Legal Updates

Employment Law – Enhanced Redundancy Entitlement can be subject to a Compromise Agreement

In the case of Garratt v Mirror Group Newspapers Ltd [2011], the claimant claimed an enhanced redundancy payment pursuant to a collective agreement signed between his employer and the British Association of Journalists (a union of which he was a member). The entitlement to the enhanced redundancy payment of 2 weeks’ pay for each full year worked by the claimant was incorporated into his contract of employment by virtue of the said collective agreement.

The condition imposed by the respondent was that the claimant had to enter into a compromise agreement which would, amongst other things, extinguish all rights the claimant had or may have against the employer (to the extent permitted by law).  The claimant refused to sign a compromise agreement, due to some outstanding issues with the respondent on the part of the claimant.  The respondent therefore paid the claimant the statutory redundancy entitlement (which was over £30,000.00 less than he would have received under the enhanced package), and the claimant asserted that his entitlement to the enhanced redundancy was contractual and not subject to him signing a compromise agreement (which was not a contractual condition but rather based on the employer’s custom and practice).

The claimant brought a claim for breach of contract on the basis that the respondent had breached the term of the collective agreement that now formed part of his contract of employment, as he was not required to sign a compromise agreement. 

Decision

The court held that it was reasonable to imply that the enhanced redundancy entitlement would be payable subject to the employee signing a compromise agreement. 

The claimant appealed to the Court of Appeal.  It was held that the court was correct in arriving at the decision that the entitlement to the enhanced redundancy payment would be subject to signature of a compromise agreement by the appellant.  In deciding not to sign the compromise agreement, the appellant had to decide whether the claims he would be waiving were potentially more valuable than the offer under the compromise agreement and seek one or the other – he could not have the benefit of both.

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© RT COOPERS, 2011. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.