Redundancy success

A group of former employees of the Peacocks retail chain has succeeded in persuading an employment tribunal that they have an implied contractual right to redundancy pay, calculated by using the statutory redundancy scheme but with no cap on either the amount of weekly pay or the number of years’ service.

An Employment Appeal Tribunal agreed that the term should be implied based on custom and practice. The successful claim follows the landmark Court of Appeal decision, Park Cakes Limited v Shumba [2013] EWCA Civ 974, a case supported by the BFAWU bakers’ union which also concerned contractual redundancy pay (see Labour Research, September 2013, page 25).

Both cases involved incoming employers who challenged established redundancy payment arrangements following a TUPE transfer. In the Peacocks case, the claimants had between 14 and 27 years’ service.

Although their contract terms included an express contractual redundancy procedure, there was no express contract term as to the amount of their redundancy pay.

They succeeded in establishing the implied term largely because they were able to call witness evidence from the ex-head of human resources, who managed redundancies until he was himself made redundant.

He told the tribunal there was a long-standing policy at the retailer of paying staff based on the statutory scheme without applying either of the two statutory caps, which he described as “most definitely custom and practice” and not discretionary.

www.bailii.org/uk/cases/UKEAT/2014/0315_13_2503.html