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.
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. [Summary not yet checked against the judgment.]
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References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
Contract; variation; unilateral pay cut. The employer unilaterally imposed a reduction in wage rates, wishing to go on employing the whole workforce. The employee continued to work and receive wages while reserving his rights and protesting about the reduced amount. The House of Lords (Lord Oliver giving the sole reasoned speech) treated the reduction as a repudiation that did not end the relationship: a fundamental breach other than a purported dismissal does not terminate the contract automatically and needs acceptance. The case confirms that an employee faced with a repudiatory pay cut need not resign but may remain in employment and sue for breach of contract. Lord Oliver reserved his opinion on an outright dismissal or walk-out. [Summary checked against a practitioner text, not the judgment.]
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References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
Contract; conditions precedent; references. The offer of employment was 'subject to receipt of satisfactory references' and the employer considered the references produced not to be satisfactory. The question was whether the plaintiff had an arguable case that he was party to an unconditional contract of employment. Mustill LJ felt little doubt that 'satisfactory' meant satisfactory to the employer; Ralph Gibson LJ expressed the same view. Global Asset Capital v Aabar [2016] EWHC 298 (Comm) at [125] reads the Court of Appeal as concluding that the construction needed to be considered at trial. Distinguished in Kankanalapalli [2026] EAT 49, inapplicable where references were never sought. [Summary checked against a practitioner text, not the judgment.]
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. [Summary not yet checked against the judgment.]
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. [Summary checked against a practitioner text, not the judgment.]
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References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
Contract; conditions precedent; references. Langstaff J (as he then was) confirmed that it was a matter for the employer whether the references were satisfactory. He expressed some doubt whether a contract had been formed at all, because of the specific wording of the offer. 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. [Summary checked against a practitioner text, not the judgment.]
Wrongful dismissal; damages; common law damages cannot be recovered for the manner of dismissal (the 'Johnson exclusion zone'). [Summary checked against a practitioner text, not the judgment.]
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References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
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. [Summary checked against a practitioner text, not the judgment.]
Approved by Abrahall v Nottingham City Council [2018] EWCA Civ 796 (2018-04-19)
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References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
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. [Summary not yet checked against the judgment.]
Contracts; unilateral variation; a robust variation clause in the handbook allowed the employer to change pay terms without consent. [Summary checked against a practitioner text, not the judgment.]
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.
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References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
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.
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References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
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.
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References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
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.
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References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
Variation of contract; acceptance by conduct; pay freeze. The group 1 employees had a contractual entitlement to pay progression [55]. On Elias J's test in Solectron, acceptance of a varied term by continuing to work must be unequivocal: conduct reasonably capable of a different explanation is not acceptance [87]. Protest at collective level can negative any inference of individual acceptance [88]. Underhill LJ held the tribunal entitled to find the freeze was not accepted, for three reasons [101]: the variation was wholly disadvantageous, with no contractual promise against redundancies [102]; it was not put to employees as needing their agreement, the Council's position being that it was contractually entitled to impose it [103]; and the unions protested strenuously up to and beyond implementation [104]. Almost two years without complaint was not unequivocal acceptance, though the second judgment would not rule out acceptance where redundancy can only be avoided by accepting the new terms [109], [111]. Appeal dismissed, cross-appeals allowed [105].
Cites
References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
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.
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References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
Contract; 'fire and rehire'; terms implied in fact; injunctions. Tesco had promised relocating distribution-centre staff 'retained pay' as a permanent feature of their contracts, and later proposed to dismiss and re-engage them without it. The Supreme Court allowed the union's appeal from [2022] EWCA Civ 978. Lord Burrows and Lady Simler (Lord Lloyd-Jones agreeing) held that a term was implied in fact, on the business efficacy or obviousness test, precluding Tesco from exercising its contractual right to dismiss on notice for the purpose of removing or diminishing the right to permanent retained pay [45], [57]. Lord Leggatt and Lord Reed agreed in the result, and the injunction granted by Ellenbogen J was restored [137]. Lord Leggatt's suggestion that the common law rule permitting an unreasonable or capricious dismissal might give way to a term of the Braganza kind implied in law [128] was not adopted by Lord Reed, who said the question did not require decision [149].
“We would therefore hold that, applying the test of business efficacy (or obviousness) Tesco is precluded by an implied term from exercising the contractual right to dismiss the claimants on notice for the purpose of removing or diminishing their right to receive permanent retained pay.”Lord Burrows and Lady Simler, at [57]
Cites
References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.