The claimants, who had been subject to a TUPE transfer, were made redundant and claimed that they were entitled to enhanced redundancy pay. It was initially claimed that there was an express term of the claimants' contracts affording them the claimed benefits but that claim was not pursued and the entitlement was said to arise as a matter of "custom and practice". The ET dismissed their claims, saying that "enhanced redundancy pay had been paid to pre transfer employees in the past, although it was not clear on how many occasions it was paid, but the Tribunal was unable to infer that it was paid without exception", that "the Tribunal was not satisfied that payments of the enhanced redundancy pay claimed by the claimants was paid automatically" and "the claimants have not proved on the balance of probabilities that there was an implied term entitling them to an enhanced redundancy payment and their claim fails and is dismissed." The claimants appealed to the EAT. The question whether an enhanced payment had been made consistently over a substantial period and a substantial number of redundancies was a factor of central importance in deciding whether it was to be treated as contractual. The unchallenged evidence was that the enhanced terms had been paid on the occasion of every redundancy exercise from 1993 to 2006, numbering a minimum of seven and it was not open to the ET to profess itself "unable to infer that [the enhanced terms were] paid without exception" unless it had rejected the evidence. Thus the EAT allowed the appeal and remitted the case to a fresh Tribunal. The respondent appealed to the Court of Appeal.

The Court of Appeal dismissed the appeal. The ET's failure to find that the claimed benefits had been paid invariably prior to the transfer remained a material flaw in its reasoning.

_______

Case No: A2/2012/3358

Neutral Citation Number: [2013] EWCA Civ 974

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL

HHJ RICHARDSON AND MEMBERS

UKEAT/0219/11/RN

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 31/07/2013

Before :

LORD JUSTICE MOORE-BICK

LORD JUSTICE RIMER

and

LORD JUSTICE UNDERHILL

• - - - - - - - - - - - - - - - - - - - -

Between :

PARK CAKES LTD (Appellant)

- and -

SHUMBA & ORS (Respondents)

• - - - - - - - - - - - - - - - - - - - -

• - - - - - - - - - - - - - - - - - - - -

Ingrid Simler QC (instructed by Davenport Lyons) for the Appellant

Simon Gorton QC and Charles Prior (instructed by Thompsons) for the Respondent

Hearing dates : 12 June 2013

• - - - - - - - - - - - - - - - - - - - -

Judgment

Lord Justice Underhill :

1. The four Claimants in these proceedings, who are the Respondents before us, worked as "section managers" in the Appellant's factory in Oldham. They were dismissed for redundancy in the spring of 2009. They brought proceedings in the Employment Tribunal claiming that they were unfairly dismissed and also – which is the only claim with which we are concerned – that they had not been paid "enhanced" redundancy payments, i.e. payments over and above their statutory entitlements, to which they said they were entitled as a matter of contract. The entitlement which they claimed consisted of double the statutory package, i.e. two weeks' pay for each year of service up to age 41 and three weeks' pay for each year over that age, but without the statutory cap on service or the amount of a week's pay, together with a lump sum payment of £600. As will appear, there is a potential question about whether any distinction falls to be made between the claim for the £600 and the claim for the enhanced payments; but where it is not necessary to distinguish between them I will refer to them simply as "the claimed benefits". Although it was initially claimed that there was an express term of the Claimants' contracts affording them the claimed benefits that claim is not maintained before us, and the entitlement is said to arise as a matter of "custom and practice".

1. Those claims were heard by an ET sitting at Manchester, chaired by Employment Judge Vinecombe, in two three-day tranches in May 2010 and January 2011. By a judgment sent to the parties on 7 February 2011 the claims of unfair dismissal were upheld but the claims in relation to the redundancy payments were dismissed.

1. The Claimants appealed to the Employment Appeal Tribunal. By a reserved judgment promulgated on 28 November 2012 a Tribunal comprising HHJ Richardson, Lady Drake and Mr Mallender allowed the appeal by a majority and remitted the case for re-hearing by a differently constituted Tribunal.

1. Before us the Appellant has been represented by Ms Ingrid Simler QC and the Claimants by Mr Simon Gorton QC, leading Mr Charles Prior. Mr Prior appeared in both the ET and the EAT, and Ms Simler appeared in the EAT. In the ET the Appellant was represented by Mr Satnam Choongh of counsel.

1. I shall have to set out some of the detailed facts more fully below. At this stage I need only set out two matters of important background about union representation at the factory and about a change of ownership which occurred in 2007.

1. The Claimants were first employed at dates between 1990 and 2001. During that period the Oldham factory was owned and operated by a company within the Northern Foods group. In respect of most of the employees at the factory the company recognised the Bakers Food and Allied Workers Union ("the Union") for collective bargaining purposes. But although the Claimants were members of the Union, as section managers they fell within a class known as "non-negotiated employees", and the Union did not have negotiating rights in respect of them.

1. In January 2007 the factory was sold to the Vision group, and the Claimants' employment transferred to the Appellant, which is a company within that group, under the Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE"). Where it is necessary to refer specifically to the Claimants' pre-transfer employer I will do so as "the old company"; where there is no need to distinguish I will refer to the pre- and post-transfer employers together simply as "the company".

1. The Claimants' case before the ET was that Northern Foods had operated a formal redundancy scheme under which the enhanced terms and the lump sum were paid. Such payments were made, over very many years, whenever redundancies occurred. The existence of that scheme was well-known both to the Union and to the workforce generally and was correctly understood by them to reflect a contractual entitlement.

1. The Appellant did not dispute that Northern Foods had had a group-wide policy of paying enhanced redundancy terms and that in the case of non-negotiated employees such as the Claimants the terms in question were those which are claimed in the present case – though not including the £600 lump sum. But its case, in summary, was that that was a matter of policy and not of contractual entitlement: it was not the result of any negotiation with employees or their representatives and the policy was not communicated to employees generally or "systematically" provided to them.

1. Thus the essential issue between the parties was not the existence of a policy of paying enhanced terms to redundant employees but whether that policy reflected any contractual obligation. The evidence which the Tribunal heard was significant to the extent that it cast light on that issue. I need to summarise it fairly fully in order that the grounds of appeal can be understood; but it is not my intention to perform my own evaluation of the extent to which it supports either party's case. I will summarise that evidence under three headings – (1) the explicitly contractual documents; (2) the non-contractual documents; and (3) the evidence of practice and knowledge.

1. The Claimants had written terms and conditions of employment. These made no reference to any entitlement to enhanced redundancy payments. Under the heading "Other Terms and Conditions of Employment" there was a cross reference to an Employee Handbook, which was said to contain "additional information regarding terms and conditions of employment". The Handbook is fairly full. Under the heading "What Park Cakes Offers You" it set out provisions relating to holiday entitlement, sick pay, maternity and paternity leave, bereavement leave etc. Under the heading "Benefits for Employees" it gave details of the Northern Foods pension scheme and certain other benefits. There is no reference to entitlements in the case of a dismissal for redundancy.

1. Two documents dating back to the time when the factory was owned by Northern Foods either constitute or evidence agreements between the employers and the Union about redundancy entitlements. Although, as I have said, the Union was not recognised in relation to employees of the Claimants' status it may be relevant to refer to the collective agreements between it and the old company because it was the Claimants' case that the entitlement to enhanced redundancy payments applied to all permanent employees and not only those for whom the Union was recognised. Two collective agreements are potentially material, as follows:

(1) A full and elaborate "Memorandum of Agreement" was entered into between Park Cakes Ltd (that is, the old company) and the Union with effect from December 1985. This contains many provisions of a collective character regulating the relationship of the Union and the company, but it also purports to set out certain provisions which are plainly apt for incorporation in the terms and conditions of individual employees, such as working hours and overtime entitlements. Clause 22 reads:

"Redundancy payments will be made as required by the Redundancy Payments Act 1965 (as amended by subsequent legislation)."

There is no reference to any entitlement to enhanced redundancy payments.

(2) There was an undated agreement between the old company and the Union relating to employment of temporary workers. The agreement itself does not appear to have been available to the Tribunal, but its terms were set out in an old handbook for managers. Clause 10 of the agreement, which is headed "Security of Employment", provides that in a redundancy situation the company would be entitled to dismiss all temporary employees (being those employed for less than nine months) first; but it goes on to set out the redundancy payments to which employees would be "entitled" after they became permanent. The relevant paragraphs read:

"Between 9 and 24 months service the employee would have permanent status and the entitlement of one weeks' notice of termination of employment and 2 weeks' pay in lieu of notice.

Between 24 and 36 months service the employee would have permanent status and would be entitled to a redundancy package of equal to twice the statutory package with no upper earnings limit plus an additional £600 ex gratia payment."

The "entitlement" of permanent employees with more than 24 months' service is identical to that sought by the Claimants in the present case.

The two agreements point in wholly opposite directions. The former is hard to reconcile with the existence of any contractual entitlement to enhanced redundancy terms – at least as at 1985; whereas the latter appears to provide for the claimed benefits as a matter of express entitlement.

1. As I have said, the Appellant accepts that Northern Foods generally, and the old company in particular, operated a policy under which the enhanced redundancy payments claimed in these proceedings were made. Two internal documents setting out that policy were produced to the Tribunal: the evidence was that they formed part of the Northern Foods HR manual. I will refer to them as "the policy documents". I take them in turn.

1. The first is headed "Redundancy – Non-Negotiated Employees" – that is, it explicitly applies to employees in the position of the Claimants. It can be summarised as follows:

(1) Section 1, headed "Introduction", explains that the document "sets out the application of compensation for loss of pay and benefits in instances of redundancy".

(2) Section 3, headed "Application", reads as follows:

"This redundancy policy applies to non-negotiated groups (except where local agreements currently exist) within Northern Foods Plc and its subsidiary companies, whose contractual notice arrangements exceed the statutory minimum terms of the one week by completed year of service to a maximum of 12 weeks."

(3) Section 5 is headed "Redundancy Payments". Sub-heading (a) is "Entitlements". It reads:

* Below age 41 – 2 weeks per complete year of service

* Above age 41 – 3 weeks per complete year of service

No limit is applied to service."

That is identical to the enhanced redundancy payments claimed by the Claimants; but there is no reference to the additional £600. The definition of "pay" refers to a discretion whether to proceed by reference to "salary plus contractual entitlements" or "P60/52". It is unnecessary to elucidate that distinction: I refer to the provision only because the Appellant's HR Director refers to it in a passage of her evidence which I set out at para. 23 (1) below.

(4) I need not set out sections 6 and 7, but section 8, which is headed "General", reads as follows:

"The above specifies the policy limits to apply to redundancy packages. In no circumstances should these limits be exceeded without the prior authorisation of the Personnel Executive."

(5) Attached to the document is a table, described as "Northern Foods Plc Redundancy Policy Entitlements Table", which sets out the number of weeks' pay by reference to an employee's age and length of service.

1. The second document is headed "Redundancy – Local Company Schemes". The Introduction explains that it is concerned with "negotiated groups of employees who are not covered by the redundancy scheme for non-negotiated employees [my underlining]": thus it is not applicable to the Claimants. It recognises that, in the case of such employees, it is not appropriate to have a standard scheme throughout the group but it provides "guidelines for operating companies in their local negotiations". The guidelines essentially consist of maxima, which are not to be exceeded unless there are already more generous local agreements in place. The maximum entitlements set out are identical to the enhanced payments provided for in the document relating to non-negotiated employees.

1. The evidence of Ms McGauley, the Appellant's HR Director, was, and it is clear from their terms, that these two documents were primarily internal documents intended for the use of managers and HR Departments; and that they were not published to employees "generally" or "systematically". However, Mr Shumba at least had a copy of the policy relating to non-negotiated employees at the time of his dismissal, since he produced it at his appeal hearing; and Ms McGauley acknowledged that employees would receive a copy of the policy "if they specifically asked for it". She confirmed this in cross-examination, saying (as noted by the Judge) that the policy "was not routinely handed out but could be handed out".

1. I should refer to two other disclosed documents of a non-contractual character:

(1) In the context of the sale of the business to Vision the "Staff & Management Group" produced written questions relating to the consequences of the proposed transfer. Northern Foods' response is set out in a document which it is reasonable to infer was intended to be seen by employees in the position of the Claimants. The first Q&A reads as follows:

"Redundancy terms

* Will current customary rules apply to any future redundancy ?

* If not will we resort to state entitlement ?

A: There are no known plans for redundancy. As part of the data provided to Vision within the sale process they have been made fully aware of the Northern Foods redundancy terms. They have not indicated any plan for change."

Mr Prior in his closing submissions in the ET understandably placed considerable weight on this document as evidencing an assertion by employees, and a recognition by Northern Foods, that there were "customary rules" applicable.

(2) The Claimants – in practice, the Union – disclosed an undated note which reads as follows:

"ENHANCED

* AGE 41 & BELOW – 2 WEEK'S PAY PER EACH YEARS SERVICE

* AGE 41 & ABOVE – 3 WEEK'S PAY PER EACH YEARS SERVICE

* MINIMUM ENTITLEMENT – 4 WEEK'S PAY REGARDLESS OF SERVICE

NOTICE PAID [sic*] – 1 WEEK PER YRS SERVICE UP TO A MAXIMUM OF 12 WEEKS

* NO UPPER LIMIT ON EARNINGS OR SERVICE

IF AGREE TO WORK 2 NOTICE DAY GET EXTRA £600 GRACIOUS [sic*] PAY"

Most of the document is typed, but the final bullet is inserted in manuscript. There is no finding by the Tribunal about the origin of this document; indeed it does not refer to it. Nor were counsel able to enlighten us.

1. The principal witness called by the Claimants on the issue of the status of the enhanced redundancy terms was Roy Streeter, who was the District Secretary of the Union and the full-time officer with responsibility for the company. He had been employed by the old company between 1978 and 1996 and was for many years the Union's shop steward. He said at para. 3 of his witness statement that "the Northern Foods redundancy scheme", which he summarised in terms corresponding to the policy documents to which I have already referred, had already been in place when he started to work for the company. He continued:

"In addition, the employer would normally pay a £600 ex gratia payment on top of the redundancy pay."

He said at para. 4 of his statement that during the period that he had been involved with the company, either as shop steward or full time official, there had been at least seven occasions where the company made redundancies and that on each occasion it always paid "the enhanced package". He said:

"On each of these occasions, and others, everyone, regardless of whether they were shop floor, supervisory or management, received the enhanced payment. The Company Handbook clearly set out the basis for calculating these amounts and there was never any question that employees that were being made redundant would receive a lesser amount. We did not need to negotiate or ask for it, it was offered automatically."

He concluded, so far as this issue is concerned, (at para. 7 of his statement):

"I have had over 30 years connection with Park Cakes and during that time have never known anyone who was made redundant not to have been paid the enhanced Northern Foods Package. I would estimate that during this period over 300 employees have been made redundant and they all expected and received the enhanced package. Even those who were ultimately not made redundant got estimates to confirm the enhanced package would be paid."

1. Mr Streeter was cross-examined by Mr Choongh. We have the Judge's notes. The cross-examination focused on the payments which had been made to employees who were made redundant in 2006 and 2007: see paras. 23 (3) and 24 below. As to the period prior to that, he was asked about the 1985 collective agreement (see para. 12 (1) above): he said that it was "an old agreement" and that the reference to statutory redundancy payments only "was never applied". He also said, though the context is unclear, that "there had been issues over the £600 but that was it". Apart from that, he was not challenged on his evidence as to the number of redundancy exercises in which the claimed benefits had been paid nor his statement that payment was invariable and did not have to be the subject of negotiation.

1. There were also witness statements from each of the Claimants. Each said that they believed they were entitled to the benefits claimed because they had always been paid. Mr Shumba said that he "was aware that whenever anyone had been redundant in the past they had received enhanced payments known as the Northern Foods Scheme", making it clear that he was referring also to what he described as the "£600 additional payment". He said that when he had been at risk of redundancy in 2006 he had been provided with a quote for his redundancy payment, which was in the bundle and which offered the benefits claimed. Ms Amin said:

"I had worked at the bakery for a long time and had been aware that whenever anyone had been made redundant in the past they had received enhanced payments known as the Northern Foods Scheme. This was a payment which was double the statutory entitlement without a cap on weekly earnings. It also had a £600 additional payment which I thought had always been paid to people when they were made redundant by Northern Foods."

Mrs Buckley's statement contained a paragraph in identical terms. Mr Patterson said that it was "always my understanding that this was a term of my contract and certainly any redundancies that had been made by Park Cakes in my time there had always been on this basis".

1. Each of the Claimants was cross-examined, albeit briefly, but the only significant cross-examination focused on the redundancy exercises of 2006: see para. 24 below.

1. The Claimants also put in a witness statement from a Mr Hulme, though he did not give oral evidence. Mr Hulme had been employed by the company until 2006 and had been the Union branch secretary for the staff side employees since about 1993, though he had been involved with the Union a long time before that. It was his evidence that in about 1983 an explicit agreement was reached to extend to the managerial staff whom he represented "the Enhanced Redundancy Package that had always been in place for shop floor staff": he said that he believed that a written agreement existed but he could not produce a copy. He described the enhanced redundancy terms and continued, like Mr Streeter:

"In addition, the employer would normally pay a £600 ex gratia payment on top of the redundancy pay."

He said that on every occasion he had been involved in redundancies at the company "those who have left the business had been paid the enhanced package as outlined above". He referred to three redundancy exercises in particular, in 2002, 2004 and 2006. He concluded:

"I cannot understand why the company now deny that the enhance redundancy package was not [sic] a contractual term. There was a specific agreement around 1983 which set out the basis of the redundancy payments which mirrored what was adopted by the rest of the Northern Foods Group. On each occasion that redundancies were made the payments were on the basis of this agreement and it was certainly common knowledge amongst all employees that these were the standard redundancy terms. This was common knowledge to the extent that I understand that there was even a matrix for calculating the redundancy payments in the company Handbook."

1. The only witness called by the Appellant was Isabella McGauley, who was its head of Human Resources. She had been employed as Human Resources Manager at the Oldham factory since 2006 – i.e. before, though not much before, the sale to Vision. Her evidence can be summarised as follows:

(1) She acknowledged the existence of the Northern Foods policy, and specifically the two policy documents. She said that she did not know how long the policy had been in force, but she believed it went back to "around 2001". Her essential point about it was that it was non-contractual. It was in that context that she said, as already noted, that it was not published to employees generally and that they "only received a copy … if they specifically asked for it". She says at para. 34:

"I do not believe that, up until January 2007 when the Park Cakes business was transferred out of Northern Foods, that the Northern Foods Group ever applied the redundancy policy on an automatic basis. I note that in the policy document for the local company scheme itself it is explicitly stated to be a guideline. In both policy documents there is discretion for the local businesses as to how the policy should be applied and I believe that the variation in the methods of calculating weekly pay and whether or not to apply an additional ex gratia payment demonstrates this."

It seems that that passage is not based on any direct knowledge of the thinking of her predecessors who implemented the scheme prior to 2006 (and still less of what may have been said to employees at that time) but, rather, on the inferences to be drawn from the policy documents themselves. The reference to "the variation in the methods of calculating weekly pay" is to the point which I have identified at para. 14 (3) above; but I cannot identify any reference in the documents to a discretion "whether or not to apply an additional ex gratia payment".

(2) Beyond that, Ms McGauley gave no evidence about the position prior to her arrival in 2006. Specifically, she gave no evidence about the frequency, or invariability, of payment of the benefits claimed. She acknowledged in her oral evidence, in the context of what she had said about the Northern Foods policy going back to around 2001, that there was documentary evidence of the benefits claimed being paid as far back as 1993: she said she was "not aware of these documents". She was said in the EAT to have agreed in cross-examination that "prior to the transfer the non-negotiated employees always received the Northern Foods redundancy terms". There is no passage to precisely this effect in the Judge's notes, but it was not controverted before us; and she was in any event not in a position to rebut the natural inference that the company applied its own policy.

(3) She gave evidence about a redundancy exercise which she had been involved with in 2006. Her point was that, although the company did in fact pay the claimed benefits to the employees who were made redundant on that occasion, it made it clear to the representatives with whom it was consulting that it felt under no obligation to do so; it only did so in the end because the Union threatened to strike if it did not. Ms McGauley refers to the minutes of the consultation meetings with employee representatives which formed part of that exercise: the representatives included Mr Shumba and Mr Patterson. Those minutes repeatedly record that an "update" on redundancy terms is "outstanding", and that Ms McGauley told the representatives that she could not say what the terms would be until they were "approved". There is also at one point a note that "info on statutory redundancy circulation" would be circulated. Ms Simler asked us to note that the minutes do not record any protest on the part of the employee representatives to the effect that there was no need for information or approval about redundancy terms – and still less for information about statutory terms – because they had an absolute entitlement to the Northern Foods package.

(4) She also gave evidence that the Appellant had since 2007, i.e. since the transfer, made a large number of employees voluntarily redundant on terms which did not incorporate the claimed benefits.

1. As noted above, Ms McGauley's evidence about the 2006 consultation exercise was put to the Claimants and Mr Streeter in cross-examination. The Judge's notes of Mr Streeter's answers are a little opaque, but it is clear that he denied that there had ever been any threat of strike action. Mr Shumba was shown the minutes of the consultation meetings. He is noted by the Judge as saying that "the terms of redundancy were up for negotiation", though also as saying that he could not say yes or no about whether the redundancy terms had to be agreed by the company.

1. Finally, there were before the ET a very large number of somewhat miscellaneous documents in the form of "redundancy estimates" or "redundancy quotations" issued to individual employees, sometimes with the accompanying correspondence: a selection of those documents were in our bundle. They date back to 1993. They invariably show payment of the enhanced redundancy terms, often describing them as "entitlements". They also show in many cases payment of a lump sum of £600, variously described as "redundancy severance payments", "severance payment – one off payment" or "further additional ex-gratia severance payments"; but such payment is not invariable.

1. The implication of terms into a contract of employment by reference to "custom and practice" has attracted a certain amount of case law. The story starts with two well-known cases from the earlier part of the last century – Devonald v Rosser & Sons [1906] 2 KB 723, and Sagar v Ridehalgh & Son Ltd [1931] 1 Ch 310 – but they were concerned with rather different issues from the present case, and I need only review the more recent authorities.

1. In Duke v Reliance Systems Ltd [1982] ICR 449 the employer had had a policy for many years of requiring female clerical employees to retire at the age of 60; but there was an issue as to whether this had contractual effect. There was no express provision about retirement age in their contracts of employment. Browne-Wilkinson J, giving the judgment at the EAT, said, at p. 452 F-G:

"On the evidence … we do not think that it can be right to imply into the contracts of employment of all the female clerks of 1978 any term that the age of 60 was the normal retiring age. There was no evidence that the employers' policy of retirement for women at the age of 60 had been communicated to such employees in 1978 nor was there evidence of any universal practice to that effect. A policy adopted by management unilaterally cannot become a term of the employees' contracts on the grounds that it is an established custom and practice unless it is at least shown that the policy has been drawn to the attention of the employees or has been followed without exception for a substantial period."

1. In Quinn v Calder Industrial Materials Ltd [1996] IRLR 126 the facts were closer to those of the present case than those in Duke. The claim by the appellant employees was that the employers were in breach of contract by failing to pay them enhanced redundancy payments. The group of which the employers' business was then a part had issued a policy document to member companies containing guidelines on additional redundancy payments. Although the terms of that policy were not communicated to the employees or their trade unions, they became generally known. On the four occasions between 1987 and 1994 when the need for redundancies arose, the enhanced payments (described as "the Cookson terms") had been made. However, such payment was not made automatically but required a decision from higher management on each occasion. Lord Coulsfield in the EAT examined the relevant principles at some length. He referred to Duke, making the point that Browne-Wilkinson J

"… was not attempting to set out the whole law relating to the implication of a term, but was drawing attention to particular factors which negatived the existence of an implied term in the particular circumstances of that case"

(para. 6, p. 128). He said that the question was essentially one of identifying "what terms the parties have actually agreed" and that in order to answer that question "it is necessary to consider the whole circumstances of the formation of the contract and the parties' actings before, or even after, the contract, to gather what terms they had actually agreed" (loc. cit.). He continued, at pp. 128-9:

"7. In a case such as the present, the factors to which Browne-Wilkinson J referred are likely to be among the most important circumstances to be taken into account, but they have to be taken into account along with all the other circumstances of the case. Thus, for example, in our view, the question is not whether the period for which a policy has been followed is 'substantial' in some abstract sense, but whether, in relation to the other circumstances, it is sufficient to support the inference that that policy has achieved the status of a contractual term. Again, with regard to communication, the question seems to us to be not so much whether the policy has been made or become known directly to the employees or through intermediaries, but whether the circumstances in which it was made or has become known support the inference that the employers intended to become contractually bound by it.

1. If the present case is approached in the manner which we have attempted to explain, it is, in our view, important that, while the Cookson terms had been applied on every occasion on which redundancy arose between 1987 and 1994, they had not been incorporated in any agreement, or communicated to the employees by the management. That is important because the positive act of communication of the terms to the employees might well suggest an intention to be bound by them, which does not arise, or not with the same force, merely from the repeated acting upon those terms. The period over which the enhanced terms were acted on was seven years, but, on the other hand, there were only four occasions during the seven years when redundancies arose. The enhanced terms had been paid on each occasion when there was a redundancy from 1987 onwards; but, on the other hand, there was evidence that payment of the enhanced terms was not, from the employers' point of view, automatic, but required a decision on each occasion. The fact that the employees' knowledge came from fellow-employees would not preclude the possibility of treating the enhanced terms as established, by custom and practice, as part of the contract; but it is necessary to take that knowledge along with the other circumstances, including the fact that there does not appear to have been any evidence that any employee actually entered into the employment on the faith of an expectation that those terms would be applied.

1. We have not found it easy to reach a conclusion on the effect of all the circumstances taken together, and there has been some variation of opinion among us. In the end, however, we have unanimously concluded that, while the appellants may well have expected, quite reasonably, that the Cookson terms would apply, this is not a case in which we can go so far as to infer that the Cookson terms had become a binding part of the contract of employment. We, therefore, agree with the conclusion of the industrial tribunal, and these appeals fall to be dismissed."

1. I have set that passage out in full because it is frequently referred to in the subsequent authorities. While I am in agreement with Lord Coulsfield's general approach, I do have some reservations about particular aspects of his reasoning, or at least its expression. Specifically:

(1) There may be room for misunderstanding of his statement at the end of para. 7 that the crucial question is whether the circumstances support the inference that the employer intended to be contractually bound. Although on a proper reading I think this is clear, it is nevertheless worth spelling out that the reference to the employer's intention must be to his intention as objectively evinced: that is, the question is whether the employer's conduct (including anything said by him) was such, viewed objectively, as to convey to the employees that he intended to be so bound. On ordinary contractual principles, what matters must be not what an offeror actually intends but what intention his words or conduct would communicate to the reasonable offeree.

(2) A similar point arises in relation to the observation in the middle of para. 8 that the employers themselves did not regard payment of the enhanced terms as "automatic" but made a specific decision on each occasion. For the same reason that would be relevant only to the extent that the employees appreciated, or should have appreciated, that that was the employers' approach.

(3) I do not understand the significance attached by Lord Coulsfield to the fact that no employee appears to have "entered into the employment on the faith of an expectation that those terms would be applied". In reality there may be several important benefits of a contract of employment which only become relevant in particular contingencies – sick pay is an obvious example – and to which the employee will pay very little attention, either on recruitment or subsequently, unless and until the contingency arises in his case.

1. In Albion Automotive Ltd v Walker [2002] EWCA Civ 946 the issue was, again, whether enhanced redundancy terms had become part of the claimants' contracts of employment "by custom and practice". The terms in question had been applied by the previous owner of the business on six previous occasions over the previous ten years. The employment tribunal held that they had indeed become a contractual entitlement. That decision was upheld by the EAT and by this Court. Counsel for the employees, Mr Timothy Brennan QC, submitted (see para. 15 of the judgment) that "in the light of Duke and Quinn there are likely to be a number of factors important in assessing whether a policy originally produced by management unilaterally has acquired contractual status". He submitted that in that case the relevant factors included:

"(a) whether the policy was drawn to the attention of employees;

(b) whether it was followed without exception for a substantial period;

(c) the number of occasions on which it was followed;

(d) whether payments were made automatically;

(e) whether the nature of communication of the policy supported the inference that the employers intended to be contractually bound;

(f) whether the policy was adopted by agreement;

(g) whether employees had a reasonable expectation that the enhanced payment would be made;

(h) whether terms were incorporated in a written agreement;

(i) whether the terms were consistently applied."

He then considered those "factors" one-by-one by reference to the facts of the case and submitted that on that basis the tribunal had come to a proper conclusion. Peter Gibson LJ, who delivered the only substantial judgment, accepted those submissions without further discussion (see para. 18), saying simply that the decision of the employment tribunal constituted a conclusion of fact which was well open to it.

1. Although Mr Brennan's list of relevant factors deployed in Albion is not unhelpful, it should not in my view be treated as the last word on the proper approach to cases of this kind, or applied without thought as a kind of definitive checklist. It was, after all, a forensic exercise aimed at the circumstances of the particular case before the Court, and there is no articulated conceptual underpinning. (The absence of any discussion of principle may be why Albion has not found its way into any of the law reports.) Some of the factors do seem to me to need some glossing. In particular:

(1) Factors (d) and (e) appear to be drawn from Lord Coulsfield's judgment in Quinn, and my observations at para. 29 (2) above apply equally.

(2) If, as contemplated by factors (f) and (g), the policy has been the subject of an agreement between the employer and (presumably) a trade union or other representative body we would appear to be in rather different territory from a case of the present kind. A case where there has been an express agreement but where there is, presumably, some dispute as to whether it was intended to have contractual effect raises different issues from one where there has been no such express agreement and the question is what can be inferred from the conduct of the employer.

1. In Solectron Scotland Ltd v Roper [2004] IRLR 4 an employment tribunal had found that the applicants had become entitled, by custom and practice, to enhanced redundancy terms, described as "the BT terms", but the employer sought to argue that those rights had been lost by reason of a period during which they had failed to apply those terms when there were redundancies: that was said to have set up a subsequent custom and practice which undermined that previously established. That argument was rejected both in the employment tribunal and in the EAT. In the EAT Elias J said this, at p. 6:

"21. We reject this argument and consider that it is based on a misconception of the effect of custom and practice. A custom or established practice applied with sufficient regularity may eventually become the source of an implied contractual term. That occurs where the point is reached when the courts are able to infer from the regular application of the practice that the parties must be taken to have accepted that the practice has crystallised into contractual rights.

1. The parties must be shown to be applying the term because there is a sense of legal obligation to do so. That will often be a difficult matter to prove. For example, if a practice is adopted because a party does so as a matter of policy rather than out of a sense of legal obligation, then it will not confer contractual rights: see Young v Canadian Northern Railway Company [1931] AC 83 (PC). Again the practice must be 'reasonable, notorious and certain': see Devonald v Rosser & Sons [1906] 2 KB 728 at 743, per Farwell LJ. ..."

Those observations were only prefatory to a consideration of the particular case being advanced by the employers, which is different from that with which we are concerned here. Nevertheless it seems to me, with respect, to be a useful summary of the essential question to be considered in cases of this kind. I note that Elias J refers at para. 21 not to what the parties have accepted but what they "must be taken to have accepted".

1. In [Garratt v Mirror Group Newspapers Ltd ]()[2011] ICR 880 it had for many years been the employer's consistent practice to pay an enhanced redundancy payment, and that had indeed latterly been confirmed by an express agreement with the recognised trade union. The employer did not dispute that even prior to the express agreement the payments had become a contractual entitlement, but it was its case that it was a condition of the entitlement that the employee should have signed a compromise agreement. The case was argued in the County Court, and therefore also in this Court, principally on the basis of "custom and practice". Leveson LJ reviewed essentially the same authorities as I have done above. He started his discussion, at para. 35 (p. 891 A-C), by distancing himself from some of the language of the authorities, saying that he preferred "to focus on the broader question of what was agreed between the employers and the employees (as a group), either expressly or by clear implication". He said that that was the element underlying the "factors" endorsed by Peter Gibson LJ in Albion. He also observed that the time-honoured test of whether a putative custom was "reasonable, notorious and certain" connotes essentially the same approach. As he pointed out, the kinds of factors identified in Albion are to a considerable extent concerned with "notoriety" – which he says at para. 43 (p. 893 E-F) is "no more than widespread knowledge and understanding" – and certainty; and reasonableness is likewise highly relevant to the question of whether a term should be implied. The remainder of his judgment is directed to the particular issues raised by that case; but I respectfully agree with his overall approach.

1. As will have appeared, although the authorities reveal a fair degree of consensus as to the types of consideration that are likely to be relevant in deciding a question of this kind, there is rather less analysis of the nature of the exercise. But what Leveson LJ makes clear in Garratt is that the essential object is to ascertain what the parties must have, or must be taken to have, understood from each other's conduct and words, applying ordinary contractual principles: the terminology of "custom and practice" should not be allowed to obscure that enquiry.

1. Taking that approach, the essential question in a case of the present kind must be whether, by his conduct in making available a particular benefit to employees over a period, in the context of all the surrounding circumstances, the employer has evinced to the relevant employees an intention that they should enjoy that benefit as of right. If so, the benefit forms part of the remuneration which is offered to the employee for his work (or, perhaps more accurately in most cases, his willingness to work), and the employee works on that basis. (The analysis by reference to offer and acceptance may seem rather artificial, as it sometimes does in this field; but it was not argued before us that if the employer had indeed sufficiently conveyed an intention to afford the benefits claimed as a matter of contract he would not thereby be bound.) It follows that the focus must be on what the employer has communicated to the employees. What he may have personally understood or intended is irrelevant except to the extent that the employees are, or should reasonably have been, aware of it.

1. In considering what, objectively, employees should reasonably have understood about whether a particular benefit is conferred as of right, it is, as I have said, necessary to take account of all the circumstances known, or which should reasonably have been known, to them. I do not propose to attempt a comprehensive list of the circumstances which may be relevant, but in a case concerning enhanced redundancy benefits they will typically include the following:

(a) On how many occasions, and over how long a period, the benefits in question have been paid. Obviously, but subject to the other considerations identified below, the more often enhanced benefits have been paid, and the longer the period over which they have been paid, the more likely it is that employees will reasonably understand them to be being paid as of right.

(b) Whether the benefits are always the same. If, while an employer may invariably make enhanced redundancy payments, he nevertheless varies the amounts or the terms of payment, that is inconsistent with an acknowledgment of legal obligation; if there is a legal right it must in principle be certain. Of course a late departure from a practice which has already become contractual cannot affect legal rights (see Solectron); but any inconsistency during the period relied on as establishing the custom is likely to be fatal. It is, however, possible that in a particular case the evidence may show that the employer has bound himself to a minimum level of benefit even though he has from time to time paid more on a discretionary basis.

(c) The extent to which the enhanced benefits are publicised generally. 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. In some circumstances publication to a trade union, or perhaps to a large group of employees, may constitute publication to the workforce as a whole. 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.

(d) How the terms are described. If an employer clearly and consistently describes his enhanced redundancy terms in language that makes clear that 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, though again much depends on the context, point in the same direction. Conversely, the language of "entitlement" points to legal obligation.

(e) What is said in the express contract. As a matter of ordinary contractual principles, no term 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.

(f) Equivocalness. The burden of establishing that a practice has become contractual is on the employee, and he will not be able to discharge it if the employer's practice is, viewed objectively, equally explicable on the basis that it is pursued as a matter of discretion rather than legal obligation. This is the point made by Elias J at para. 22 of his judgment in Solectron.

1. At paras. 65-78 of its Reasons the ET set out its factual findings on the redundancy pay part of the claim. The section starts with a summary of the Claimants' case. Most of the following paragraphs consist of summaries, without any attempt at analysis, of the various documents to which I have referred at paras. 11-17 above: I need not set them out here. Apart from that:

(1) Para. 75 summarises what happened during the redundancy consultations in 2006: see para. 23 (3) above. It reads:

"Prior to the sale by Northern Foods there was joint Consultation and the Tribunal were referred to the 'Section Managers Forum Meeting Notes'. Miss McGauley was present during these meetings as were the claimants Messrs. Shumba and Patterson. The employee representatives were advised that the respondent could not answer questions on redundancy terms because these had not been approved and that they would be circulated once approved. It was noted that information on the statutory redundancy information would be circulated."

(That passage, and another at para. 107, may read as if these were "TUPE consultations"; but they were indeed consultations about proposed redundancies.)

(2) The question of past practice is dealt with in a single paragraph, para. 76, which reads as follows:

"During the previous round of compulsory redundancies in 2008 the claimants had been offered enhanced redundancy terms and in previous rounds of compulsory redundancy employees had been offered enhanced redundancy terms. It was also the case that employees who had opted for voluntary redundancy had negotiated terms which were less than the enhanced redundancy terms that the claimants alleged were either contractual or implied terms of their contracts of employment."

It has to be said that that is a distinctly over-compressed account of the evidence. It hardly does justice to the evidence about the consistent practice from, at least, 1993 to 2006, if not earlier: see paras. 18-22 and 25 above.

(3) The witness evidence of Mr Hulme is summarised at para. 72, but otherwise the only paragraph referring to the witness evidence is para. 77, which reads as follows:

"Miss McGauley the HR Manager for the Oldham site when the business was owned by Northern Foods stated that there were two policies dealing with redundancy payments, namely, 'Redundancy – Local Company Schemes' and 'Redundancy – Non-Negotiated Employees'. These were non-contractual schemes which allowed for a maximum payment in accordance with Local Company Schemes or no enhanced payment. The policies were expressed to be guidelines. Miss McGauley said that enhanced redundancy payments were made in 2006 because there was a threatened strike if the payments were not made. Mr Streeter denied that strike action was threatened. Mr Streeter indicated that there had been issues over the payment of the £600."

Again, I have to say that that is a rather inadequate summary of the evidence.

1. The section of the Reasons giving the ET's reasoning and its conclusion on the claim to the enhanced terms is at paras. 97-100. Para. 97 identifies the claim as being based on either an express or an implied term, making the point, uncontroversially, that the burden of proof of the existence of such a term lay on the Claimants. Para. 98 finds that there was no express term entitling the Claimants to enhanced redundancy payments: that is not now disputed. The rest of the passage is concerned with the claim based on an implied term. The ET starts with the law. It briefly summarises Lord Coulsfield's judgment in Quinn. It then says that the Court of Appeal in Albion "set out the factors to be taken into account when considering whether an implied term has been incorporated into a contract of employment" and reproduces Mr Brennan's list in full. I should set out in full the reasons which follow:

"104. It was clear from the documents that the Tribunal was referred to that apart from the Park Cake Bakeries Handbook for Managers and Supervisors relating to temporary employees all references to redundancy payments either stated that statutory redundancy pay would be paid or gave guidelines as to the payment of enhanced redundancy pay. The claimants' terms and conditions and the Employee Handbook made no reference to redundancy pay, enhanced or otherwise. There was no agreement before the Tribunal confirming that a policy entitling employees to an enhanced redundancy payment had been agreed.

1. The Tribunal was satisfied that there was no formal policy giving rise to the payment of the enhanced redundancy pay to which the claimants say they were entitled. The Tribunal was also satisfied that the 'guideline' documents were not drawn to the attention of employees nor was any document or policy indicating that the employees were entitled to an enhanced redundancy payment.

1. Enhanced redundancy pay had been paid to employees in the past, although it was not clear on how many occasions it was paid, but the Tribunal was unable to infer that it was paid without exception. If there was a policy entitling employees to an enhanced payment there would be no requirement for guidelines. The existence of documents giving managers a discretion to make enhanced redundancy payments within certain limits infers that firstly, the enhanced redundancy payment sought by the claimants was not the 'normal' enhanced payment and secondly that an enhanced payment would not be made on every occasion.

1. The Tribunal was not satisfied that payments of the enhanced redundancy pay claimed by the claimants was paid automatically. Miss McGauley was involved in the collective consultations prior to the transfer of the business to the respondent. It is clear from the documents that the Tribunal were referred to that there were discussions on redundancy terms. If there had been a contractual entitlement to enhanced terms such discussions would be otiose.

1. Undoubtedly the claimants had an expectation that they would receive an enhanced redundancy payment because they were aware that other employees had received enhanced payments. However the Tribunal agreed with Mr. Choongh's submission that this expectation was not based on any agreement or policy drawn to their attention or indication from the respondent that it intended to be contractually bound to pay an enhanced redundancy payment.

1. Accordingly the Tribunal concluded that a policy relating to the payment of enhanced redundancy payments had not been drawn to the attention of the claimants nor was it satisfied that enhanced redundancy payments had been paid to redundant employees' in the past without exception.

1. The claimants have not proved on the balance of probabilities that there was an implied term entitling them to an enhanced redundancy payment and their claim fails and is dismissed."

1. It seems that in those paragraphs the ET was seeking to address each of the factors identified in Albion, though it does not do so very systematically. Para. 104 appears to be addressed to factor (f); para. 105 to factor (a); para. 106 to factors (b), (c) and (i) and perhaps also to (e); para. 107 to factor (d); and para. 108 to factor (g). Para. 109 is a summary, but the fact that it refers in particular to the facts that the policy "had not been drawn to the attention of the Claimants" and that enhanced payments had not been made in the past "without exception" suggests that those were the factors which weighed most heavily with it.

1. The essential issue in the EAT is encapsulated at paras. 47-49 of its judgment, which read as follows:

"47. The principal attack by Mr Prior was upon the Tribunal's conclusion, in paragraph 106 of its reasons, that:

"Enhanced redundancy pay had been paid to employees in the past, although it was not clear on how many occasions it was paid, but the Tribunal was unable to infer that it was paid without exception.

1. Mr Prior submits that the only finding open to the Tribunal on the evidence was that every redundancy during the Northern Foods era had led to payment in accordance with the Northern Foods redundancy terms without exception. He says (1) Mr Streeter's evidence was unequivocally to this effect and he was not cross-examined upon it; (2) Mr Streeter's evidence derived considerable support from documents produced on disclosure; (3) the Respondent adduced no evidence at all of any exception in the Northern Foods era; (4) Ms McGauley agreed in cross examination that prior to the transfer the non-negotiated employees (such as the Claimants) always received the Northern Foods redundancy terms.

1. Ms Simler QC for the Respondent says that the Tribunal was entitled to doubt whether enhanced redundancy pay was paid without exception. She relies on the 1985 agreement, which provides for most workers to receive statutory redundancy pay, and makes no mention at all of enhanced redundancy pay. She accepts that there was no explicit assessment of Mr Streeter's evidence: she says it is only possible to infer that Mr Streeter was not regarded as a reliable witness. She prays in aid cases on perversity, such as Neale v Hereford and Worcester County Council [1986] IRLR 168, Piggott Bros v Jackson [1991] IRLR 39 and Stewart v Cleveland Guest (Engineering)

**[1994] IRLR 440 and Yeboah v Crofton from which we have already cited."

1. As Judge Richardson goes on to say, the Appeal Tribunal was not unanimous on that issue. The decision of the majority (comprising Judge Richardson himself and Lady Drake) is given at paras. 50-59. It can be summarised as follows:

(1) The unchallenged evidence of Mr Streeter – who was best placed of any of the witnesses to know – was, clearly and explicitly, that the enhanced terms had been paid on the occasion of every redundancy exercise from 1993 to 2006, numbering a minimum of seven.

(2) That evidence was supported not only by the documents of the kind to which we have referred at para. 25 above but also by the terms of the temporary workers' agreement (see para. 12 (2) above). It was also supported by the fact that the enhanced terms had again been paid in 2006 and by the evidence of the Claimants and Mr Hulme that they were aware of no exceptions. In short, "the evidence as to what happened on the ground prior to 2007 was all one way".

(3) Notwithstanding that evidence, the ET had professed itself "unable to infer that [the enhanced terms were] paid without exception". That finding was curiously expressed because the issue of whether there had been any exceptions to past practice was not a matter of inference but of direct evidence. But it was in any event not open to the ET unless it rejected Mr Streeter's evidence. Any such rejection would have had to be explicit and reasoned; but in fact the ET hardly referred to Mr Streeter's evidence at all, the only reference being to the tangential issue as to whether a strike had been threatened in 2006 (see para. 77 of the Reasons).

(4) The fact that the ET had, without explanation, declined to make a finding which, on the face of it, was inevitable on the undisputed evidence was fatal to its overall reasoning and conclusion. As is apparent from the authorities, the question whether an enhanced payment has been made consistently over a substantial period and a substantial number of redundancies is a factor of central importance in deciding whether it is to be treated as contractual.

(5) However, the fact that the ET should have found that the payments were made without exception up to 2007 did not mean that the claims were bound to succeed. The invariability of payment was only one factor, albeit an important one, in the overall assessment which fell to be made. Accordingly the case had to be remitted for re-hearing.

1. The minority decision of Mr Mallender is set out at paras. 60-66 of the judgment. His principal point concerned the £600 lump sum. He noted the variations to which I have referred at para. 25 above, and also the evidence in the witness statement of Mr Hulme (he could also have referred to Mr Streeter's statement) that the £600 was only "normally" paid and Mr Streeter's concession that there were "issues" with the payment: see paras. 19 and 22 above. He says that "this did not seem like evidence of an automatic contractual payment which could become an implied term". More generally, he observes that there were areas of difficulty and uncertainty in the evidence and that Mr Streeter's evidence that the enhanced terms had always been paid conflicted with Ms McGauley's evidence that they were "not automatically paid". In those circumstances he did not believe that the ET could be said to have made any error of law in reaching the conclusion that it did.

1. At para. 57 of the judgment the majority commented on the significance attached by Mr Mallender to the evidence about the £600 lump sum. It said:

"We accept that the Tribunal might legitimately have drawn a distinction between the enhanced redundancy terms themselves (which were of great value to employees) and the additional sum of £600 (variously described as an ex-gratia or "one off" sum). The Tribunal, however, did not draw this distinction. It said rather that it was not satisfied that enhanced redundancy pay was paid without exception. As we have seen, all the documents show that enhanced redundancy pay was always paid: there is no exception, and we cannot see any rational basis for doubting that enhanced redundancy pay was always paid."

1. I should say for completeness that the EAT rejected other criticisms made on behalf of the Claimants about the ET's reasoning; but I need not deal with these for the purposes of this appeal.

1. Ms Simler's overall submission on behalf of the Appellant was that the EAT was not entitled to interfere with what was a legitimate finding of fact made by the ET. She acknowledged that the Reasons were neither as full nor as clear as they could have been, but she submitted that it could nevertheless be seen on a careful reading that it had based its decision on findings of fact which did not require it to confront the evidence of Mr Streeter in the way that the majority asserted. Her more particular points can be summarised as follows:

(1) The essential finding by the ET was that such payments as there had been in the period up to 2006 had not been made "automatically": see para. 107. In that paragraph it relied specifically on Ms McGauley's evidence about the Company's attitude in the 2006 redundancy consultations: see para. 23 (3) above. Mr Streeter might have denied that the Union threatened strike action in 2006; but the fact remained that the contemporary minutes showed that the company did not regard itself as bound to offer the claimed benefits. That was sufficient in itself to support the finding of "non-automaticity" (I apologise for the ugliness of this term, but it is too convenient to be eschewed), but it also supported Ms McGauley's evidence that prior to 2006 the claimed benefits had only been paid as a matter of policy and not as of right; and the ET at para. 106 appeared to be accepting that evidence. The EAT, significantly, had failed to deal with the 2006 redundancy consultations at all.

(2) The ET had made a clear finding at para. 108 that there had been no agreement or policy drawn to the employees' attention which indicated an intention on the part of the Company to pay the claimed benefit as a matter of contractual obligation.

(3) Whatever might be said about the enhanced payments it was quite clear on the evidence that there was no consistency about the payment of the £600 lump sum, as Mr Streeter himself acknowledged; and that uncertainty about one of the component parts of the claimed benefits undermined any argument that they had crystallised into a contractual term. She pointed out that the term which the Claimants had pleaded and advanced throughout was a composite term, and that was the basis on which the ET had, rightly, approached it: see its summary of the claim at para. 65. She also submitted, essentially adopting Mr Mallender's minority reasoning, that that might well be the further reason why the ET said in para. 106 that it was "unable to infer that [the claimed benefits were] paid without exception".

1. Persuasively though Ms Simler advanced those arguments, I am unable to accept them. I take them in turn.

1. In the first place, I do not think that Ms Simler's point, even if it is right so far as it goes, meets the point made by the majority. I appreciate that in theory it would have been open to the ET (subject to the point I make below) to find that, even though the claimed benefits had in fact been paid on every occasion up to and including 2006, that could not be treated as an indication of any contractual obligation because they were not paid "automatically". But that is not the way that it in fact approached it. Although it did indeed make the finding relied on by Ms Simler, it also and separately declined to find that the benefits had been paid on every occasion; and indeed that is one of the two core points on which it focuses in its summary of its reasoning at para. 109. Subject to Ms Simler's point about the £600, that was plainly an error as the majority said, the evidence was all one way. I do not believe that it is safe or appropriate simply to ignore that error on the basis that the ET could perhaps have reached the same conclusion by a different route. The various matters which the ET had to consider are not neatly separable; and it cannot be assumed that if it had found, and given proper weight to its finding, that the enhanced terms had been paid on the occasion of every redundancy since 1993, and perhaps long before, it would have found that they were nevertheless not paid automatically. Even if it had found that they had not been paid automatically in 2006, that would not dispose of the possibility that a contractual obligation had "crystallised" prior to that date.

1. But there is a further point. I have already noted that the question, first identified in Quinn, of whether a payment has been made "automatically" is capable of being misleading: see para. 29 (2) above. What matters is not, as such, whether the company, internally, believed that it was making a unilateral choice whether to pay the benefits but whether that should reasonably have been understood by the employees. I am far from sure that the Tribunal appreciated that distinction. Its finding of "non-automaticity" at para. 107 is based entirely on the events of 2006. Those events would indeed be relevant if they showed that the employee representatives accepted that payment of the claimed benefits was not automatic, because that would be evidence that the company's past conduct had conveyed the message that these payments were made as of right. As to the stance of the employees, the ET refers to "discussions" about redundancy terms having taken place; but that reference is not supported by its brief findings of fact at para. 75, nor is it supported by the minutes of the consultation meetings or Ms McGauley's witness statement. All that those findings, and that evidence, suggest is that the company's stance was inconsistent with it believing that it was under any legal obligation; but they record nothing said by the representatives, and such points as can be made could only be about the inferences to be drawn from their (apparent) silence. It might be suggested that the ET had in mind Mr Shumba's answers in cross-examination noted at para. 24 above, but they are not referred to anywhere in the Reasons; nor is it in any event clear to me that he was conceding that he did not understand the employees to have a legal entitlement to the claimed benefits. There is in truth no explicit consideration by the ET of the employees' stance in 2006, and we should not be tempted by Ms Simler into making any findings of our own. It is important not to lose sight of the fact that in the end the company did pay the claimed benefits in 2006. Even if we prefer Ms McGauley's evidence to Mr Streeter's and accept that they were paid only after the Union had threatened a strike (though the ET made no finding about that either way), that does no more than reinforce the Appellant's case that the company did not believe that it was bound to pay them: it is no evidence that the employees had the same belief. Thus, even if the Tribunal did mean at para. 107 to reach a conclusion about the employees' understanding of "non-automaticity" as well as the company's, the findings of primary fact and the expressed reasoning are in my view inadequate to support such a conclusion.

1. Although the Tribunal's principal finding of non-automaticity is at para. 107 and depends on the redundancy consultations in 2006, Ms Simler did also, as I have noted, rely on the second part of para. 106, which is based on the terms of the two "policy documents". I have to say, however, that that passage appears to be confused. The references to "guidelines" by which the ET sets such store are all to be found in the "Local Company Schemes" document: the guidance is to assist managers in (NB) "negotiating" local schemes with employees' representatives. It does not follow that such schemes, once in place, will leave room for discretion. The "Non-Negotiated Employees" document with which we are concerned, which contains an actual scheme, contains no reference to "guidelines": it sets out what are apparently fixed "entitlements" (subject to the point made by Ms McGauley on the definition of pay: see para. 23 (1) above). If this document does indeed not assist the Claimants, that would appear to be not so much because of any discretion embodied in its actual terms as because of its status as an internal policy document, not generally published (though apparently available on request) and not referred to in any avowedly contractual document; but that is not what the ET is saying at para. 106.

1. The ET's conclusion at para. 108 that the company had not drawn to the attention of the Claimants any policy or agreement conveying an intention to be contractually bound to pay the claimed benefits, nor given any other indication to the same effect, is not clearly based on any prior finding of fact. Although at paras. 68-74 of the Reasons the Tribunal gives short summaries of most of the documents to which I have referred at paras. 13-17 above, it does not discuss the extent to which those documents might have been expected to come to the attention of the workforce generally or, perhaps more significantly, its representatives (as to this, see para. 36 (c) above). It does accept Ms McGauley's evidence that the policy documents were not distributed generally, but it does not record, or discuss the effect of, her evidence that they were available on request. I am bound to say that I think a fuller treatment was required. Obvious points requiring consideration were what conclusion should be drawn from the fact that the Union had negotiated an agreement for temporary workers which referred to the claimed benefits as an entitlement of permanent workers (see para. 12 (2) above), and also the effect of the "Q&A", to which Mr Prior had attached particular importance in his closing submissions. The fact that the policy documents were not generally published is certainly significant, but it seems to me that it was only part of a rather complex picture about what information was made available to the company's employees and their representatives.

1. But even if the ET's finding on this point is sustainable, it is not an answer to the failure identified by the majority in the EAT. The fact that there has been no explicit publication of the policy underlying a practice of making payments is certainly significant in deciding whether that practice has crystallised into an obligation; but it is not necessarily decisive. I note that in his judgment in Duke (see para. 28 above) Browne-Wilkinson J referred to a policy having been "drawn to the attention of employees or … [having] been followed without exception for a substantial period". While I agree with Lord Coulsfield in Quinn that this passage should not be treated as an exhaustive statement of the law, I am sure that Browne-Wilkinson J said "or" rather than "and" advisedly; and I think he was right. That being so, the ET's failure to find that the claimed benefits had been paid invariably prior to the transfer remains a material flaw in its reasoning.

1. On the basis of the material which we have seen it seems to me very unlikely that the Claimants will be able to establish any contractual entitlement to payment of the £600 lump sum. It does not appear to have been paid "without exception"; and even when it was paid Mr Streeter's acknowledgement that there were "issues" about it tends to suggest that it cannot be thought to have been being paid as of right. I note also the reference to it in the contemporary documents as "ex gratia".

1. I do not, however, believe that the fact that the Claimants may have no entitlement to the £600 lump sum means that they can have no entitlement to the other claimed benefits. I see no conceptual difficulty about the company having communicated to its employees that the enhanced redundancy payments, but not the lump sum, were a contractual right, particularly as they are benefits of a rather different character: cf. para. 36 (b) above.

1. Ms Simler said – so far as I can see rightly – that the Claimants had always advanced their claim as being to a composite package, and she said that it would not have been open to the ET to reach different conclusions about different elements in the package. I do not accept that. The fact that the Claimants had claimed too much, if they had, was not a reason why the ET could not find for them on such part of their claim as it found proved. It would be a different matter if there was some inherent reason why the claim had to be all or nothing; but, as I have said, I can see none.

1. As for Ms Simler's suggestion that the ET may have had in mind the difficulties about the claim to the £600 when it said, at paras. 106 and 109, that it could not be satisfied that the claimed benefits had been paid without exception, I can only say that if that was its thinking I would have expected it to say so. As the majority in the EAT noted, the ET at no point in the conclusions section of the Reasons considers any possible distinction between the £600 and the rest of the claim, nor had Mr Choongh in his closing submissions invited it to. It does in its findings of fact record Mr Hulme's statement that the £600 was "normally" paid and Mr Streeter's acceptance that there had been "issues" about it; but it makes no comment and draws no conclusions.

1. In my judgment none of the reasons advanced by Ms Simler undermine the basis on which the majority in the EAT found the decision of the ET to be flawed. It follows that the appeal must be dismissed. The Claimants did in fact in their Respondents' Notice plead a number of additional grounds for upholding the EAT's decision. These to some extent overlap with points which I have made in addressing Ms Simler's arguments, but I need not consider them separately. I do, however, note that one of the pleaded grounds is that the ET failed to give adequate reasons for its decision. It will appear from what I have already said that the particular flaw on which the EAT fastened does not stand alone: the fact-finding and the reasoning are, I have to say, unsatisfactory in other respects. This is significant to the question of remittal. I might in other circumstances have been tempted by a proposal that we should avoid the cost and delay of a remittal by deciding for ourselves whether the claimed benefits were indeed contractual. But neither party asked us to take that course, and in truth the findings in the Reasons are too abbreviated, and in places obscure, for an appellate court to be confident about reaching its own conclusions based on them. Remittal is accordingly, however regrettably, inevitable. It is also fair to say that this is the kind of case where the expertise of lay members is likely to be particularly valuable.

1. I should make it clear that in upholding the decision of the EAT I am not to be taken as expressing any view as to what should be the eventual outcome. Cases of this kind often involve difficult questions of judgment, and it will be apparent from the summary which I have given of the evidence and submissions that there are points to be made on both sides of the argument. Although I have at one or two points expressed a view on particular aspects of the evidence (most obviously in relation to the £600), the Tribunal on remittal should give those views weight only to the extent that they appear to be supported by the evidence before it.

1. Ms Simler argued that even if the case had to be remitted the EAT was wrong to direct that it be remitted to a fresh Tribunal. I cannot agree. The decision was one for its discretion, and it would be a strong thing to say that it had exercised that discretion wrongly. In any event I would have made the same decision. In my view the Claimants would be justified, in the context of the various criticisms made of the ET's reasoning, in not having confidence that it could, however good its intentions, approach the issues with a fresh mind.

1. Both aspects of the appeal are dismissed.

Lord Justice Rimer :

1. I agree.

Lord Justice Moore-Bick :

1. I also agree.