Turning policies into contractual rights: Peries v Wirefast Limited

Peries v Wirefast Limited, EAT, 14 September 2006


Background


Mr Peries was selected for redundancy by his employer, Wirefast Limited. Subsequently, he brought a tribunal claim arguing that, among other things, Wirefast had failed to comply with an agreed redundancy policy. Peries claimed that, under the policy, he was entitled to 12 weeks’ redeployment pay and the services of a professional outplacement adviser. However, the document containing the policy included the statement: ‘this is not part of your contract’. The tribunal concluded the policy did not give rise to any contractually binding obligations on the employer, and rejected Peries’ claims. Peries appealed.


Decision


The Employment Appeal Tribunal (EAT) allowed the appeal on the grounds that it is possible for a policy, over time, to give rise to contractual rights, even though it was originally expressed to be non-contractual. Saying that a document is for information purposes only and does not form part of the contract of employment does not preclude a policy emerging based on custom and practice that hardens into a contractual entitlement. The EAT did not go so far as to say that the redundancy policy had become contractual. Instead, it sent the case back to the tribunal to consider all the facts and decide whether the redundancy benefit had become a contractual entitlement.


Comment


This case serves as a reminder to employers not to be lulled into a false sense of security by a ‘non-contractual’ label. The fact that a benefit was originally described as non-contractual will be relevant in determining whether its status has been altered through custom and practice. But, as this case shows, that description will not be conclusive.




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