The construction of the employment contract and the terms implied into it. Wood v Capita Insurance Services Ltd; Malik v Bank of Credit and Commerce International SA.
Wrongful dismissal; damages are limited to financial loss (notice pay) and do not cover injury to feelings or reputation.
Contract; notice; the court addressed whether a contract was permanent or terminable on notice. Distinguished in Kankanalapalli [2026] EAT 49 on the basis that the case concerned the nature of the contract (permanent vs terminable), not the timing at which reasonable notice should be assessed.
Contract; variation; employees are expected to adapt to new methods and technology without a new contract.
Contract; variation; working on new terms under protest does not imply acceptance.
Contract; conditions precedent; references. The Court of Appeal held that where an offer of employment was conditional upon satisfactory references, the employer was entitled to terminate once references were obtained and found unsatisfactory. Distinguished in Kankanalapalli [2026] EAT 49, inapplicable where references were never sought.
Contract of employment; the House of Lords confirmed the implied term of mutual trust and confidence: an employer must not, without reasonable and proper cause, conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust. Stigma damages are recoverable where the employer's corrupt conduct damages former employees' employment prospects and causes quantifiable, foreseeable loss.
Contract; implied terms; an employer had an implied duty not to conduct its business in a way that destroyed employee trust.
Wrongful dismissal; damages; common law damages cannot be recovered for the *manner* of dismissal (the 'Johnson exclusion zone').
Variation of contract; acceptance by conduct; the source of the 'only referable to' test. Per Elias J: the fundamental question is whether the employee's conduct, by continuing to work, is only referable to their having accepted the new terms imposed by the employer. If the conduct is reasonably capable of a different explanation, it cannot be treated as acceptance. Approved and applied by the Court of Appeal in Abrahall v Nottingham City Council.
Contracts; unilateral variation; a robust variation clause in the handbook allowed the employer to change pay terms without consent.
Contract; incorporation of collective agreements; enhanced redundancy pay; custom and practice; compromise agreements. A photographer employed from 1989 and dismissed for redundancy on 4 February 2006 claimed an enhanced redundancy payment of two weeks' basic pay for each completed year of service under a collective agreement of 22 August 2002 between MGN and the British Association of Journalists, incorporated into his 2005 contract.
Termination of contract; elective theory; a wrongful repudiation of a contract of employment does not terminate the contract unless and until the other party elects to accept the repudiation.
Supreme Court restated the primacy of clear contractual language. Where the words of a term are unambiguous, the court gives effect to them even if the commercial result is surprising or harsh. Commercial common sense is not a licence to rewrite a contract in defiance of its language.
Contractual interpretation; textualism vs contextualism; the Supreme Court clarified that interpretation is a unitary exercise involving both the language of the contract and the factual context.
Variation of contract; acceptance by conduct. Applying Elias J's test in Solectron Scotland v Roper, acceptance of a varied term by continuing to work must be unequivocal — conduct 'only referable to' acceptance; if reasonably capable of a different explanation it is not acceptance. On the facts a pay freeze imposed on contractual incremental pay progression was not accepted: there had been sustained collective protest by the unions, the variation was wholly disadvantageous (acceptance less readily inferred), and the change had never been put to employees as requiring agreement. Distinguish carefully: the case concerns variation of a subsisting contractual right — it does not engage where the disputed terms were the original bargain.
Economic duress; lawful act duress. The Supreme Court confirmed the doctrine exists in English law but is very narrow, confined essentially to two categories: (i) reprehensible means used to manoeuvre the victim into a position of vulnerability (blackmail-type conduct, exploiting knowledge of wrongdoing); and (ii) illegitimate means used to force waiver of a claim made in good faith. Lord Hodge rejected any general test of good faith or unconscionability: hard commercial pressure, even by a monopolist exploiting overwhelming bargaining power, is not duress. Fear of an adverse but lawful outcome, without an unlawful threat, is not illegitimate pressure — and duress renders a contract voidable, not void, so affirmation by performance defeats it.
Contract; implied terms; Carr LJ set out the modern framework for implying terms into contracts. Applied in Kankanalapalli [2026] EAT 49 in the context of implying a reasonable notice term into a contract of employment silent on the point.
Breach of contract; probationary period; an express contractual right to extend a probationary period must be actively exercised. By allowing the probationary period to pass without dismissing the employee or expressly exercising the right to extend it, the employer lost the right to dismiss on one week's notice and the employee became entitled to three months' notice under her contract.
Contract; conditions precedent; references. Langstaff J (as he then was) considered that a requirement for satisfactory references meant the formation of the contract depended entirely on the employer being satisfied with the references. Distinguished in Kankanalapalli [2026] EAT 49, inapplicable where references were never sought; neither Wishart nor Mellors addressed the status of a conditional contract before references had been obtained.
Contract; implied terms; the terms of a non-existent future contract cannot define the legal content of a contract that already exists. Cited in Kankanalapalli [2026] EAT 49 for the principle that an employer's standard employment terms, produced only during litigation, could not be incorporated retroactively into a contract formed earlier.