute to decline to deal with the construction of a contract summarily merely on the basis that something relevant to the matrix might turn up if there were a full trial. Most disputes as to "pure" construction of a contract will be suitable for summary determination because the factual matrix necessary for its construction will itself be determinable on that application.

**The Facts
**6.The claimant was employed by the defendant bank as a derivatives trader from June 1998 until 13 January 2009.  Until May 2008 his contract was governed by the terms of a letter of 20 May 1998.  His basic salary in 1998 was £40,000 per annum plus "any future applicable bonuses made entirely at the discretion of the bank on the basis of your financial and managerial performance viewed across Rabobank International".  (Rabobank International is the trading name of the defendant). It was accepted that the basic salary had been increased over the years but not up to as much as £100,000.

7.The job the claimant actually did from about 2005 was to trade on behalf of the bank itself as opposed to trading for clients.  This is called "proprietary trading."   It is common ground that the claimant was good at his job and regularly made money for the bank.

8.Until the contract in question the claimant's entitlement to a bonus was discretionary.  Before I go further I should say a word about discretionary bonuses generally since their widespread existence forms part of the background matrix. The authorities establish that even where an employee's contract says that he is entitled to a bonus on a purely discretionary basis that does not mean the employer is entirely free to decide whether to pay a bonus or not.  On the contrary, in making his decision whether to pay a bonus, and if so how much, the employer must act in a rational and fair manner.  The test is essentially one of Wednesbury unreasonableness, see Horkulak v Cantor Fitzgerald [2005] ICR 402, [2004] EWCA Civ 1287 and Keen v Commerzbank  [2007] ICR 623,[2006] EWCA Civ 1536.

9.So, contrary to Mr Goudie QC's written submissions on behalf of the claimant, an entitlement to a purely discretionary bonus is not of "minimal value".  Indeed in the past the claimant has received large sums by way of "discretionary" bonuses.  For example in 2007 he received £150,000, a sum with which he was unhappy as being too low compared with some of his colleagues.  To be fair Mr Goudie did not press the "minimal value" point in his oral argument.

10.In March 2008 the parties changed the employment contract.  Part of the background to the change was that not only was the claimant unhappy with the previous year's bonus of £150,000 but colleagues of the claimant on the same desk had performance related bonuses and both the claimant and the bank considered he had "lost out" in 2007 compared with them.

11.The new contract was contained in a letter of 18 March 2008, a document signed by the claimant to signify his agreement on the 19 March.  The claimant's basic salary was increased to £100,000 per annum with effect from 1 July 2008.  There were two provisions as to bonus:

**Guaranteed Bonus
**Provided you have complied with the Conditions and subject to the conditions specified below, the following payment is also guaranteed:

A guaranteed bonus of £50,000 attributable to the 2008 calendar year.  This award, less statutory deductions, will be paid no later than 31 March 2009.

The guaranteed bonus (the net amount paid to you) will be refundable to the Bank in the event of you voluntarily resigning from the Bank prior to having completed twelve months' service from the initial payment date of the guaranteed bonus.

If your employment with the Bank is terminated, for reasons of gross misconduct, or you have given notice of your intention to resign, in circumstances other than those in which you are entitled to terminate it without notice by reason of the conduct of the Bank, on or before the bonus payment dates, then you will not be entitled to receive your guaranteed bonus including any deferred portion of guaranteed bonus.

Performance Related Bonus
You will also be eligible to receive a performance related bonus from the Bank, subject to your individual revenue generation.  Any payment due will be made at the time the Bank makes its annual performance bonus payment but in any event no later than 31 March in the year following the performance year for which you are being awarded (i.e. 31 March 2009 in respect of 2008).  The formula used to calculate the bonus due to you will be as follows and will be calculated for 2008:



Total Revenues (net of brokerage fees)






12% will be linked to your individual performance providing the individual total revenue threshold of €550,000 has been reached.

The above table is applicable to your 2008 bonus.  The Bank maintains the right to review or remove this formula linked bonus arrangement at any time.

12.It is common ground that the Guaranteed Bonus of £50,000 was to "make up for" the "shortfall" in 2007.  It was not given without any strings however, for it remained subject to the two conditions (no voluntary resignation or misconduct).  The first of these is some evidence of a desire by the bank to retain the claimant's services.

13.In mid-July the claimant was told that he might be made redundant.  At that time his "book" had suffered recent heavy losses, although not enough to wipe out all the profit he had made in the year 2008 up until that point.

14.Shortly thereafter, on 22 July the claimant received a letter about his possible redundancy.  It said:

I write further to our recent conversations at which you were advised that your position was at risk of redundancy.

You are invited to a further meeting on 23 July 2008 … as part of the first stage of our consultation process and where we will also advise you of the outcome of the interview process …

I confirm that the reason for this meeting is that further to the recently announced re-structure of the GFM Business product lines, to follow the Model Two strategy approved by the Board, there is as a result, no further requirement for the Proprietary Trading business in London going forward as it is not part of GFM's core business strategy. The key reason being that it is not a client facing activity and no longer relevant for its strategic business.  In addition, due to current market conditions, the profitability of the Desk has been affected and has not been profitable during 2008.

15.Following his interview on the 23 July the claimant received a further letter saying:

I write further to our recent meetings of 21 and 22 July at which you were advised that your position was at risk of redundancy.

The Bank can now confirm that the selection process is now complete.  As a result I can advise that you are no longer at risk of redundancy.  I can also confirm that you have been successfully redeployed as a Trader within the Global Financial Markets, Position Management, Interest Rate Derivatives Desk.

A further letter detailing the amended terms and conditions of your employment which will apply to your change in role will follow. 
The first three months from today's date will be regarded as a trial period for your new role. This will provide an opportunity for the Bank and yourself to assess your suitability for the role.

16.The "further letter" came the next day, on 24 July 2008.  It said:

Further to your recent meetings with Henk Rozendaal and Julie Fitzgerald, I am writing detailing amendments to your original contract of employment dated 29 May 1998 following your successful appointment as Trader within the Global Financial Markets, Position Management, Interest Rate Derivatives Desk.

1.   Status and Duties You will be employed as a Director in the Interest Rate Derivatives Department within the Global Financial Markets Division …

3. Remuneration
*Guaranteed Bonus
*The terms relating to the guaranteed bonus attributable to the 2008 calendar year continue to apply, as per the letter dated 18 March 2008.

*Discretionary Bonus
*For future calendar years you will also be eligible to participate in the Bank's annual discretionary performance related bonus scheme.  This scheme will vary from year to year.  Bonuses which are made entirely at the discretion of the Bank, on the basis of a number of factors including your individual performance, the performance of the business area in which you work and the performance of the Bank.

For clarification please note that following the closure of the London Desk, the formula driven bonus relating to this desk will cease with immediate effect and you will be eligible to participate in the discretionary bonus for 2008.

17.The letter went on to set out some restrictive covenants not contained in the original contract of 1998 or the letter of March 2008.   It concluded with this:

I should be grateful if you would sign below to indicate your acceptance of this offer.  Should you have any questions then please do not hesitate to contact me.

18.The claimant did not sign the letter as asked.  Nor was he ever pressed to do so. And, despite the talk of the "new role" and "successfully redeployed" nothing in fact changed. The claimant continued to work in the London Office doing exactly the same work as proprietary trader as he had been doing before. He had the same budget and risk limits and even sat at the same desk. He continued to be paid (and to accept) his salary. The only slight difference was that he reported to a different person.

19.By October the claimant's book had improved considerably.  It was showing a profit of €11m (or more if one takes into account an accounting error). Also in October the bank made it known that further redundancies were proposed. Just before the end of the 3-month trial period set by the letter of 23 July, the claimant made it explicit that he did not accept that the letter of 24 July was effective to deprive him of the performance related bonus which he claimed he was entitled to by virtue of the letter of 18 March. He sent an email of 21 October saying the "unilateral change of my contract" was never discussed at any of the interviews and he had never expressed acceptance of it.

20.On 28 October the claimant was told he was dismissed by reason of redundancy.  The dismissal eventually took effect on 12 January 2009.
21.By the end of 2008 the claimant had traded very successfully on behalf of the bank taking the year as whole.  He made a profit of €13,898,066. The formula of the letter of 18 March 2008, if it applies, amounts to €1,601,767.92.  It is that sum with interest which the claimant claims.

**Principles of Construction
22.The first question is whether the contract entitles the claimant to a bonus according to the formula. It is purely one of construction. It falls to be decided by how the words would be understood by a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation they were in at the time of the contract. The background includes anything which would have affected the way in which the language of the document would have been understood by the reasonable man, see ICS v West Bromwich** [1998] 1 WLR 896 at 912-3 per Lord Hoffmann.

*A Dispute as to the Factual Matrix?
*23.Before the Judge, and initially before us, Mr David Craig on behalf of the bank took the position that this case needed a trial in order to determine the factual matrix. The Judge made no express reference to such a need, essentially reaching his decision that the claimant had a realistic prospect of success on the language of the letter of 18 March alone.

24.We pressed Mr Craig as to what, if anything, really needed investigation at a trial.  He submitted that there were four such matters:

i) That the March 2008 variation took place against a general background of the financial crisis which had started by then;

ii) That the Bank was intending to review its bonus arrangements generally;

iii) That the purpose of the variation was to put the claimant on the same basis as other members of the team. They had performance related formulae in their contracts but those contracts did not give them an entitlement to a bonus if the performance was achieved;

iv) That performance related formulae for bonuses were unusual in the industry.

25.The first of these points hardly needs any investigation at a trial or at all.   Besides Mr Goudie QC for the claimant accepted it. To my mind it casts no light on the meaning of the contract as it would be understood by the reasonable reader. On the one hand he might think that if the contract remained essentially discretionary despite the formula, the bank could decide not to pay an "earned" bonus if it concluded that its overall position (which given the times was uncertain) did not make that appropriate.  On the other hand, precisely because of the uncertainty, it might be that the bank was keen to confer a real incentive on a trader who consistently actually made a profit for the bank by conferring on him an actual entitlement. The point is neutral.

26.The second of these points was not accepted by Mr Goudie. It is not actually alleged at all by Mr Rozendaal who made the witness statement in answer to the claim for summary judgment.  Moreover as formulated by Mr Craig it amounts to no more than the private thinking of the bank, a matter irrelevant to construction of the contract.  And finally even if it were a background matter known to both parties I do not see that it would affect the construction of the contract. Again it cuts both ways:  on the one hand knowing that there might be a change in the future might lead one to suppose that this formula could be changed whenever the bank chose to do so.  On the other hand given that possibility, the change from a purely discretionary bonus to a performance related bonus just for the year 2008 (which had only 9 months left to run) might give rise to the inference that the claimant's services were seen as particularly valuable and were being rewarded, just for that year, by an entitlement.  And all the more so given that he was to get a definite £50,000 bonus anyway.

27.Again as formulated by Mr Craig the third point would not form part of the background matrix.  It is not suggested that the claimant knew the details of the other employees' contracts or that the bank thought he knew those details.  All that the claimant says is that he knew there were performance related formulae in the some of the others' contracts and that that was the reason for his 2007 bonus being so low – after the performance related bonuses were paid there was not enough left in the bonus pot for the bonus he thought (and to be fair the bank recognised) he deserved.  That hardly suggests the claimant knew that the others were, despite the formulae in their contracts, in substance only on a discretionary bonus like him.

28.As to the last of the "matrix" points, the allegedly unusual nature of performance related bonus in the industry, again I do not see how it could affect construction even if it were proved to be true.   For this contract has got a formula, and in general terms, other members of the team were known to have them too.

29.The upshot of all this is that I can see no relevant factual issue which needs a trial. The issue of the construction of the contract can be, and should be, decided now.  Mr Craig, to be fair, accepted that was appropriate if we concluded there was no need for a trial of any of the matters he had relied upon by way of matrix.

**Construction of the Contract
**30.It is first convenient to get out of the way an argument, not pressed very hard by Mr Craig, arising from the two sorts of bonus to be provided under the headings "guaranteed" and "performance related".  The suggestion was that a contrast was being drawn between a bonus to which the employee was entitled ("guaranteed") and something of a discretionary nature.  But that is a false contrast. The "guarantee" is for a fixed sum to be paid on fulfilment of the two conditions. The contrast is with a bonus which depends on performance. The contrast tells you nothing about whether the performance related bonus is "guaranteed" in the sense of being made a definite entitlement or not.

31.The next logical thing to consider is whether the March 2008 letter was concerned to say something about a performance related bonus only for the year 2008.  This was a point which emerged in the course of oral argument as a result of a question by Longmore LJ and was followed up in some post-argument written submissions.

32.Although this was not Mr Craig's "primary position" and not necessary for his main argument he suggested this was a tenable view.  The suggestion was that the letter related only to 2008.  It provided for a guaranteed bonus for that year only. The possibility of a performance related bonus for that year alone was also provided, but that possibility could be reviewed or removed at any time at the discretion of the bank: at any time, on this construction, is limited to the 2008 bonus formula. There is no ongoing (for future years) bonus formula at all.

33.I reject this contention.  It is inconsistent with the background matrix of facts in that quite clearly neither side was intending in their mutual dealings to be catering for 2008 only. It is inconsistent with the language of the clause which clearly contemplates successive yearly evaluations of bonus:

Any payment due will be made at the time the Bank makes its annual performance bonus payment but in any event no later than 31st March in the year following the performance year for which you are being awarded (i.e. 31st March 2009 in respect of 2008).  [Key words italicised]

34.It follows that the contract is clearly speaking of a performance related bonus being applicable on a yearly basis.  It is on that basis that one must consider the meaning of the clause as it would be understood by the reasonable reader.

35.Such a reader would be taken to know the key background fact that this contract was intended to be a variation of the previous contract which was for a discretionary bonus.   So I think he would not readily conclude that this contract was in effect no different from the earlier, which is what Mr Craig's argument amounted to.  He submitted:

i) The contract said the table "is applicable to your 2008 bonus".

ii) But it went on to say that the Bank retained the right to review or remove this formula … at any time.

iii) That must include the formula for 2008.

iv) Hence the formula for 2008 could be and was varied by the July correspondence.

36.The bank's primary submission (now in the alternative) was that at any time related to 2008 as well as future years. To avoid the uncomfortable consequence of an absolute right to remove or vary the 2008 bonus (even after it had been "earned") Mr Craig submitted that the bank could only do either of these on a rational basis.  The same principles applied to variation or removal as they did before to the discretionary bonus.  The only difference was one of expectation:  under the new contract the employee had a better expectation of bonus (if he could achieve performance) than under the old.

37.I do not accept this submission.  The language of the clause contains words of entitlement, "you will also be eligible", "the formula used to calculate the bonus due", "the above table is applicable to your 2008 bonus" and "all payments due to you."  To say all of this entitlement is potentially taken away by the words at any time at the end of the clause is simply not the most rational way to read it. It makes much better sense to read the clause as a whole as saying "this bonus formula applies for this year; but it may all be different next year."   If the bank was really intending to say that the 2008 bonus remained discretionary with only an initial expectation of calculation according to the formula, three little words at the end was not the way to convey that to the employee or the reasonable reader. The matrix of fact that the clause was replacing a discretionary entitlement clause reinforces that.  So also does the fact that the bank clearly wanted to retain the claimant's services – hence the entitlement to the "guaranteed bonus" provided he stayed on.

38.Accordingly I conclude that the contract did confer on the claimant a right to a bonus according to the formula.

39.I reach this conclusion with no regret. If banks decide to reward their employees by means of purely discretionary bonuses then they should say so openly and not seek to dress up such a bonus with the language of entitlement qualified by a slight phrase which does not make it absolutely clear that there is in fact no entitlement at all.  If you are to give with one hand and take away with the other, you must make that clear.

**Variation of the Contract?
**40.Again it is important first to consider whether any of the facts relevant to this question are in dispute or reasonably require further elucidation at a trial.   The Judge said it was "very dependent upon the facts relating to the defendant's conduct and activities between July and October 2008" and was a "very fact-sensitive issue."   However he did not identify any dispute of fact about the bank's conduct or activities in period concerned or explain why the question was fact-sensitive necessitating a trial.

41.Accordingly we asked Mr Craig to identify what facts were disputed or required a trial for further elucidation.  He suggested that it was a fact known to both sides that if the claimant did not accept the terms contained in the letter of 24 July he would or might be made redundant there and then.  So his acts of continuing to work and the bank's act of not making him redundant show acceptance of the new terms.

42.I am not impressed with this.  First the bank's evidence does not allege this risk of redundancy at all, yet if it truly were a live matter, it surely would have been.  Second the letter of 23 July, before the letter of 24 July which contains the terms, explicitly made it clear that the risk of redundancy was over.

43.So the question turns on undisputed facts.  It is therefore prima facie fit for determination by summary process.  Moreover the applicable law is not complex, complexity of law sometimes (but by no means always) being a factor militating against summary judgment.  I conclude, contrary to the Judge, that the question is one which should be decided now.

44.Mr Goudie submits, correctly in my view, that none of the acts of either party unequivocally show acceptance by the claimant of the new terms. In reality he carried on doing the old job for the same pay.  The only difference was in reporting to a different superior.  That is a trivial difference and miles away from a clear unequivocal act from which one can infer that the claimant was accepting the new terms.

45.Particularly striking is the fact that the claimant did not use the method of acceptance of the new terms specifically called for in the "offer" letter, namely by signing it. He had done that in relation to the March letter. That reinforces the inference that he had not accepted the new terms on this occasion.   Further reinforcement is provided by the fact that the bank did not require him to sign or even query with him why he had not signed.

46.It should be remembered here that not only did the new terms purport to remove the bonus entitlement, they also sought to impose restrictive covenants.  Acceptance of the terms would make the claimant worse off. So why should his conduct in continuing just as if nothing had changed spell out acceptance of this offer?

47.We asked Mr Craig when it could be said that the offer was accepted.  Was it on the day after the offer when the claimant came into and was allowed to work?  Was it when he accepted his first pay after the offer?  Or when?   Mr Craig could not really say, other than that the acceptance must have happened by October. That overlooks why he could not really say.  It is because there is no unequivocal act implying acceptance.

48.The law in such a case is reasonably clear.  Perhaps the leading authority is Rigby v Ferodo [1988] ICR 29.  An employer unilaterally announced a reduction in pay.  The employees rejected that but continued to work under protest. It was held that the unilaterally imposed variation of the contract did not take effect. Lord Oliver said at p.35:

I can see no other basis [i.e. estoppel waiver or acquiescence] upon which it can be argued that the continued working by Mr Rigby and his acceptance for the time being and under protest of the wage that the appellant, with full knowledge of his lack of agreement, chose to pay him is to be construed as an acceptance by him either of the repudiation by the appellant of the original continuing contract or of the new terms which the appellant was seeking to impose.

49.Mr Craig submitted that this case is different because there was no protest. However there was a failure to accept the terms as specifically asked for by the employer. Why should anyone construe the fact of continued working as an acceptance of those terms?

50.Elias J, then President of the EAT, considered the position in a case rather weaker than the present (because, unlike the present case, there was no failure by the employee to respond to a specific request for acceptance). In Solectron Scotland v Roper [2004] IRLR 4 he said:

30 The fundamental question is this: is the employee's conduct, by continuing to work, only referable to his having accepted the new terms imposed by the employer? That may sometimes be the case. For example, if an employer varies the contractual terms by, for example, changing the wage or perhaps altering job duties and the employees go along with that without protest, then in those circumstances it may be possible to infer that they have by their conduct after a period of time accepted the change in terms and conditions. If they reject the change they must either refuse to implement it or make it plain that by acceding to it, they are doing so without prejudice to their contractual rights. But sometimes the alleged variation does not require any response from the employee at all. In such a case if the employee does nothing, his conduct is entirely consistent with the original contract continuing; it is not only referable to his having accepted the new terms. Accordingly, he cannot be taken to have accepted the variation by conduct.

31 So, where the employer purports unilaterally to change terms of the contract which do not immediately impinge on the employee at all — and changes in redundancy terms will be an example because they do not impinge until an employee is in fact made redundant — then the fact that the employee continues to work knowing that the employer is asserting that that is the term for compensation on redundancies, does not mean that the employee can be taken to have accepted that variation in the contract.

32 The point was put by Browne-Wilkinson J in this Tribunal in the case of Jones v Associated Tunnelling Co Ltd [1981] IRLR 477. It is not necessary to set out the facts of that case, save to say that it was a case where the employers were asserting in the statutory statement of terms that the terms of the contract contained a wider mobility clause than that which the employee considered to be the case. One of the arguments was that the employee had continued to work with knowledge that this was the term being asserted by the employer and therefore he must have been taken to have accepted it. This Tribunal said this:

22 "In our view, to imply an agreement to vary or to raise an estoppel against the employee on the grounds that he has not objected to a false record by the employers of the terms actually agreed is a course which should be adopted with great caution. If the variation relates to a matter which has immediate practical application (e.g. the rate of pay) and the employee continues to work without objection after effect had been given to the variation (e.g. his pay packet has been reduced) then obviously he may well be taken to have impliedly agreed. But where, as in the present case, the variation has no immediate practical effect the position is not the same. It is the view of both members of this Tribunal with experience in industrial relations (with which the Chairman, without such experience, agrees) that it is asking too much of the ordinary employee to require him either to object to an erroneous statement of his terms of employment having no immediate practical impact on him or be taken to have assented to the variation. So to hold would involve an unrealistic view of the inclination and ability of the ordinary employee to read and fully understand such statements.

23 Even if he does read the statement and can understand it, it would be unrealistic of the law to require him to risk a confrontation with his employer on a matter which has no immediate practical impact on the employee. For those reasons, as at present advised, we would not be inclined to imply any assent to a variation for a mere failure by the employee to object to the unilateral alteration by the employer of the terms of employment contained in the statutory statement."

51.Applying Elias J's "only referable" test to the present case, it seems clear to me that it would be quite wrong to infer from all the circumstances that the claimant had accepted changes to his contract, changes which were wholly to his disadvantage both by removing his right to performance related bonus and imposing restrictive covenants. There is no substance in the variation point.

52.It follows that I would allow the appeal and grant summary judgment to the claimant.

**Lord Justice Longmore:
**53.I agree.

**Lord Justice Rix:
**54.I also agree.

Published: 27/04/2010 14:34

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