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Law for Business

Knowhow - guidance - precedents

11 SEP 2012

Contractual implied terms

The Court of Appeal in the case of Garratt v Mirror Group Newspapers considered whether an employment judge was right to conclude that there was an implied term in Mr Garratt's employment contract that he was not entitled to an enhanced redundancy payment unless he signed a compromise agreement.

Mr Garrett was dismissed as redundant in 2006.  He was offered an enhanced redundancy payment under the terms of a 2002 collective agreement, providing he signed a compromise agreement.  Mr Garrett refused to sign the agreement and alleged that he was contractually entitled to the enhanced payment in any case.  The Court of Appeal held that, by custom and practice, it was implied into his contract that he was not entitled to the enhanced redundancy payment unless he signed a compromise agreement since: 

  • Arrangements for enhanced redundancy payments had existed before the 2002 collective agreement, and no employee had been paid an enhanced redundancy payment without signing a compromise agreement;
  • From at least 1993, all employees being made redundant had been told they would need to sign a compromise agreement, and the signing of such an agreement was an automatic consequence of being dismissed as redundant; and
  • No employee, other than Mr Garratt, had sought to insist on a contractual right to an enhanced redundancy payment without a compromise agreement.

Before the redundancy process started, Mr Garratt knew that he would have to sign a compromise agreement to be given the enhanced redundancy payment.

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