Enhanced Redundancy Payments

The Court of Appeal recently held that a term entitling employees to an enhanced redundancy payment was implied into their contracts of employment by virtue of the employer's custom and practice.

ALBION AUTOMOTIVE LTD V WALKER & OTHERS

In January 1999 Albion Automotive made 22 employees redundant from its Farington site. The employees had no written contracts of employment, but instead their terms were negotiated each year on a collective basis with the trade unions. There was, however, no collective agreement in relation to redundancy payments. The employees were offered their statutory redundancy entitlement.

The employees argued that, in the previous 10 years (during which period the site had two different owners), over 750 employees at the Farington site (which represented 75% of the workforce) had been made redundant on enhanced terms. Furthermore, the enhanced redundancy terms had been brought to the attention of all the employees in writing. They therefore argued that the employer...