Lee v GEC Plessey Telecommunications High Court, Queen's Bench Division, (HCQB) Mr Justice Connell The High Court

held: The plaintiffs were entitled to a declaration that their contracts of employment included a term derived from a collective agreement entitling them to enhanced severance payments in the event of termination of their employment on the ground of redundancy. The Court could not accept the defendants' argument that the terms were not contractually binding upon them because there was no consideration given by the employees for the introduction of the enhanced terms into the individual contracts. Where, in the context of pay negotiations, increased remuneration is paid and employees continue to work as before, there is plainly consideration for the increase by reason of the settlement of the pay claim and the continuation of the same employee in the same employment. The situation is similar with an increase in a severance payment since a redundancy payment is part of the remuneration package. The employee continues to work for the employer, thereby abandoning any argument that the increase should have been even greater and removing a potential area of dispute between employer and employee. The employer has both secured a benefit and avoided a detriment. It could not be held that the employers were entitled unilaterally to alter the plaintiffs' contracts of employment since they had reserved to themselves, in the statement of terms and conditions issued in 1985, the power to alter individual contracts of employment unilaterally via general instructions. Terms incorporated into a contract as a result of a collective agreement will remain part of the contract unless and until removed, either by agreement or under specific right found within the contract. In the present case, there was no agreement as to the removal of the entitlement to enhanced redundancy terms and there was no clear right in the contract, as set out in the 1985 statement of terms and conditions, to effect unilateral adverse variations to the contract. In any event, the contract as it existed on 4 July 1990, when the general instruction purporting to withdraw the enhanced terms was issued, did not include any right unilaterally to alter the plaintiffs' contracts via a general instruction. The statement of terms and conditions which took effect in April 1990 omitted any reference to the incorporation of collective agreements or general instructions and notices. There is a heavy burden upon a party who asserts that the actual contract is different from the statement of terms and conditions and, in the present case, there was no evidence to imply a continuation of the previous terms. The plaintiffs could not be held to have compromised their claims by virtue of an agreement by the unions in April 1991 to withdraw from litigation against the defendant employers. The unions could not be regarded as acting as the plaintiffs' [1993] IRLR 383 at 384 agents for the purpose of settling the litigation since they were not authorised to act, and did not act, as agents for the plaintiffs in the course of negotiations leading to the agreement.

Nor could it be held that the April 1991 settlement was a collective agreement incorporated into the plaintiffs' contracts of employment so as to alter those contracts by providing that the enhanced redundancy terms would no longer apply. As with general instructions, the new contracts of employment did not include the incorporation clause previously contained in the statement of terms and conditions. Neither could it be held that the collective agreement constituted a package offer by the employers to individual employees of a variation in their contract of employment, which the plaintiffs accepted by their conduct in accepting the pay rise. In order to determine whether terms of a collective agreement relating to redundancy matters have been incorporated into individual contracts so as to become contractually enforceable as between employer and employee, the court must look for the necessary contractual intent on both sides of the bargain and also look at the content and character of the relevant parts of the collective agreement. In the present case, the necessary contractual intent did not exist and the two parts of the collective agreement relating to redundancy were not both apt for incorporation into individual contracts. The evidence showed that both sides to the negotiations understood that they were involved in collective bargaining and that no-one believed that the agreement was binding upon individuals or intended that that should be the case. Moreover, as to content, the agreement was to restore the previous terms until 31 May 1991 and thereafter to negotiate on any enhanced severance payments. While the former term was apt for incorporation, the latter was uncertain and not suitable for incorporation in an individual contract. 124.5 Obiter dicta: If the employers wished to incorporate in individual contracts a term relating to the ending of the entitlement to the 1985 redundancy terms and to link this to the pay increase, they could have written to their employees to this effect, making it clear that acceptance of the increase would also amount to acceptance of the cessation of such rights. Cases referred to: Williams v Roffey Bros and Nicholls (Contractors) Ltd [1991] 1 QB 1 CA Price v Rhondda Urban Council [1923] 2 Ch 372 HC Robertson and Jackson v British Gas Corporation [1983] IRLR 302 CA Cadoux v Central Regional Council [1986] IRLR 131 CS Hammersmith & Queen Charlotte's Special Health Authority v Cato [1987] IRLR 483 EAT Alexander and others v Standard Telephones & Cables Ltd (No.2) [1991] IRLR 286 HC Walford v Miles [1992] AC 128 HL Appearances:

For the Plaintiffs:JEFFREY BURKE QC and ROY LEMON, instructed by Robin Thompson & Partners

For the Defendants:PATRICK ELIAS QC and RICHARD PAYNE, instructed by Rotherham & Co 1 MR JUSTICE CONNELL: This is a claim by three employees against their employer in which they seek a declaration that their contracts of employment include within them a term entitling each of them to enhanced severance payments from their employer in the event that they should be made redundant. 2 Each of the plaintiffs is a production worker employed by the defendants, GEC Plessey Telecommunications Ltd, at their premises at Beeston, near Nottingham. 3 This is one of the places where the defendants conduct their business, namely, the manufacture of telecommunications equipment. 4 Each of the plaintiffs has been employed by the defendant company, or by its predecessors, for a significant period of time. In the case of David Lee the length of his employment is 26 years. In the case of Melvyn Wood the length of his employment is 31 years. In the case of Byron Harvey the length of his employment is 21 years. 5 When the proceedings were commenced in January 1991 there was a fourth plaintiff, Patricia Ann Lawson. However, during the currency of these proceedings Mrs Lawson has been made redundant by the defendant company, she has obtained from her former employers a payment which is satisfactory to her, and she has played no further part in these proceedings. In the course of his opening Mr Burke (leading counsel for the plaintiffs) told me that the claim on her behalf was withdrawn. 6 So far as the site at Beeston is concerned, this was operated by the National Telephone Company more than 100 years ago; and in the early 1960s Plessey took over the running of the business of manufacturing telecommunications equipment from that site. 7 In the 1970s Plessey had 8,000 or so employees at the site, but the number of employees there at the present time has reduced to under 3,000. This reduction is in part due to the formation of a partnership between the two concerns: GEC and Plessey in 1987 and to the subsequent takeover of Plessey by GEC after a hostile bid in 1989. 8 Subsequent to the completion of that takeover, GEC were in the driving seat at Beeston and they continued with a business improvement programme which had been under discussion for some time before the takeover. 9

Given the very significant reduction in the workforce to which I have previously referred, it is not surprising that the individual entitlement to redundancy payment is a matter of significant consequence to the employees of the defendants at Beeston. 10 Put shortly, what the plaintiffs assert is that over a number of years, and in particular from 1970 onwards, whenever a redundancy situation has arisen, the defendants or their predecessors have paid to all employees made redundant at Beeston a significantly enhanced severance payment. 11 That is to say, that in every case the employers have paid to the employees a severance payment which was substantially higher than the statutory minimum entitlement of that employee under the Employment Protection (Consolidation) Act 1978. 12 The plaintiffs contend that this enhanced payment is the right of each of them as a result of a specific term to [1993] IRLR 383 at 385 that effect in their contracts of employment, and they further assert that the defendants have indicated an intention not to be bound by any such contractual term, but to make to any of the plaintiffs (and to any other of their employees) who should be made redundant, a severance payment in a significantly lesser sum than that to which the plaintiffs claim that they and their fellow employees are entitled under their contracts of employment. 13 In the case of Mr Lee the redundancy payment to which he claims that he would have been entitled if he had been made redundant in the spring of 1992 is 26,643. 14 So far as the defendants are concerned, their case is that they would only have been obliged to pay him 8,193 under the redundancy payment terms that they wished to operate. 15 Accordingly, the difference in Mr Lee's case is 18,450 and in the case of the other two plaintiffs is 17,898 for Mr Wood and 13,138 for Mr Harvey. 16 It is immediately apparent that the difference between the plaintiffs and the defendants is very significant in financial terms. Counsel told me in the course of his opening that there is in existence another action following on this action in which second action there are 1,324 plaintiffs who seek a declaration in similar terms to the declaration sought by the plaintiffs in this instant action. 17 It is common ground between the plaintiffs and the defendants in the second set of proceedings that the result of that litigation will follow the result of this action. 18

Bearing in mind the sums in dispute, and bearing in mind the numbers of persons affected by the litigation, it is easy to understand why this action has provoked significant concern in the minds of both the employers and the employees. 19 In short, the plaintiffs say that they have a contractual entitlement to enhanced severance payments in accordance with a formula which was agreed with the employers over the years since 1970 and finally in 1985, and they ask the Court to declare that that is their entitlement. 20 The defendants dispute that the plaintiffs are so entitled, but they agree that if the contracts do contain such a term, and if their other arguments by way of defence are defeated, then it is appropriate for the Court to make the declarations sought. 21 Thus there is no issue between the parties as to the appropriate remedy if the plaintiffs make out their case. 22 The plaintiffs' case can be summarised as follows. They assert that from 1970 onwards the contracts of employment relating to employees of the defendants or their predecessors at Beeston included a term entitling them to enhanced severance payments; which term was the subject of negotiation from time to time, until in October 1985 the defendants agreed that thereafter they would pay to any employee who became redundant 15 weeks' pay for anybody employed for less than four years, four weeks' pay for each year of service for anybody employed between four and 25 years, and for anybody employed in excess of 25 years, 104 weeks' pay. 23 The plaintiffs go on to say that such an entitlement was of significant importance to all employees because it provided for them a degree of security against the possibility of unemployment and prompted them to enter into a variety of personal arrangements, such as mortgages or loans, in reliance upon this entitlement. 24 They assert that there was also value in this agreement for the employers for this reason. The unions representing the employees were implacably opposed to compulsory redundancies. By providing substantial redundancy payments the employers were able to attract volunteers for redundancy whenever a redundancy situation arose and thus the employers were enabled to achieve the desired reduction in their workforce without the risk of industrial disharmony and, in particular, without the risk of strike action. 25 The plaintiffs add that these terms relating to severance payments were observed in every case at Beeston where an employee became redundant until on 4 July 1990, by means of a general instruction of that date, the defendants purported to withdraw the previously existing severance terms as from 30 September 1990. 26

The plaintiffs assert that this was a unilateral action by the defendants, taken without previous discussion with the employees and certainly without their agreement. They say that such action was in breach of an important term of their contract of employment and that they immediately objected. 27 They ask the Court to make a declaration that the terms of their respective employments include the right to enhanced severance payments in the event of termination of their respective employments on the ground of redundancy. 28 In the light of these objections by or on behalf of the plaintiffs a temporary moratorium was in fact agreed between the employers and the employees to the effect that the old terms for severance payments would still be operated whilst discussion took place between the two sides, but these discussions came to nothing and the 1985 redundancy terms were withdrawn at a meeting between the employers and the relevant unions at Beeston on 10 December 1990. 29 The writ in these proceedings followed on 7 January 1991. 30 After the meeting on 10 December 1990 the defendants announced 47 more redundancies on 17 December 1990 and on the same date they published a notice setting out the details of how severance payments would be calculated for the future. 31 The result of this calculation was that the employee would receive about half or less of the amount which he would have received under the 1985 agreement. 32 Proceedings having been issued, another announcement was made on 22 January 1991, this time of 270 redundancies, of which 220 were within the Business Systems Group. 33 The situation was plainly very unhappy from the point of view of both the employer and the employees. So far as the company was concerned, they knew that the unions were implacably opposed to compulsory redundancies and they also knew that any such redundancies would be likely to lead to a strike. 34 Indeed, by April 1991 the various unions were holding individual ballots concerning strike action and the results were expected over the weekend of 1314 April 1991. 35 The first ballot to be declared (on or about 10 April, in fact) was that of the transport drivers, who voted to strike. 36 Further, the employer's representatives realised very well that their new terms would be unlikely to attract sufficient volunteers to satisfy the 270 requirement.

37 So far as the employees were concerned, they were dissatisfied with the new basis for the redundancy calculation and they were anxious to do their best to restore the 1985 terms, which they believed was their right. 38 On 28 March 1991, Mr Brian Crossland, the full-time [1993] IRLR 383 at 386 officer and district secretary of the TGWU, wrote a letter to Mr Malcolm Thompson, who was then the personnel director of the Business Systems Group of GPT, threatening to consider seeking an injunction against the defendants if they did not comply with site-recognised redundancy procedure. 39 On Thursday 11 April 1991 Mr Thompson telephoned Mr Crossland. In the 'phone call Mr Thompson asked Mr Crossland if he was serious in his letter of 28 March to which the reply was, in effect: 'Yes'. 40 Then Mr Thompson suggested a private meeting later that day between him and Mr Carden on behalf of the defendants and Mr Crossland, Mr David de Lacey (who was the senior shop steward for the Production Group) and Mr David Lee (one of the plaintiffs in these proceedings and branch chairman of the TGWU) on behalf of the unions. Mr Thompson suggested that the meeting should be exploratory and secret. The invitation was accepted and later that evening the five of them met in a private room at the Post House Hotel, Long Eaton. 41 Much of what transpired at that meeting is common ground. Mr Thompson's suggestion was that he would be prepared to restore the 1985 redundancy terms for the 270 workers if he could reach agreement with the unions over the pay claim which would arise on 1 July 1991. 42 In short, he wanted to link the two matters together and he indicated that if agreement could be reached on these items, then that ought to provide stability at Beeston over the ensuing 15 months, ie until the pay claim of 1 July 1992, thereby enabling management to concentrate on building up the business and enhancing the company's reputation. 43 The union representatives were taken by surprise by the attempt to link these separate matters in the same negotiation and were initially hostile to the idea. However, they agreed to adjourn the meeting and consider the situation over the weekend, by which time the results of the strike ballot would be known. 44 In the result, the production workers, like the transport drivers, voted in favour of a strike, but the other groups did not. 45

The same persons met again on Monday 15 April 1991 at the Post House Hotel at about 4 pm. The meeting lasted until about midnight. There was much further discussion on many subjects, including extensive haggling about the size of the pay increase. 46 Eventually the parties believed that they had a deal, the terms of which were noted by Mr Carden who subsequently committed them more formally to writing (see core bundle p.208). 47 The union representatives agreed to report back to their various committees on the next day, Tuesday 16 April, and in the afternoon of the 16th a meeting of the joint union committee with their full-time officials took place. 48 This was a very heated meeting. Some union members were upset that their representatives should have attended a secret meeting with employers without specific authority. Others were disappointed at the recommendation of a pay increase of 4.25% when the Retail Prices Index figure at that time was 6% or more. 49 Another very major issue concerned the redundancy situation. The three union representatives reported to the JUC that the employers had said that over the next 15 months there would be no significant redundancies. The members wanted to hear more about this for themselves because there was nothing in writing about it and so management were asked to come along and explain. 50 At about 5 pm Mr John Carden and Miss Canning came to the meeting. They were asked a number of questions. In particular, Mr Marshall, a senior union representative asked whether there would be any more redundancies, to which Mr Carden replied that there were no further planned redundancies. 51 Mr Crossland then intervened to reiterate his understanding from the two previous meetings to the effect that there would be no significant redundancies over the 15month period, which understanding was not contradicted either by Mr Carden or Miss Canning. 52 Thereafter the meeting soon ended on the basis that the union representatives would report back to their members with a recommendation of acceptance of the proposed terms. 53 The following day (17 April 1991) Mr Carden sent an employee relations report to all senior managers detailing what he understood that the joint union committee and the individual union committees had agreed to recommend to their members (core bundle, p.208) and the committees communicated their recommendations to their members in similar terms (bundle 10, p.13). 54

There followed a number of mass meetings and ballots, as a result of which the company's offer was accepted by each union affected by the proposal. 55 Over the next few weeks, before 31 May 1991, 270 volunteers for redundancy were found and were paid in accordance with the 1985 terms as set out in the company's offer. 56 On 13 June 1991 the company announced a further 41 redundancies in the Network Systems Group at Beeston. 57 After 1 July 1991 the company paid its employees the extra 4.25%. 58 On 19 July 1991 they announced their new terms of severance payments to take immediate effect, which terms were significantly less generous than the 1985 terms, in some cases by as much as 80%. 59 On 24 July 1991 they announced a further 400 redundancies in the Business Systems Group at Beeston. 60 The union representatives were dismayed by this turn of events and on 1 August 1991 an external joint union committee conference was held which was attended by management representatives, including Mr Carden and Miss Canning. 61 Miss Canning took notes during the course of this conference, which were handwritten, and subsequently typed out (core bundle, pp.218 to 221). 62 That meeting was acrimonious and was adjourned without any agreement being reached. 63 On 6 September 1991, Mr Crossland wrote to Mr Thompson placing on record his dismay at the company's attitude in respect of the redundancies which had been declared recently and indicating that he was instructing solicitors to continue the original actions which had been adjourned by consent in April 1991 in the light of the apparent agreement reached at that time. 64 He stated in his letter that it was clear that the company had broken the spirit of its offer made in April. 65 Mr Thompson replied on 20 September 1991 to the effect that it was clear to those involved in the negotiations in April that severance terms for those leaving after 31 May 1991 would be a matter for discussion and negotiation and further asserting that no guarantee had been given at that time that further redundancies

[1993] IRLR 383 at 387 would not be declared. 66 External conferences were held on 17 September and 24 September, but no accord was reached and at a mass meeting on 27 September 1991 the voting rejected strike action but supported the continuation of this action and the other related actions. 67 On 15 January 1992 the defendants amended their defence to allege that, by virtue of agreements made between them and various trade unions acting on behalf of each of the plaintiffs in April 1991, the plaintiffs had each compromised their claims on the terms set out in the document dated 17 April 1991 issued by the works committee and the joint union committee. 68 This was the document (bundle 10, p.13) which recorded the company's offer arising from the meetings of 11, 15 and 16 April, which offer was recommended by the committees to their members for acceptance and was subsequently accepted by each union. 69 The document included the terms which restored the 1985 redundancy terms for those leaving before 31 May 1991 and stated that after that date those terms would no longer apply. Any enhancement after that date would be the subject of negotiation. 70 Further, it provided that: '... the recognised trade unions, singly and collectively, agree to withdraw from any pending or proposed legal actions against the company in respect of the current rationalisation programme.' 71 The plaintiffs deny that their claims have been compromised for a number of reasons which I will consider subsequently, but, in particular, they say that it was a condition of the agreement then reached that there would be no more than a few further redundancies for a period of 15 months from April 1991, ie until July 1992. 72 Alternatively, they say that there was a representation by the defendant to that effect which induced the agreement; or they assert a collateral contract which, by implication, included a term that the defendant would not seek to enforce the April 1991 agreement in the event that there were more than a few redundancies in the ensuing 15 months. 73 They go on to say that the redundancies announced in June and July 1991, totalling 441, were plainly contrary to the agreement reached in April and that the defendants

have thereby repudiated that agreement, which repudiation the plaintiffs have accepted. 74 Alternatively, these further redundancies, argue the plaintiffs, prevent the defendants from relying upon the April agreement, which has been rescinded. 75 In these circumstances it is important to resolve the issue concerning what was agreed in April 1991 before deciding upon the legal effect of that agreement. 76 There is no doubt that both the unions and the employers believed that they had reached agreement in April 1991. The problem is that they are at issue as to what was agreed. 77 The unions assert that they were assured by Mr Thompson that there would be no significant redundancies in the next 15 months. He could not guarantee that there would be none, but there would only be a few, if there were any at all. 78 Mr Thompson denies this. He says that he was not at that time aware of any plans for any further significant redundancies, and that in that state of belief he told the unions that there were no further redundancies planned. 79 Thus the issue is a narrow one: was a firm assurance given or was it no more than an honest statement of belief? 80 All the witnesses called by the plaintiffs are emphatic that the assurance was given. Mr Thompson's version of events is supported by Mr Carden, who in turn is supported by Miss Canning as to the events of 16 April 1991. 81 After a lapse of 18 months it is most unlikely that any witness can recollect accurately precisely what was said at the relevant time, and, in my judgment, a more reliable conclusion is likely to be reached by looking at the contemporary documents and the surrounding circumstances that then prevailed. 82 I am clear in my conclusion that no witness was in any way attempting to deceive me or to do other than tell me the truth to the best of his or her ability. 83 Equally I am clear that both sides to the April 1991 discussions were anxious, if at all possible, to reach agreement because of the pressures that they were under in the circumstances previously described. In particular, the employers wished, if possible, to secure 15 months of industrial stability and uppermost in the minds of the union representatives was the desire to restore the 1985 redundancy terms, especially for

the 270 employees who were imminently to be made redundant in the Business Systems Group. 84 Against that background I look at the documents. The most important of these in this context is the document at bundle 10, p.13, which records the company offer, which the works committee and the joint union committee recommended for acceptance, and the employee relations report from Mr Carden dated 17 April 1991 (core bundle p.208). 85 They are identical in their essential terms. Neither document makes any reference to an assurance by the employers that there would be no significant redundancies in the next 15 months. 86 The claims to enhanced terms of any employees made redundant after 31 May 1991 are to be the subject of negotiations, but nowhere is the assurance relied upon by the plaintiffs set out. 87 If the assurance was given as claimed, this is a remarkable omission, since agreement to this effect would have been very important against the background of the recent redundancy declarations and of the recession. 88 Secondly, the document at core bundle p.213a and 213b is a document drafted by Mr de Lacey and designed to explain to union members what the union strategy had been since December 1990. It was written, Mr de Lacey told me, after the April 1991 agreement had concluded and it came into Mr Thompson's possession on 13 June 1991. 89 It makes no mention of any assurance, such as that asserted by the plaintiffs. The document records the considerable achievement of the unions in pressuring the company into significantly changing their position on the redundancies, and then states: 'The Redundancy Payments have been restored until the end of May. Should management declare future surpluses following that date we will have to fight again at that time to restore the payments and to avoid compulsory redundancies.' 90 If the union representatives had achieved the additional promise of no further significant redundancies for 15 months, such an important achievement would most certainly have been set out in this propaganda document, as Mr de Lacey described it. 91 Nor does the union reaction after the redundancy decla-

[1993] IRLR 383 at 388 rations of June and July 1991 support the plaintiff's case on this point. There was no allegation of any breach of agreement when 41 redundancies were announced on 13 June and when the 400 were announced on 24 July an external joint union committee conference was speedily arranged for 1 August. 92 Miss Canning made a contemporary note of what was said and the first paragraph of that note is significant (core bundle p.218). The union were alleging that the company had breached the undertaking gained in April 1991 for two reasons, namely: (a) that further redundancies were announced soon after, and the company must have known this was going to happen before 31 May 1991 when the enhanced payment terms ceased; and (b) the company simply announced the new payment terms, and did not negotiate about them. 93 It is noticeable that, according to the note, the unions were not saying that the company were in breach simply by virtue of declaring significant redundancies within the 15-month period. 94 At this distance of time Miss Canning's note is the best evidence of what was said at the time and I accept its essential accuracy. 95 In these circumstances my conclusion is that the question of future redundancies certainly formed an important part of the April 1991 discussions. The unions sought from the management the maximum comfort on this point that they could hope to achieve, appreciating the reality that a definite commitment to a no-redundancy situation was something that they could not expect in the prevailing economic circumstances. 96 They were very worried about the 270 redundancies which were imminent and were most anxious to achieve the 1985 terms and payments for those employees and they settled for the best that Mr Thompson could give them an honest statement of his understanding and belief at the time. They trusted him and relied on his judgment in the matter. 97 When the union representatives reported to the joint union committee that the employers had said that over the next 15 months there would be no significant redundancies and when Mr Crossland on 16 April reiterated his understanding to this effect in the presence of Mr Carden and Miss Canning they were not intentionally misrepresenting what had been said to them, rather they were repeating their understanding of what the situation would be in the coming months in reliance upon Mr Thompson's good faith and judgment and realising that they could achieve no more than that. 98

Thus Mr Crossland's letter of 6 September 1991 in which he asserted that the company had broken the spirit of its offer, accurately recorded the correct situation, namely, that the further redundancies after 31 May 1991 were contrary to what the unions had been led to expect. 99 They were not, however, contrary to any term in the agreement because no undertaking, as alleged, had been given. 100 In the same letter Mr Crossland went on to complain that the company had broken its promise to negotiate concerning enhanced severance payments for the future, which complaint was further justified by the attitude of the company thereafter when they declined to make any significant improvement in the terms announced on 19 July 1991. 101 Before leaving this aspect of the matter I must deal with Mr Burke's submission that Mr Thompson, when saying that in April 1991 he was not aware of any plans for any further significant redundancies, could not reasonably have held that opinion. 102 Mr Burke relies upon a memorandum prepared by Mr Trollope and amended by Mr John Rivers, the defendant's personnel director, in January 1991 (core bundle pp.204 and 205) which spoke of a further manufacturing rationalisation which would involve the loss of an additional 1,8002,000 jobs throughout the defendant's organisation from January 1992 onwards. 103 He also relies upon the deteriorating situation in the defendant's business between January 1991 and March 1991, of which Mr Thompson was aware in April 1991, and upon the suggestion of a further review of manpower in the Business Systems Group of the defendants which was the main employee group at Beeston (see bundle 15, pp.64 and 71). 104 However, Mr Rivers told me that the Trollope memorandum was a discussion document which never reached the stage of becoming a proposal. It was not a plan and he had not discussed it with Mr Thompson because it was not part of Mr Rivers's thinking at the time. 105 He confirmed that in March/April 1991 there were no plans for any more redundancies in the Business Systems Group. It was on 3 June 1991, when the main board met, that the seriousness of the economic situation was brought home to them, as a result of which further redundancies were subsequently declared. 106 In April 1991 Mr Thompson knew that the defendant's business was in difficulties, but he did not then believe that Beeston would suffer any more redundancies because they were very efficient at that site and because that possibility had not been discussed with him.

107 When he said that he was unaware of any plans for any further significant redundancies I have no doubt that he was being truthful; and, given his state of knowledge at that time, his opinion to that effect was held on reasonable grounds. 108 Against the background of my conclusions on the facts I pass now to consider the other issues which require my decision. 109 Originally on the pleadings the defendants denied that an entitlement to an enhanced redundancy payment formed any part of the individual contracts of employment of its employees. 110 However, in May 1992 the defendants conceded that the terms of the general instruction which was issued on 21 October 1985 and which specified the amounts that the defendants would thereafter pay to an employee leaving due to redundancy, was, subject to one reservation, a term of each such contract. 111 Nonetheless, they still disputed the plaintiffs' right to the declaration sought on four separate grounds, which I will deal with seriatim. 112 (1) Consideration The defendants say that there was no consideration given by the plaintiffs or any other of the employees of GPT for the introduction of the enhanced terms into the individual contracts. Thus, say the defendants, such terms were not contractually binding upon them. 113 To this the plaintiffs give a number of answers. Firstly, they say that individual contracts of employment specifically included 'the provisions of relevant collective agreements currently in force and made between and on behalf of the company (or the Engineering Employers' Federation) and the trade unions concerned'; and 'general instructions and notices'. 114 The best evidence of this is to be found in the statement of terms and conditions of employment dated 16 September 1985. [1993] IRLR 383 at 389 115 Thus, say the plaintiffs, as terms and conditions relating to enhanced redundancy payments were improved from time to time, it was not necessary for the employees to give separate consideration for each such improvement since there was obvious consideration for the contract of employment as a whole; and all that was being changed was one detail of a collective agreement which was specifically incorporated into each contract.

116 Secondly, the plaintiffs assert that where an improvement in the employees' terms and conditions is announced by the employer, the employee gives consideration by continuing to work on the basis of the improved terms and without seeking a larger or more significant improvement. Otherwise, say the plaintiffs, the result would be ludicrous because any employer who announced a pay increase in the context of a pay claim which is then paid by the employer and accepted by the employee could thereafter withdraw the pay increase at will and without being liable to a damages claim for the difference on the basis that there was no consideration for the increased payment. 117 The consideration is, they say: (a) the employee continuing to work; and (b) not continuing with his pay claim, so that the employer avoids industrial action and benefits from the continued services of a known employee. 118 110.1, 124.5, 160 In my judgment the arguments advanced by the plaintiffs are correct. Where, in the context of pay negotiations increased remuneration is paid and employees continue to work as before, there is plainly consideration for the increase by reason of the settlement of the pay claim and the continuation of the same employee in the same employment. 119 110.1, 124.5, 160 The situation is similar with an increase in the severance payments made to those who lose their employment due to redundancy, for a redundancy payment is part of the remuneration package. The employee continues to work for the employer, thereby abandoning any argument that the increase should have been even greater and removing a potential area of dispute between employer and employee. The employer has both secured a benefit and avoided a detriment (see Williams v Roffey Bros and Nicholls (Contractors) Ltd [1991] 1 QB 1). 120 The case of Price v Rhondda Urban Council [1923] 2 Ch 372 is plainly distinguishable from the instant case, since in Price there was no negotiation between the employer and the employee as to whether married women should be employed or not, so that there was no extra value to the employer in women teachers continuing in their employment. 121 Here there were constant negotiations between the employer and the trade unions concerning redundancy terms and there was value to the employer in the settlement of those negotiations from time to time. 122 In any event, the observations of Eve J in Price supra concerning considerations were obiter since the ratio decidendi of the case was that there was, in truth, no new offer of employment capable of acceptance by the plaintiff.

123 Further, in the instant case, if in each individual contract of employment there were incorporated the provisions of relevant collective agreements agreed from time to time, as well as general instructions and notices, the contention that each improvement in the employees' terms requires fresh consideration fails to give proper recognition to the value to be attributed by the employer to the continuation of the same workforce in his employ and/or to the possibility of making adjustments from time to time to the detail of the contracts of employment without having to issue new contracts whenever adjustments are put into effect. 124 (2) Unilateral alteration The defendants claim that they had reserved to themselves the power to alter individual contracts of employment unilaterally, via general instructions. They rely upon the statement of terms and conditions of employment dated 16 September 1985 which expressly incorporated general instructions and notices into such contracts. 125 In this way the defendants claim that they were entitled unilaterally to alter these contracts, either to the benefit or to the detriment of the employee, and they say that they did just this via the general instructions of 4 July 1990, which, on its face, withdrew the terms for redundancy payments then in force (ie the October 1985 terms) as from 30 September 1990. 126 At a meeting between the joint union committee and senior management on 21 November 1990 the employers agreed to observe the old redundancy terms until a special joint union works conference had been convened, but on 10 December 1990 at an external conference a failure to agree and exhausted procedure was registered and the company withdrew the 1985 redundancy terms. 127 The plaintiffs' answer to this contention is threefold. First they say that the right to withdraw unilaterally a term in individual contracts of employment and to replace it with something less advantageous to the employee cannot exist unless it is plainly expressed in the contract. 128 Secondly they say that on the evidence in this case the entitlement to enhanced redundancy terms came into the contracts of employment as a result of collective agreements reached between management and unions which were then incorporated into the individual contracts and not as a result of general instructions and notices. Contractual terms thus incorporated cannot be unilaterally withdrawn by a different route. 129 Thirdly, they say that if the right to make a unilateral adverse alteration to the terms of the individual contract did exist in contracts accurately recorded by the statement of terms and conditions dated 16 September 1985 (which incorporated general instructions and notices), then such a right did not exist after 9 April 1990; on which

date a new contract of employment commenced and evidence of which is set out in a new statement of terms and conditions of employment which was attached to a letter of 15 January 1990 sent by GPT to its employees at Beeston. 130 This new statement of terms and conditions omitted any reference to the incorporation of general instructions and notices into individual contracts; and therefore from 9 April 1990 the power to make changes to such contracts via general instructions and notices ceased to exist. 131 In order to deal with the rival contentions on this issue I look first of all at the manner in which the enhanced redundancy terms had become terms in the contracts of employment. This had been via collective negotiation leading to collective agreement. 132 The consequence of such agreement was then communicated to the individual employees by general instruction. The instruction, in effect, announced what had previously been agreed but was not itself the source of the contractual term. Thus the general instruction of 21 October 1985 informed the employees of the terms collectively agreed between the unions and the employers, and thereafter these terms, it is conceded by the defendants, became incorporated into the individual contracts. 133 110.1 These terms will remain part of the contracts unless and until they are removed, either by agreement or under specific right found within the contract. 134 110.1 Here there was certainly no agreement to their removal; quite the contrary. Unilateral withdrawal from the collective agreement is certainly permissible, but such withdrawal is not effective to change the individual contracts, which will still include the agreed item (see, Robertson and [1993] IRLR 383 at 390 Jackson v British Gas Corporation [1983] IRLR 302 per Ackner LJ at p.304, 1416 and Kerr LJ at p.305, 24. 135 110.1 Further, when looking at the terms of the individual contracts, as set out in the statement of terms and conditions of employment of 16 September 1985, I do not find there clearly set out the right to effect unilateral adverse variations to the contract for which the defendants contend. 136

Certainly they never asserted any such right at the external conference on 10 December 1990, but contented themselves instead by relying upon their current business circumstances. 137 The case of Cadoux v Central Regional Council [1986] IRLR 131, referred to by the defendants is plainly distinguishable because there the rules which the employers wished to change unilaterally had been made by them unilaterally and not as a result of any agreement with the trade union. 138 110.1 As to the situation after 9 April 1990, it is plain that new individual contracts of employment took effect on 10 April 1990. The plaintiffs accurately point out that the statement of terms and conditions of employment omits any reference to the incorporation of either the provisions of relevant collective agreements currently in force or general instructions and notices. 139 These omissions are striking when one remembers, first, that they were included in the statement of 16 September 1985 and, second, that the new terms and conditions did make reference to collective agreements (see item 3 salary) and to a company general instruction (see item 5 holiday entitlement). 140 Further, Mr Thompson told me that the 1990 statement was put together deliberately by people skilled in doing so and after legal input. He agreed that the statement was a fairly comprehensive document touching all the important aspects of the contract of employment. 141 110.1 There is a heavy burden upon a party who asserts that the actual contract is different from the statement of terms and conditions, and whilst Mr Elias is right to point out that the terms here under consideration are not terms which are required to be included in the statement under s.1 of the Employment Protection (Consolidation) Act 1978 , nonetheless the omission in the circumstances described is, in my judgment, significant. 142 No doubt the new contracts were part of the defendants' business improvement programme, but, nonetheless, the statement of terms and conditions was an important document which had been the subject of detailed consideration. 143 It is argued by the defendants that an intention to change the pre-existing contractual terms should only be inferred if such an intention is spelt out by a clear statement of that which is being changed or removed. 144

I conclude here that the opposite is the case. If a continuation of the previous terms is to be implied, despite the omissions to which I have referred, there should be some evidence to justify or support the implication. 145 Here there is none. Mr Rivers was never asked about the point. No-one from the defendants' legal department or from the Engineering Employers' Federation was called. 146 Comparing the two statements, in many respects they follow a similar pattern and individual matters are raised therein in substantially the same order. 147 It is certainly not necessary to imply the continuation of such terms to give meaning to the statement or to the contract of which it is strong evidence. Looking at the document on its face there is no reason for any such implication and the conclusion that I draw is that the new contracts of employment applicable on and after 10 April 1990 did not have general instructions and notices incorporated within them. 148 That being the case, by 4 July 1990 the defendants cannot rely upon any right unilaterally to effect an adverse variation to the plaintiffs' contracts via a general instruction, since the contract, as it existed, did not include any such right. For all these reasons I reject the second ground relied upon by the defendants. 149 (3) The April 1991 agreement The defendants assert that as a result of the agreement reached in April 1991, whilst the litigation was pending, the plaintiffs are not entitled to the declaration that they seek. 150 This, say the defendants, is because the plaintiffs seek a declaration as to their present legal rights, not their past rights; and, they say, by virtue of the April 1991 agreement, any right to enhanced redundancy payment was extinguished with effect from 31 May 1991. 151 They go on to say that the April 1991 agreement settled this litigation because the unions who were parties to it were the plaintiffs' agents for the purpose of effecting such settlement. 152 In the light of the findings previously expressed, it is clear that there was an agreement reached between the employers and the unions in April 1991, the essential terms of which agreement are set out at core bundle pp.208 and N13. 153 Thus the agreement included terms to the effect: (1) that the 1985 redundancy terms would not apply after 31 May 1991;

(2) that the recognised trade unions singly and collectively agree to withdraw from any pending or proposed legal action against the company in respect of the current rationalisation programme. 154 This agreement was plainly a collective agreement and, therefore, presumed not to be legally enforceable (see s.18 of the Trade Union and Labour Relations Act 1974 , now s.179 of the Trade Union and Labour Relations (Consolidation) Act 1992 ) unless the requirements of subsection 1 are satisfied, which they are not here, since there is no provision in the agreement which states that the parties intended that it would be a legally enforceable contract. 155 Indeed, the evidence from both sides relating to the agreement was to similar effect. Mr Thompson described the agreement as a collective agreement couched in collective language. Mr de Lacey described it as the normal situation, namely, that agreements reached in this manner are not legally binding. Mr Crossland describes it as no more than collective bargaining. 156 The union witnesses accepted that the term of the agreement relating to the withdrawal from any pending or proposed legal actions against the company was intended to include this action, and the first question to be answered is whether the unions were acting as the plaintiffs' agents for the purpose of settling the litigation. 157 In appropriate circumstances it is possible for a union to act as agent for its members, and here the union did organise and fund the litigation. 158 On 6 September 1991 Mr Crossland wrote to Mr Thompson on behalf of all trade unions and employee groups, saying: 'I am therefore instructing solicitors to continue the original actions for those union members on-site who have been declared redundant.' 159 However, s.30 of the 1974 Act (now s. 178 of the 1992 Act ) [1993] IRLR 383 at 391 provides that collective agreements are made by or on behalf of the trade union. 160 There are significant practical difficulties in the way of the agency argument, eg are non-union members (of whom there were significant numbers at Beeston) bound by agreements reached by union representatives? Are employees who disapprove of some or all of the concluded agreement bound? 161 Most importantly, the evidence in the case does not support the proposition that the unions were agents for these plaintiffs.

162 Mr de Lacey stated that the union representatives had no authority to alter their members' individual contracts. Mr Thompson clearly stated that the April 1991 negotiations were collective negotiations producing a collective bargain. His understanding of the situation was that the unions would withdraw support for the litigation and would try to persuade their members not to continue with it. He knew that instructions had to be obtained from the individuals concerned. 163 The reality of the situation was confirmed by the defendant's solicitors when they wrote to the plaintiffs' solicitors on 28 August 1991 enquiring of the progress with regard to obtaining the consent of the various plaintiffs to a compromise of these proceedings. 164 No such consent was ever obtained and I have no doubt that if any of the plaintiffs had been asked after April 1991 whether his action had been settled as a result of the agreement reached in that month his answer would have been 'certainly not'. 165 1416 In short, I reject the submission that this litigation was compromised by the April 1991 agreement, since the unions were not authorised to act, and did not act as agents for the plaintiffs in the course of the negotiations leading to that agreement. 166 (4) Alternatively, and this is their fourth ground of defence, the defendants say that the April 1991 agreement was a collective agreement which was incorporated into the plaintiffs' contracts of employment so as to alter those contracts. 167 The essential variations thus effected were that the enhanced redundancy terms would not apply to those leaving Beeston by reason of redundancy after 31 May 1991 and that the plaintiffs would get a pay rise of 4.25% as from 1 July 1991. This pay rise was paid to and accepted by the plaintiffs, in accordance with the agreement, who have thus accepted such variations as terms of their individual contracts. 168 Accordingly, say the defendants, firstly, these terms are incorporated into the plaintiffs' contracts of employment and they are thus precluded from obtaining the declaration that they seek, and/or, secondly, by accepting the pay rise which was paid to them after 1 July 1991 the plaintiffs have, by their conduct, agreed to vary their contracts which thereafter included the term that the 1985 redundancy terms would not apply after 31 May 1991. 169 As to the incorporation argument, the defendants point to and rely on the clause in the statement of terms and conditions of employment dated 16 September 1985 which expressly incorporated the provisions of relevant collective agreements

currently in force and made between and on behalf of the company (or the Engineering Employers' Federation) and the trade union concerned. 170 110.1, 1416 I have previously stated my conclusion that the new contracts of employment applicable on and after 10 April 1990 did not have general instructions and notices incorporated within them; and my conclusion is the same concerning relevant collective agreements. 171 110.1, 1416 The April 1991 agreement was a relevant collective agreement and, accordingly, as such, it was not incorporated into individual contracts because after 10 April 1990 they no longer included the incorporation clause relied upon. Accordingly, this argument fails. 172 The second point made by the defendants under this head relies upon the conduct of the plaintiffs in accepting the pay increase of 4.25% applicable from 1 July 1991 and paid to them on and after 23 July 1991. In short, the defendants say that the April 1991 agreement constituted an offer by the defendants to individual employees of a variation in their contract of employment; which variation, say the defendants, was in two parts which were essentially linked and to be treated as a package. 173 These two parts were: (1) the abandonment of the entitlement to the 1985 enhanced redundancy terms by all the employees after 31 May 1991; and (2) the pay rise of 4.25% from 1 July 1991. 174 Since the plaintiffs accepted the pay rise, the defendants say they cannot avoid the consequence of their conduct, namely, the loss of the right to enhanced redundancy terms. They cannot accept the good part of the offer of variation and reject the bad part, but must be taken to have accepted both parts of the offer. 175 Further, say the defendants, both parts of the offer were suitable, or apt, for incorporation into the individual contracts because they both related to pay, it being common ground that redundancy pay is pay (see Hammersmith & Queen Charlotte's Special Health Authority v Cato [1987] IRLR 483 at paragraph 10). 176 124.5, 1416 In appropriate circumstances terms of a collective agreement relating to redundancy matters can be incorporated into individual contracts and thus become contractually enforceable as between employer and employee (see Alexander and others v Standard Telephones & Cables Ltd (No.2) [1991] IRLR 286 at paragraph 29 per Hobhouse J). 177

124.5, 1416 In order to decide whether this has occurred in a particular case the court must look for the necessary contractual intent on both sides of the bargain and also look at the content and character of the relevant parts of the collective agreement. 178 As to intent, the evidence shows that both sides to the April 1991 discussions understood that they were involved in collective bargaining. I have previously referred to the evidence which establishes this (eg Mr Thompson described the Post House talks as collective negotiations leading to a collective agreement and Mr de Lacey said that these talks involved normal bargaining as between the unions and management and any agreements reached were not legally binding). 179 So far as the individuals are concerned, Mr Lee spoke of his involvement in seeking individual consent to the agreement which the joint union committee recommended, to which some union members agreed and some did not. 180 124.5, 1416 In my judgment it is clear that no-one involved in the April 1991 talks which led to the agreement, to which I have previously referred, believed that that agreement was binding upon individuals; and no-one intended that that should be the case. 181 Further, as to its content, the agreement dealt with redundancy terms and/or severance pay in two places, namely, the restoration of the 1985 terms up to 31 May 1991 and the agreement thereafter to negotiate on any enhanced severance payments. 182 124.5, 1416 Whilst the former term is, as I conclude, apt for incorporation, the latter is not. Such a term is unenforceable (see Walford v Miles [1992] AC 128 at 136G138H), it is uncertain, and whilst it is appropriate for collective nego[1993] IRLR 383 at 392 tiations, it is not suitable for incorporation in an individual contract. 183 On the other hand, the agreement to negotiate carries with it certain important implications from the point of view of the employee, who is led thereby to expect a dialogue directed towards fresh agreement. No individual would have been prepared to abandon his contractual rights to the 1985 terms without at least the prospect of negotiating about them thereafter, yet if the defendant's argument be correct, the term bringing such rights to an end after 31 May 1991 became part of the individual contracts with no corresponding benefit to the individual employee, save for the pay increase. 184

The act of acceptance of the increase is not clearly referable to the abandonment of the 1985 terms; rather it illustrates the willingness of the individual to accept that increase in salary for 12 months but no more. 185 In summary, therefore, the necessary contractual intent did not exist in this case; and the two parts of the collective agreement relating to redundancy were not both apt for incorporation into individual contracts. 186 Accordingly, in my judgment, neither was in fact incorporated into these contracts in this case. If it be thought that this conclusion is unjust to the employers on the basis that their employees are thereby enabled to accept the good and reject the bad, the answer is that the remedy lay in their own hands. 187 When in January 1990 they wished to introduce new contracts of employment as from 10 April 1990, they wrote a letter making their intention plain and telling individuals that consequences would follow from their attendance at work thereafter (see core bundle p.136). 188 124.5 If they wished to incorporate in individual contracts the term relating to the ending of the entitlement to the 1985 redundancy terms and to link this to the pay increase, they could have written to their employees to this effect, making it clear that acceptance of the increase would also amount to acceptance of the cessation of such rights. They did not do this and for the reasons previously set out I conclude that this term never became any part of the individual contracts. 189 In the light of these conclusions, and particularly those concerning the April 1991 agreement, it is not necessary for me to go on to consider the points relating to collateral contract, warranty, misrepresentation, repudiation and rescission, which were fully argued before me. This does not mean that I was not assisted by these arguments and I would like to place on record my thanks to counsel for the clear and constructive way in which the arguments on each side were placed before me. 190 Accordingly, there will be a declaration for the plaintiffs as sought, the precise terms of which declaration can be submitted by agreement or adjudicated upon by me in the event of disagreement.