Posted by Nicola Cutler, Associate
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Another case on contractual redundancy payments
In Park Cakes Limited v Shumba and others, the Court the Appeal overturned a Tribunal decision that enhanced redundancy benefits had not become contractual through custom and practice. The Court found no evidence to demonstrate that these benefits had not historically always been paid, which would evolve a custom and practice, and that the tribunal had been wrong to hold that no custom and practice had been established.
In coming to this decision, the Court of Appeal reviewed the leading case law on the factors to take into account when determining whether or not and if so to what extent terms acquire contractual force through custom and practice. The Court clarified that the main consideration in cases such as these will be what the employer has communicated to the employees and whether, on a objective assessment, it has evidenced an intention that the employees should have the right to enjoy these benefits. This case is clear evidence that employers need to be careful about the basis on which non-contractual benefits are granted.
This legal update is provided for general information purposes only and should not be applied to specific circumstances without prior consultation with us.
For further details on any of the issues covered in this update please contact Gemma Ospedale, Partner in Employment on 020 7583 2222.
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