The claimant’s employment with the respondent’s predecessor began in 2003. He received a letter of offer, a summary of benefits and a contract. The letter of offer and the summary of benefits set out the terms of a long-term sickness scheme, and the level of income protection payments (IPP) payable under it. These included reference to an ‘escalator’ of 5% per annum which would apply after the first 52 weeks. At the time the respondent’s predecessor had insurance cover, in respect of its obligation to pay IPP, including the escalator.
In 2009 the claimant began a period of long-term sickness absence and then began to receive IPP. This was continuing at the time of the litigation in the Employment Tribunal and EAT. Following his transfer into the respondent’s employment, he realised that the payments of IPP had not been including the escalator. The respondent informed him that the escalator had ceased in 2008, from which time its underlying insurance cover did not include it. The Employment Tribunal held that the claimant was contractually entitled to the escalator, and therefore upheld a claim for unlawful deduction from wages. The respondent appealed, arguing that the correct construction of the documentation was that its obligation was limited to the amount in respect of which it or its predecessor from time to time had insurance cover.
Held: the summary of benefits originally provided to the claimant contained terms that were clear and certain, and, objectively, intended to be incorporated. They conferred a contractual entitlement to the escalator. Keeley v Fosroc International Limited [2006] IRLR 961 applied. The references in the summary to the existence of insurance cover, did not have the effect that the respondent’s obligation was limited by reference to the extent of that cover from time to time. Jowitt v Pioneer Technology (UK) Limited [2003] ICR 1120 and Awan v ICTS UK Limited [2019] IRLR 212 considered. There was no implied limitation of the respondent’s obligation by reference to the extent of its insurance cover on the basis of an appeal to commercial common sense. The respondent was bound by the commitment it had inherited. Arnold v Britton [2015] AC 1619 applied. The liability appeal was dismissed.
The Tribunal had also subsequently awarded the claimant the whole of his costs of pursuing the claim up to the point of the liability decision, on the basis that the respondent had relied as a central plank of its defence, upon a provision in its 2005 Manual which, on the evidence of its own witness given at trial, had ceased to apply in 2007. Its defence based on that Manual was found to have had no reasonable prospect of success, and it was found to have acted unreasonably in running it. The respondent also appealed that decision.
Held: The Tribunal had been entitled to find that the defence based on the 2005 Manual had no reasonable prospect of success and was unreasonably pursued. However, the Tribunal failed, in its costs decision, to take into consideration that there was a further element of the respondent’s defence, that it had not found had no reasonable prospect of success, and which, though it in fact properly failed, was not so weak as to have had no such prospect. While the Tribunal was entitled to award the claimant a significant proportion of his costs, taking proper account of this aspect of the defence, an award of 100% was not justified. Barnsley Metropolitan Borough Council v Yerrakalva [2012] ICR 420 considered and applied.
[2021] UKEAT 001237 – 19 – 240
Bailii
England and Wales
Updated: 30 October 2021; Ref: scu.667953