ALEXANDER and Others (Plaintiffs) v. STANDARD TELEPHONES & CABLES LTD (Defendants) (No. 2) WALL and Ot

OverviewAlexander v Standard Telephones and Cables Ltd (No 2); Wall v Standard Telephones and Cables Ltd
(No 2)
Overview | [1991] IRLR 286
ALEXANDER and others (plaintiffs) v. STANDARD TELEPHONES &

CABLES LTD(defendants) (No. 2)WALL and others (plaintiffs) v. STANDARD
TELEPHONES & CABLES LTD (defendants) (No. 2) [1991] IRLR 286
Queen's Bench Division, (QBD)

24051991
100 Contracts of employment
110.1 Written particulars – legal effect
120.6 Terms of employment – redundancy procedure
160 Effect of collective agreement
171 Wrongful dismissal
191 Remedies – damages

The facts:
The plaintiffs in both actions were employed at STC Submarines Systems, Southampton. The Alexander [1990]
IRLR 55 action was brought by eight members of the TGWU employed as production workers. Their statement of
terms of employment specified that the “basic terms and conditions of [your] employment by this company are in
accordance with and subject to the provisions” of the collective agreement negotiated at plant level with the union.
That agreement included a redundancy procedure. Clause 15.5.1 of this procedure provided that: “In the event of
compulsory redundancy, selection will be made on the basis of service within the group”. Clause 15.5.2 provided:
“If, in the event of compulsory redundancy, the balance of skills is jeopardised it will be redressed by operators
moving voluntarily into the required shift or areas. Failing the necessary number of volunteers ... the company will
direct operators to the required areas to be retrained if necessary.”
The Wall action was brought by four maintenance workers, who were members of various unions. They had a
similar statement of terms and conditions. Clause 6.1 of the collective agreement relating to redundancy provided:
“In the event of a compulsory redundancy, selection within each skill group will be made on the basis of service
within the group.” This was modified by a further agreement which stated: “In the event of a compulsory
redundancy, selection on the basis of service means that employees with the shortest service in each skill group
would be the first to be affected by a compulsory redundancy.”
In 1988, management decided that a rationalisation was necessary and that there would have to be redundancies.
Discussions began with the unions and in early 1989 it was announced that compulsory redundancies would be
unavoidable. In the case of both sets of negotiations, the unions maintained that the relevant provisions of the
collective agreements required selection for redundancy on the basis of seniority, ie last in first out. The company
insisted that they needed to retain those workers whose skills and flexibility were best suited in the circumstances.
ALEXANDER and others (plaintiffs) v. STANDARD TELEPHONES & CABLES LTD(defendants) (No. 2)WALL
and others (plaintiffs) v. STANDARD TELEPHONES & CABLES LTD (defen....
Following unsuccessful negotiations to resolve the dispute, redundancy dismissal notices were issued. The
employees concerned were informed that they would receive pay in lieu of notice and redundancy payments in
excess of the statutory minimum as provided for under the collective agreements.
The plaintiff employees argued that they had not been lawfully dismissed in that the employers were only entitled to
select employees for redundancy on the basis of seniority as required by the collective agreement, the terms of
which were incorporated into their individual contracts of employment. The plaintiffs contended that they would not
have been selected for dismissal had the last in first out principle been applied.
Mr Justice Aldous [1990] IRLR 55 refused to grant an interlocutory injunction restraining the employers from
determining the plaintiff's employment by reasons of redundancy until the terms of the redundancy procedure
agreement had been fully complied with.
At the trial, the plaintiffs claimed damages for breach of contract for the loss of their employment which, they
contended, subject to contingencies, would have continued until they reached their respective retiring ages.
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The High Court, Queen's Bench Division (Mr Justice Hobhouse) on 24 May 1991 dismissed the application.
120.6, 160
The High Court held:
The seniority provision of the redundancy procedure contained in the collective agreements between the
defendant employers and the relevant unions were not expressly or impliedly incorporated into the individual
contracts of employment of the plaintiffs so as to entitle them to claim that they had a contractual right not to be
made redundant without last in first out being applied.
The principles to be applied in determining whether a part of a collective agreement is incorporated into
individual contracts of employment can be summarised as follows: the relevant contract is that between the
individual employee and his employer; it is the contractual intention of those two parties which must be
ascertained. In so far as that intention is to be found in a written document, that document must be construed on
ordinary contractual principles. In so far as there is no such document or that document is not complete or
conclusive, their contractual intention has to be ascertained by inference from the other available material
including collective agreements. The fact that another document is not itself contractual does not prevent it from
being incorporated into the contract if that intention is shown as between the employer and the individual
employee. Where a document is expressly incorporated by general words it is still necessary to consider, in
conjunction with the words of incorporation, whether any particular part of that document is apt to be a term of
the contract; if it is inapt, the correct construction may be that it is not a term of the contract. Where it is not a
case of express incorporation, but a matter of inferring the contractual intent, the character of the document and
the relevant part of it and whether it is apt to form part of the individual contract is central to the decision whether
or not the inference should be drawn.
In the present cases, the wording of the only document directly applicable to the individual plaintiffs, the
statements of written particulars issued under the Employment Protection (Consolidation) Act, was not sufficient
to effect an express incorporation of the provisions relating to redundancy in the collective agreements since the
statutory statement did not itself deal with redundancy matters.
Nor was it possible to infer, as a matter of contractual intent, that the selection procedures and the principle of
seniority were incorporated into the individual contracts of employment. Where none of the other clauses of the
collective agreement are apt to be incorporated into the individual contract of employment, it would require some
cogent indication that a particular clause was to have a different character and to be incorporated. In the present
case, the clauses in question, when considered within the context of the joint consultation scheme of the
procedure agreements as a whole, were not sufficiently cogently worded to support the inference of incorporation
into individual contracts of employment.
171, 191
If the plaintiffs had proved that they were wrongfully dismissed in breach of their individual contracts of
employment, they would not be entitled to damages from the defendants covering a period down to their
respective retirement ages. The notice provisions in the plaintiffs' contracts were the relevant criterion for the
assessment of their damages and, since the defendants had already paid the plaintiffs a sum sufficient to cover
their entitlement during the notice period, they had been fully compensated and had suffered no damage.
Where the contract includes a contractual right of the employer to dismiss the servant on notice, the notice
period is the measure of the contractual rights which the servant has against his employer. The decision of the
Court of Appeal in Gunton v London Borough of Richmond-Upon-Thames [1980] IRLR 321 reaffirmed the basic
contractual principle that damages for the wrongful termination of a contract are to be assessed by reference to
the value of the contractual rights of the injured party, not his expectations. Once it is appreciated that the
general security of employment which an industrial employee enjoys under English law normally derives not from
his contractual rights but from his statutory rights, it can be seen that there is nothing surprising in his contractual
remedies for wrongful termination of the contract of employment being of limited value.
The Court could not accept the argument on behalf of the plaintiffs that the employers' right to terminate the
contract on notice was qualified by the plaintiffs' right not to be selected for redundancy save upon application of
the principle of seniority. That argument confused the question of liability and damages. As a matter of damages,
the employer's right to terminate the contract by notice without assigning a reason is unqualified.
Nor could it be held that the employers' notice to employees that seniority would no longer be the only basis for
redundancy selection was ineffective because it was unilateral. Although an employer is not entitled unilaterally
to vary a contract, it is always open to an employer, as a matter of contract, to say to his employee that after the
expiry of the contractual notice period the employer will only continue the contract of employment on different
terms. Such a notice is equivalent to giving notice to terminate the existing contract and offering a revised
contract in continuation of and substitution for the existing contract. The period of notice has to be the
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notice that is required to terminate the existing contract. It is then up to the employee to decide whether he is
willing to accept the revised terms. Accordingly, the employer's right to vary the contract is effectively equivalent
to his right to terminate the contract. Similarly, the limitation that the notice provision provides to the contractual
rights of the employee to the continuation of the contract also provides the limitation to his rights to the
continuation of the contract in its existing form. In the present case, therefore, the plaintiffs did not have a
permanent contractual right to insist upon selection for redundancy only upon the principle of seniority. That was,
ex hypothesi, a subsisting right but it was a right which the employers could bring to an end by notice.
Cases referred to:
Delaney v Staples [1991] IRLR 112 CA
Hooper v British Railways Board [1988] IRLR 517 CA
Marley v Forward Trust Group Ltd [1986] IRLR 369 CA
Burroughs Machines Ltd v Timmoney [1977] IRLR 404 CS
British Leyland UK Ltd v McQuilken [1978] IRLR 245 EAT
Systems Floors (UK) Ltd v Daniel [1981] IRLR 475 EAT
National Coal Board v National Union of Mineworkers [1986] IRLR 439 HC
Robertson v British Gas Corporation [1983] IRLR 302 CA

Young v Canadian Northern Railway [1931] AC 83PC
Gunton v London Borough of Richmond-upon-Thames [1980] IRLR 321 CA
Laverack v Woods [1967] QB 278CA
Dietman v London Borough of Brent [1987] IRLR 259 HC;Dietman v London Borough of Brent [1988] IRLR 299
CA
Jones v Lee [1980] IRLR 67 CA
Irani v Southampton and South-West Hampshire Health Authority [1985] IRLR 203 HC
Gibbons v Associated British Ports [1985] IRLR 376 HC
National Coal Board v Galley [1958] 1 AER 91 CA
Addis v Gramophone Co [1909] AC 488HL
British Guiana Credid Crop v Da Silva [1965] 1 WLR 248
Appearances:
Trade Union and Labour Relations Act 1974 section: 18(1)
Employment Protection (Consolidation) Act 1978 sections: 1, 4, 59, 81
For the Plaintiffs in Alexander v STC:Mr T KEMPSTER, instructed by Paris Smith & Randall
For the Plaintiffs in Wall v STC:Mr J McMULLEN, instructed by Rowley Ashworth
For the Defendants:Mr D SEROTA QC and Mr A CLARKE, instructed by Masons
MR JUSTICE HOBHOUSE: The defendants in these actions, Standard Telephones & Cables Ltd (STC plc), have a
number of plants. One is at Southampton, where for many years they have made submarine cables. Up to the mid-
Eighties the cables which they were making were copper analogue cables. After 1980 copper analogue cables were
gradually replaced by cables which used fibre optic technology. This led to the need for the defendants to
reconsider the organisation and deployment of their manufacturing capacity and the numbers and types of persons
that they should employ. At Southampton, by 1988, they were considering the necessity to dismiss up to half their
workforce. During 1988 and the early part of 1989 they discussed the position with the unions representing those
employed at Southampton and succeeded in reducing the numbers to be dismissed down to 112. The management
carefully evaluated how that number should be selected taking into account a number of criteria – length of service,
skill, aptitude, performance, attendance record and work-approach. Between 14 and 20 April and on 10 May letters
were sent out telling the selected individuals that they were dismissed on the grounds of redundancy with effect
from respectively 27 April and 23 May 1989.
The letters referred to the fact that notice of the need to reduce the number of employees had been given to all
employees and to the Department of Employment on 27 January, to the fact that those offering voluntary
redundancy had not been sufficient, and explaining the criteria on which those being dismissed had been selected.
Each letter informed the employee that he would receive wages in lieu of notice for the appropriate period of up to
12 weeks having regard to his length of service with the company, telling him that he would also be paid the
balance of his holiday entitlement and would be paid his redundancy entitlement, giving particulars of how it had
been calculated. The notice periods were those required by statute and the individual contracts of employment. The
redundancy payments were in excess of the statutory minima and were in accordance with the collective
agreements which had been negotiated between the company and the various unions involved The defendants
complied with the requirements of ss.99 and 100 of the Employment Protection Act 1975 regarding the procedure
for handling redundancies.
The employees involved in the dispute which has given rise to these actions were the maintenance workers and the
cable operators. The cable operators (Mr Alexander and seven others) were represented by a single union, the
Transport & General Workers' Union. The maintenance workers (Mr Wall and the three others) included a number
of different trades and were represented by four unions, one of which was the TGWU. The various plaintiffs dispute
that they were lawfully dismissed. They make no complaint about the conduct of the consultation procedures that
were gone through prior to their dismissal, nor do they complain about their selection for dismissal if the criteria
adopted by the company were the proper criteria. Nor do they say in these actions that they were unfairly
dismissed. What the plaintiffs say is that the company was only entitled to select employees for compulsory
redundancy on the basis of seniority, or as it is commonly known, 'last in first out'. If that criterion had been applied
they would not have been selected for dismissal; they were among the more senior employees. They say that it was
a requirement of the collective agreements between the company and the relevant union or unions covering the
maintenance workers and the cable operators that selection for redundancy should be on the basis of seniority
alone and they further say that provision of each collective agreement was incorporated into their individual
contracts of employment. Accordingly each plaintiff says that his dismissal was wrongful and in breach of contract
from the defendant company.
Initially the plaintiffs claimed injunctions to restrain the defendants from dismissing them. They commenced their
proceedings in the Chancery Division and obtained ex parte interim injunctions and undertakings. However, on the
hearing of the motions inter partes, Mr Justice Aldous held in July 1989 that the cases were not appropriate for
interlocutory injunctions and expressed the view that although the plaintiffs' claims were fully arguable it would be
unlikely that the Court would order injunctions in favour of the plaintiffs at a trial. The judgment of Mr Justice Aldous
is reported at [1990] IRLR 55. It is accepted that he did not have to decide the points which arise for decision at this
trial, but he was undoubtedly impressed by the plaintiffs' case and the plaintiffs accordingly referred me to what he
had said.
As a result of his decision the plaintiffs abandoned their claims to injunctions and confined themselves to the claims
for damages with which I am now concerned. The plaintiffs formally accepted the defendants' conduct as a
repudiation of their individual contracts of employment on 18 July 1989. It was agreed, however, that nothing turns
upon the difference between the original dismissal dates given in the defendants' letters and the July date. The
plaintiffs have been paid the appropriate sums by way of redundancy, holiday pay and notice payment. Their claim
is for the loss of their employment which they say, subject to contingencies, would have continued up to their
reaching their respective retirement ages. The maintenance department
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employees have also made a claim for aggravated damages, the basis of which has never been formulated in a
sustainable form; it must clearly fail.
The two substantial points which have been argued and fall for decision are firstly the question of liability – whether
or not the seniority provision in the relevant collective agreements has been expressly or impliedly incorporated into
the individual employment contracts between each individual plaintiff and the defendant company – and secondly
whether the individual plaintiffs are entitled to recover substantial damages from the defendants having regard to
the notice provisions in their contracts of employment and the various payments which have already been made by
the defendant company to each plaintiff. The plaintiffs have to succeed on both of these points if they are to obtain
judgments for damages against the defendants.
Although separate actions have been commenced by each of the two groups of plaintiffs the only significant
differences between the two actions are differences in the wording of the collective agreements. It is agreed that
there is no relevant difference between the express terms of the individual contracts of employment and that (apart
from the aggravated damages point) the principles which govern the assessment of damages must be the same. It
is also agreed that any question of figures on the damages claims and similar matters should be left over for
subsequent determination or agreement. The relevant dates applicable to Mr Evans, the fourth plaintiff in the Wall
action, and the process by which his employment was actually ended differed from the others but no argument was
based on this difference and his claim was treated as being on all fours with those of his co-plaintiffs.
8
Incorporation
The relevant contracts and agreements have to be construed in both the commercial and statutory context. The
relationships of employer and employee are the subject of a number of statutory provisions together with delegate
legislation. The presently relevant statutes are the Trade Union and Labour Relations Act 1974, the Employment
Protection Act 1975 and the Employment Protection (Consolidation) Act 1978.
The Acts of 1974 and 1975 made provision for what was termed ' collective bargaining ', essentially negotiations
relating to matters which might give rise to a trade dispute between employer and employee. Such matters were to
include the terms and conditions of employment and the termination or suspension of employment; they also
included many other topics, as for example matters of discipline. These matters form the potential subject-matter of
' collective agreements ', that is to say, agreements or arrangements made by or on behalf of one or more trade
unions and one or more employers or employers' associations. By s.18(1) of the 1974 Act collective agreements
are to be conclusively presumed not to have been intended by the parties to be a legally enforceable contract
unless the agreement is in writing and contains an express provision that the agreement should be legally
enforceable. It is thus part of the statutory scheme (which was preceded by earlier decisions based on ordinary
principles of contract law) that there should be in existence, and relevant to the actual position of the employees in
a given workplace, documentary agreements which are expressed in terms of obligation and right but do not
themselves give rise to any contractual rights.
10
The 1978 Act also makes provision for matters which do not give rise to contractual rights enforceable at common
law although they do give rise to statutory rights enforceable in Industrial Tribunals. Accordingly, here again there
are provisions which are expressed in terms of conferring rights and imposing obligations but which do not give rise
to contractual rights (Delaney v Staples [1991] IRLR 112). In this context there are provisions requiring an
employee not to be unfairly dismissed and providing for compensation or other remedies to be awarded to an
employee who is nevertheless dismissed unfairly. The amount of any compensation that may be awarded is limited
and regulated by statute.
11
An unfair dismissal does not as such involve any breach of the contract of employment; nor is a dismissal in breach
of contract necessarily unfair, (Hooper v British Railways Board [1988] IRLR 517). In the context of unfair dismissal,
express provision is made in s.59 of the 1978 Act for unfair dismissal on the ground of redundancy. Thus, where the
reason or principal reason for the dismissal of the employee was that he was redundant, and it is shown that, by
comparison with another employee who might have been dismissed but was not, the dismissed employee was
selected for dismissal in contravention of a customary arrangement or agreed procedure relating to redundancy and
there were no special reasons justifying a departure from that arrangement or procedure in his case, then his
dismissal will have been unfair. Under the statutory scheme, selection for redundancy contrary to the provisions of a
collective agreement will ordinarily amount to an unfair dismissal giving rise to statutory remedies. Similarly, s.57 of
the 1978 Act requires the employer to show what was the reason for dismissal and, in various categories including
dismissal on the ground of redundancy, whether the reason was such as to justify the dismissal. These are
statutory not contractual criteria.
12
In a separate part of the 1978 Act, statutory provision is made for the payment of redundancy payments to
employees dismissed on the grounds of redundancy. The right to redundancy payments is enforceable in an
Industrial Tribunal and the amount of the payments to be made is the subject of statutory provision. The provisions
also include a definition of dismissal by reason of redundancy which includes the situation where the requirements
of the employer's business for employees to carry out work of a particular kind in the place where they were
employed has ceased or diminished or is expected to cease or diminish. Similarly, in the same context, dismissal is
given a very wide meaning including, for example, failure to re-engage after the expiry of a previous contract of
employment. These provisions, therefore, again stress the statutory, not contractual, character of the scheme.
However, they do provide a statutory definition of redundancy which is capable of objective application.
13
The commercial background to the matters which I have to consider includes the fact that the selection of
employees for redundancy was a matter of close concern to the unions at Southampton, particularly in the
maintenance department where more than one union was involved and the employees had different skills and
trades. I was told, and I accept, that before the making of the relevant collective agreements the principle of
selection for redundancy on the basis of seniority had been generally accepted but that it had never been
necessary to require compulsory redundancies. This continued to be the situation up to the time of the events that
have given rise to the dispute that is the subject-matter of these actions.
14
I was also told, and I accept, that the relevant shops were fully unionised and that the union negotiators reported
back to and obtained the approval of shop-floor members before making any agreement with management. Matters
were dealt with informally both as regards the original terms of engagement of an employee and the revision of
those terms from time to time by agreement with the unions. This is relevant not to agency but to the scope for
accepting an implication that terms agreed between the unions and the management were also to form part of the
contracts between the individual employees and the defendants.
15
The difficulties of the present case are aggravated by this informality. There were in existence for each of the
plaintiffs, written particulars of his terms of employment purportedly provided in accordance with s.1 of the 1978 Act.
These were in varying forms and it was agreed that I
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should use a more recent form (that dated 1979) as being applicable to each of the plaintiffs. Section 4 of the 1978
Act makes provision for giving employees written statements of changes in their terms of employment. Despite the
fact that there were changes in the various plaintiffs' terms of employment subsequent to the last outstanding s.1
notice, there were not in evidence before me any notices under s.4 and here again it seems that there was a
substantial measure of informality between the plaintiffs and the defendants.
16
It is relevant to the issues in this case what are the particulars of the terms of employment which the statute
requires the written statement under s.1 to contain. These are set out under some 10 heads. These heads include
such matters as scale and rate of remuneration, when it is to be paid, and disciplinary rules and procedures. They
expressly include 'the length of notice which the employee is required to give and entitled to receive to determine
his contract of employment'. But they do not as such include any reference to redundancy rights or procedures.
Thus it is not a requirement that the statement of terms for employment should include or cover the question of
redundancy.
17
As previously stated, the statutory statements of the terms of employment of the various plaintiffs were not all up to
date and it is agreed that for the purposes of these actions the statement on the form dated April 1979 may be
taken as applicable to all of the plaintiffs. This document purports to be a statutory statement under the 1978 Act. It
identifies the relevant employee and is issued by or on behalf of the defendants. It has a tear-off slip to be signed by
the employee which reads: 'I acknowledge receipt of my statement of terms of employment.' It has three pages, the
second and third of which consist of numbered paragraphs concluding with the statement:
'The foregoing particulars in this statement are correct as at [date]. This statement does not, by itself, constitute a contract.'
The first page reads:
'The basic terms and conditions of your employment by this company are in accordance with and subject to the provisions
of relevant agreements made between and on behalf of the Engineering Employers Federation and the trade unions
(national agreements) or by agreements made by the Joint Industrial Council for the Cable Making Industry (national
agreements); the collective agreements made between the company at plant level and the trade unions (plant agreements);
company orders; the handbook “Working with STC”; the Social Security Pensions Act 1975; the company's sickness and
accident benefit plans and the employment Protection (Consolidation) Act 1978.
Copies of these agreements, orders, handbook, plans and Acts are available in the personnel office and may be inspected
following application to your supervisor.
Any alteration in the terms and conditions of employment, particulars of which are given in any of the documents referred to
above, will be duly recorded within one month of the date of any such alteration.'
The numbered paragraphs have the following headings:
'1. Date of commencement of employment.
2. Continuity of employment.
3. Job title.
4. Wages.
5. Normal working hours.
6. Holidays.
7. Sickness and accident pay.
8. Social Security Pensions Act 1975.
9. Grievances and procedures.
10. Disciplinary rules and procedures.
11. Notice.'
Some of these numbered paragraphs have blanks which are filled in. Others refer to other documents or notices.
For example, the 'Wages' paragraph tells the employee that his wages are in accordance with the national and
plant agreements and will be shown on his pay-slip. For his 'Normal Working Hours' a certain number of 12-hour
rota shifts are inserted. The 'Notice' paragraph simply sets out the number of weeks of notice to which an employee
is entitled upon being given notice by the employer, up to a maximum of 12 weeks, being one week's notice for
each year of service.
18
As regards the documents referred to on the first page, it is agreed that only the collective agreements made
between the company at plant level and the trade unions (plant agreements) and the company's handbook 'Working
with STC' are potentially relevant to the present litigation. The company handbook consists essentially of
instructions and information; thus it deals with such things as health and safety, security, benefits and amenities.
The only part of this handbook upon which the plaintiffs sought to rely was a short paragraph headed 'Collective
bargaining'. This read:
'In some work areas various agreements exist between the company and a union or unions establishing collective
bargaining units. If your job is covered by collective bargaining arrangements, some of your terms of employment will be in
accordance with the agreements made, whether or not you are a member of the relevant union.'
The main documents which were relied upon by the respective plaintiffs were the respective collective agreements
applicable at plant level to the two shops that I am concerned with, the maintenance department for the Wall action
and the production department for the Alexander [1990] IRLR 55 action.
19
For the Wall action the relevant agreement is headed 'Redundancy procedure agreement between Standard
Telephones and Cables plc and maintenance (AUEW, EETPU, TGWU and GMWU)'. It was signed by
representatives of the company and the unions. The relevant agreement was dated 7 January 1983 and was the
subject of later amendments and additions. It contains 10 numbered clauses. Having defined its application to the
hourly-paid employees represented by the unions in the maintenance department, it sets out a statement of policy
which recognises the need to plan employment requirements in the interests of the security of all the company's
employees. It recognises that redundancy may on occasion be unavoidable and states:
'This agreement is intended firstly to provide a procedure for dealing with situations which might lead to redundancy so as
to maintain security of employment as far as possible, and secondly to provide assistance should redundancy become
inevitable.'
The agreement then sets out a procedure for 'Joint consultation' which includes making provision for the three-
stage procedure which will be used. This includes stage two, under which employees are to be warned that their
employment will be terminated; this states that 'the basis of selection of individuals will be that fully stated in
paragraph 6 below and the warning shall be in accordance with paragraph 5 below.' It also provides that retraining
and redeployment shall be discussed with those persons. The third stage involves the giving of notice in
accordance with their terms of employment to the relevant individuals if, by the end of warning period, redundancy
is found to be unavoidable. The agreement sets out various steps which may be taken in consultation with the shop
stewards to avoid or minimise the need for redundancy. Clause 5 deals with the question of warning of redundancy.
20
Clause 6 is headed 'Basis of selection for redundancy'. It reads:

'When all has been done to avoid redundancy, but it is evident that some employees have to be made redundant,
volunteers will be sought in the first instance and prime consideration will be given to early retirements and employees
affected by ill-health.
6.1 In the event of compulsory redundancy, selection within each skill group will be made on the basis of service within the
group covered by the term agreement. Skills groups are as follows:
Precision fitters.
Fitters.
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Electrician.
Plumbers.
Riggers (full-time).
Boilermen/mates.
For this purpose service for ex-STC apprentices will count from completion of apprenticeship.
6.2 The mutual objective will be to ensure that a balance of skills within the department is preserved and that there is no
adverse effect on the on-going business.'
(By later agreements the skill categories were redefined and it was also expressly agreed that 'basis of service'
meant that employees with shorter service in any skill group would be the first to be affected by compulsory
redundancy.) The remaining clauses of the collective agreement dealt with employees leaving early, temporary
workers, re-employment following redundancy and transfer allowances.
21
A separate, later agreement dated 29 November 1984 dealt with the amount of the redundancy payments to be
made to maintenance employees. A later agreement recorded, in a letter of 17 August 1987 addressed to the
representative of the TGWU dealing with 'Assistant technicians – security of employment', that after volunteers for
redundancy had been considered, in the event that there were insufficient volunteers then the company would
expect that compulsory redundancies would apply on a lastin first-out basis to technicians and assistant technicians
separately but that the percentage reduction would be the same for all groups. No separate arguments were
advanced on these later documents. It was the evidence that one of the things that was important to the unions in
making the procedure agreement was to preserve the balance between the various trades within the maintenance
department, that is to say between their respective members.
22
As regards the Alexander [1990] IRLR 55 action, there was for the production department a 'term agreement', dated
1 June 1986, which dealt with a whole range of matters including, for example, shift working, day working, overtime,
earning standards, holidays etc. Two of the sections in this agreement were headed 'Redundancy procedure
agreement' and 'Redundancy terms'. The section dealing with redundancy terms made provision for the payments
which redundant employees should be entitled to receive. The section of the term agreement upon which the
Alexander [1990] IRLR 55 plaintiffs rely in the present litigation is the redundancy procedure agreement. This is in
many ways similar to the redundancy procedure agreement involved in the Wall action. Thus it includes a statement
of its application and an introduction which sets out the policy of the company. It further makes provision for joint
consultation in three stages which are for practical purposes identical to those which I have quoted from the other
agreement. There are similarly paragraphs dealing with measures to minimise or avoid redundancy and to give
warning of redundancy and the basis of selection for redundancy. This last clause, 15.5, needs to be quoted:
'When all has been done to avoid redundancy, but it is evident that some employees will have to be made redundant,
volunteers will be sought in the first instance and prime consideration will be given to early retirements and employees
affected by ill-health.
15.5.1 In the event of compulsory redundancy, selection will be made of the basis of service within the group covered by
the term agreement.
15.5.2 If, in the event of compulsory redundancy, the balance of skills is jeopardised it will be redressed by operators
moving voluntarily into the required shift or areas. Failing the necessary number of volunteers, with the ability to be
retrained, being forthcoming the company will direct operators to the required areas to be retrained if necessary.
15.5.3 Where shift workers are transferred to day work or another shift pattern which results in a level of pay, for reasons
other than at the individual request, the following procedure will apply:
Week 1: Day rate plus 80% of the difference between the day rate and shift rate.
Week 2: Day rate plus 60% of the difference between the day rate and the shift rate.
Week 5 and thereafter day rate only.'

There are similar concluding clauses in this redundancy procedure agreement covering employees who leave early,
temporary workers, re-employment, and transfer allowances.
23
The contention of the plaintiffs is not based upon any allegation of agency of the unions in making these
agreements. The case of the plaintiffs is that the relevant parts of these agreements were incorporated into the
individual contracts of employment between the individual plaintiffs and the defendants. Thus the Alexander [1990]
IRLR 55 plaintiffs place no reliance upon the statement in the term agreement that it was made by the TGWU 'on
behalf of its members employed by the company as hourly paid operators'. They did, however, rely upon the
duration provision which provided that until a new agreement was reached 'the existing terms will continue until
replaced by mutual agreement'.
24
The company handbook did not of itself significantly advance the plaintiffs' case. It recognises that some of the
provisions of the collective agreements will form part of the individual contracts of employment but it does not
answer the question relevant to this litigation which is whether the seniority provisions in the redundancy procedure
agreements were among those provisions which were so incorporated. Thus it was accepted by the defendant
company that Clause 15.5.3 of the Alexander [1990] IRLR 55 action agreement was incorporated because it dealt
with rates of pay; but it was argued that 15.5.1 was not incorporated. The argument between the parties therefore
primarily focused upon the character of the relevant provisions of the respective collective agreements.
25
120.6, 160
As regards the statutory statements it has to be recognised that they do suffice to incorporate at least some of the
provisions from the collective agreements. The opening words, 'the basic terms and conditions for your employment
by this company are in accordance with and subject to the provisions of the relevant agreements' make more than a
statement of fact. The additional words 'and subject to' indicate that in at least some respects the collective
agreements are to apply to the individual contract of employment. This is also confirmed by the last paragraph on
the first page which deals with 'alterations in the terms and conditions of employment, particulars of which are given
in any of the documents referred to'. Thus far the statutory statement supports the plaintiffs' case. However, it does
not purport to be more than a statutory statement and therefore prima facie only covers those topics (not including
redundancy) which are to be dealt with in such a statement. Further it is expressly drafted by reference to 'the basic
terms and conditions of your employment' and includes the 11 specific paragraphs which I have identified. In the
context, I consider that this statement does not of itself deal with redundancy matters. Although the word 'basic' is
clearly capable of including redundancy matters (see for example Marley v Forward Trust [1986] IRLR 369), its
meaning in this document is in my judgement to be considered in the context of this particular document. Here I
consider that the basic terms and conditions referred to are those enumerated in the document. (Compare
Burroughs Machines Ltd v Timonney [1977] IRLR 404 and British Leyland v McQuilkan [1978] IRLR 245.)
Accordingly, as a matter of the express construction of this statutory statement I do not consider that it suffices to
show that there is an express incorporation of the redundancy procedure agreements. The plaintiffs are therefore
compelled to rely upon inferred incorporation.
26
120.6, 160
The statutory statement is not itself a contractual document. It is evidential and not necessarily comprehensive. 'It
provides very strong prima facie evidence of what were the terms of the contract between the parties, but does not
constitute a written contract between the parties. Nor are the statements of the terms finally conclusive: at most,
they place a heavy burden on the employer to show that the
[*292]
actual terms of contract are different from those which he has set out in the statutory statement' (per Browne-
Wilkinson J, System Floors v Daniel [1981] IRLR 475, 9). The fact that the statutory statement does not refer to
redundancy is in no way fatal to the plaintiffs' case; it merely makes their case less simple than it would be if they
were able to point to clear express words of incorporation. In any event even express general words of
incorporation do not remove the need to consider whether all the contents of the incorporated document are apt to
be terms of the actual contract of employment (National Coal Board v National Union of Mineworkers [1986] IRLR
439).
27
160.6, 160
The so-called 'normative effect' by which it can be inferred that provisions of collective agreements have become
part of individual contracts of employment is now well recognised in employment law (see, for example, Harvey on
Industrial Relations and Employment Law, vol. 235. However, serious difficulties still arise because the principle still
has to be one of incorporation into the individual contracts of employment and the extraction of a recognisable
contractual intent as between the individual employee and his employer. The mere existence of collective
agreements which are relevant to the employee and his employment does not include a contractual intent (see for
example per Ackner LJ, Robertson v British Gas [1983] IRLR 302. The contractual intent has to be found in the
individual contract of employment and very often the evidence will not be sufficient to establish such an intent in a
manner which satisfies accepted contractual criteria and satisfies ordinary criteria of certainty. Where the relevant
subject-matter is one of present day-to-day relevance to the employer and employee, as for example wage rates
and hours of work, the continuing relationship between employer and employee, the former paying wages and
providing work, the latter working and accepting wages, provides a basis for inferring such a contractual intent.
Where, as in the case of redundancy, the situation is one which does not have daily implications but only arises
occasionally the inference will be more difficult to sustain. Here, there had not previously been any question of
compulsory redundancies. There was no previously tested position by which a local custom could be demonstrated,
nor was there any previous situation involving any of the relevant individuals, or for that matter any other employees
of the defendants from which it could be inferred as a matter of individual contractual intent, that individual contracts
of employment were to include as a matter of contractual right and obligation selection for redundancy on the
seniority principle. It must be borne in mind that although the present plaintiffs would be the beneficiaries of the
application of such a principle, by a parity of reasoning there would be other employees who would be
disadvantaged. Similarly, there is no necessity to infer an intention to incorporate since collective agreements have
a function and value of their own which exists wholly independently of any individual contract of employment (see,
for example, the reasoning of the Judicial Committee in Young v Canadian Northern Railway [1931] AC 83 at 88to
89.)
28
There have been a large number of cases decided the one way or the other on individual issues of incorporation in
a variety of circumstances. In the leading case Robertson v British Gas [1983] IRLR 302 (supra) it was held that the
terms of an incentive bonus agreement negotiated between the employer and the unions were incorporated into the
individual contracts of employment so as to give the individual employees the right to sue for the bonus payments.
In both the employees' letters of appointment and the statutory statements, there were references to the bonus
scheme; it followed that the employers could not unilaterally vary the individual contracts of employment by failing to
renew the collective agreement. The essence of the Court of Appeal's approach is to recognise the primacy of the
individual contract of employment and to apply ordinary contractual principles in order to ascertain its content and
how it might be varied.
29
This reasoning was followed and applied by the Court of Appeal in Marley v Forward Trust Group Ltd [1986] IRLR
369. In that case the letter of employment of the relevant employee referred to the company's personnel manual in
such a way as to make it clear that the terms and conditions of his employment were as set out in that manual. The
manual made express provision for redundancy including provision for a mobility clause which gave redundant
employees who were relocated at other work places the right to opt for redundancy within six months of relocation.
The provisions of the manual had been the subject of negotiation between the employers and the unions and were
effectively a collective agreement. However, since they were incorporated into the relevant individual contracts of
employment they became contractually enforceable as between the individual employees and the employer. That
case specifically illustrates that there is no objection in principle to the capacity for redundancy provisions to be
made contractually enforceable as between employer and employee.
30
In the case National Coal Board v National Union of Mineworkers [1986] IRLR 439, to which some individual
employees were also parties, Mr Justice Scott reviewed the authorities on incorporation at pp.453 and following. In
that case there was an express provision in the individual contracts of employment that the employees' 'wages and
conditions of service shall be regulated by and subject to such national, district and pit agreements as are for the
time being in force'. The question was the application of that clear contractual intent; the question in the action
therefore was: what was the extent of the resultant incorporation? He drew a distinction which was derived from the
argument of Mr Dehn before him, at p.454 (151).
'He seeks, however, to draw a distinction between the terms of a collective agreement which are of their nature apt to
become enforceable terms of an individual's contract of employment and terms which are of their nature inapt to become
enforceable by individuals. Terms of collective agreements fixing rates of pay, or hours of work, would obviously fall into the
first category. Terms ... dismissing an employee also would fall into the first category. But conciliation agreements setting
up machinery designed to resolve by discussions between employers' representatives and union representatives, or by
arbitral proceedings, questions arising within the industry, fall, submitted Mr Dehn, firmly in the second category. The terms
of conciliation schemes are not intended to become contractually enforceable by individual workers whether or not referred
into the individual contracts of employment.
...
A collective agreement between an employer and a union providing machinery for collective bargaining and for resolving
industrial disputes may be of very great importance to each and every worker in the industry. But it is not likely to be an
agreement intended to be legally enforceable as between employer and union, and it is almost inconceivable to my mind
that it could have been intended to become legally enforceable at the suit of an individual worker. In the procedures laid
down by the 1946 Scheme, for instance, no part is played by an individual mineworker. The machinery is designed to be
invoked and operated either by the NCB or by the NUM with the co-operation of the other. It simply does not lend itself at all
to enforceability at the suit of an individual mineworker.'
Therefore, even in a case which involved wide express words of incorporation the court considered it necessary to
look at the content and character of the relevant parts of the collective agreement in order to decide whether or not
they were incorporated into the individual contracts of employment.
31
120.6, 160
The principles to be applied can therefore be summarised. The relevant contract is that between the individual
employee and his employer; it is the contractual intention of those two parties which must be ascertained. In so far
as that intention is to be found in a written document, that document must be construed on ordinary contractual
prin-
[*293]
ciples. In so far as there is no such document or that document is not complete or conclusive, their contractual
intention has to be ascertained by inference from the other available material including collective agreements. The
fact that another document is not itself contractual does not prevent it from being incorporated into the contract if
that intention is shown as between the employer and the individual employee. Where a document is expressly
incorporated by general words it is still necessary to consider, in conjunction with the words of incorporation,
whether any particular part of that document is apt to be a term of the contract; if it is inapt, the correct construction
of the contract may be that it is not a term of the contract. Where it is not a case of express incorporation, but a
matter of inferring the contractual intent, the character of the document and the relevant part of it and whether it is
apt to form part of the individual contract is central to the decision whether or not the inference should be drawn.
32
120.6, 160
In the present cases I have concluded that the wording of the only document directly applicable to the individual
plaintiffs, the statutory statements, is not sufficient to effect an express incorporation of the provisions relating to
redundancy in the collective agreements: accordingly it is a matter of considering whether or not to infer that the
selection procedures and the principle of seniority have been incorporated into the individual contracts of
employment and this has to be decided having regard to the evidence given and an evaluation of the character of
the relevant provisions in the collective agreements.
33
As regards the evidence, I did not consider that it carried matters much further. There was no doubt what had been
agreed between the unions and the company and that the unions had conducted themselves on the basis of the
collective agreements and had expected their employees to do the same. Thus, a record of length of service was
maintained and the employees were aware of their relative seniority within their workplaces; I was told that
employees might take this into account when considering their future with the company. Opinions were expressed
by witnesses called on behalf of the plaintiffs as to what they believed they were entitled to, but such evidence does
not establish what were their actual contractual rights. The same principles apply to the ascertainment of
contractual intention for contracts of employment as for other contracts (see Hooper v British Rail [1988] IRLR 517
at 524). However, there was nothing in the oral evidence which detracted in any way from the plaintiffs' case.
34
Turning to the collective agreements themselves it is convenient to take the Wall agreement first. It expressly states
that it is a 'procedure' agreement. Thus, on a simplistic application of the language of Mr Justice Scott, one would
conclude that it was not apt to be incorporated. However, it is of course necessary to examine the character of the
agreement and its relevant parts more closely before reaching a conclusion. It is undoubtedly primarily a policy
document applicable to the relationship between the unions and the company. It also is specifically concerned with
procedure. Thus the third clause under the heading 'Joint consultation' lays down a procedure and it is within that
scheme that individuals are to be selected for compulsory redundancy. Indeed, all the first five clauses of the
agreement are clearly inappropriate for application to or incorporation in individual contracts of employment.
35
Clauses 7 to 10 are also inapt for such incorporation. The reference to temporary workers is merely to exclude them
from the scope of the agreement. The re-employment clause merely says that the company will give consideration
to re-employment, at a later date, of employees made compulsorily redundant; this is neither expressed as a
contractual obligation nor could it form part of a present contract of employment. As regards transfer allowances the
clause contemplates that the company may make offers of employment in another division of the company to some
individuals as an alternative to redundancy and states that if such an offer should be made it will include assistance
in making the transfer. This again is not apt to be a term of an existing contract of employment as it involves the
choice of the company to make an offer and it is only from the making of that offer and its acceptance that any
individual right can subsequently arise. As regards the provision relating to employees who leave early, it merely
provides that employees will normally be required to observe their contractual obligations under their contracts of
employment; therefore again it is not apt for incorporation.
36
120.6, 160
In this context, where none of the other clauses of the collective agreement are apt to be incorporated into the
individual contract of employment, it would require some cogent indication in clause 6 that it was to have a different
character and to be incorporated into the individual contracts of employment. The plaintiff's submissions gain
nothing from the context within which clause 6 is to be found; indeed the context strongly detracts from their case.
The first part of clause 6 is a statement of policy – looking for volunteers, giving priority to employees taking early
retirement or affected by ill-health. Likewise paragraph 6.2 is again expressed in policy terms having regard to inter-
union relationships and to the requirements of the company's on-going business; it is stated to be 'the mutual
objective'. Whilst this again is not inconsistent with giving paragraph 6.1 contractual effect, it does detract from that
implication. Paragraph 6.1, the critical paragraph, is expressed in terms which are capable of giving rise to
individual rights. It says that selection for compulsory redundancy 'will be made on the basis of service' within the
relevant group. Therefore the plaintiffs can reasonably argue that as individuals they are entitled, on account of their
seniority, not to be selected. However, I consider that the wording of paragraph 6.1 is too weak, when considered in
the context in which it occurs in clause 6 itself and within the context and consultation scheme of the procedure
agreement as a whole, to support the inference of incorporation. Clear and specific express words of incorporation
contained in a primary contractual document could displace this conclusion, but on any view the wording of the
statutory statements in the present case do not suffice.
37
120.6, 160
It follows that the Wall plaintiffs' case of breach of contract must fail. They cannot establish the contractual right
under their individual contracts of employment which they need in order to succeed in their action for damages for
breach of contract against the defendants.
38
The collective agreement relevant to the Alexander [1990] IRLR 55 case is less adverse to those plaintiffs. Although
it is again a 'procedure' agreement, it is contained within a larger collective agreement some parts of which are
undoubtedly either expressly or by inference incorporated into the individual contracts of employment. Further, by
concession, one part of the procedure agreement itself, that is clause 15.5.3 dealing with extra payments for the
transfer of shift workers, is also to be incorporated into the individual contracts. Therefore the context in which the
seniority provision is to be considered is different from that in the Wall case and less unfavourable to the plaintiffs.
Further, for the production workers there was only a single union involved and the inter-union element included in
the maintenance department agreement is absent from this agreement.
39
However, as regards the procedure agreement, none of it, except possibly the disputed clause 15.5, is apt to be
incorporated in an individual contract of employment. They are either identical to or indistinguishable from the
corresponding clauses in the Wall agreement which I have already discussed and what I have said applies with
equal force to the clauses in the Alexander [1990] IRLR 55 agreement. The same applies to the opening words of
clause 15.5 which are expressed as a statement of policy. Sub-clause 15.5.2 deals with the balance of skills and
the voluntary movement of operators into a different shift or area and provides that, failing the necessary number of
volunteers with the appropriate abilities, the company will direct operators to the required areas to be retrained if
necessary. This sub-clause
[*294]
is expressed as an obligation of the company towards the employees in general and therefore is not appropriate as
a term of any individual contract of employment. This is so even though clause 15.5.2 has to be read with 15.5.3
which, it is accepted, is incorporated; but the third sub-clause is one which on a certain contingency confers a right
on identifiable employees to additional remuneration and therefore is capable of and apt to be incorporated.
40
This leaves the first sub-clause which is that which provides for selection to be made on the basis of service within
the relevant group. I consider that the differences in context in comparison to the Wall agreement, are marginal and
that this sub-clause is also not sufficiently cogently worded to give rise to an inference of incorporation into
individual contracts of employment. It remains a part of the joint consultation scheme within the ambit of a
procedure agreement. Its character is that of a provision which is essentially part of a collective agreement and is
not apt for incorporation, without more, into individual contracts of employment. Accordingly it does not provide the
basis for the inference, necessary to the plaintiffs' case, that it is to be part of individual contracts of employment.
41
120.6, 160
It follows that in the Alexander [1990] IRLR 55 case as well the plaintiffs' allegation of breach of contract does not
succeed. The claims in both of the actions must accordingly fail and will be dismissed. But seeing that the question
of damages has been fully argued before me and that this litigation may not rest with the decision of this Court, I will
also express my conclusion on the issue of damages; for that purpose one has to assume contrary to my judgment
that the plaintiffs have proved that they were wrongfully dismissed in breach of their individual contracts of
employment.
42
Damages
The plaintiffs' causes of action are the alleged breach of their respective contracts of employment by wrongful
dismissal. The premise is that their contracts were terminated unilaterally and wrongfully by the defendants and
therefore the plaintiffs have lost their rights under those contracts. As previously stated, it is agreed that nothing
turns in these cases upon lapse of time between the defendants' alleged wrongful repudiation and the plaintiffs'
acceptance of that repudiation.
43
The defendants' case was that, in any event, they were contractually entitled under the various individual contracts
of employment to give the relevant plaintiff notice of the termination of his employment under the notice provision
without ascribing any cause or giving any justification. This, they said, was the contractual position and accordingly
the maximum amount of damages that could be recoverable for repudiation of the contract of employment would be
an amount calculated by reference to the notice period. Since the defendants had already paid to the plaintiffs a
sum sufficient to cover the entitlement of each plaintiff during the notice period, the plaintiffs had suffered no
damage.
44
The plaintiffs argued that the notice provision was not unqualified and that the defendants' right to terminate the
contract on notice was qualified by an exclusion of their right to terminate the contract where the true reason for the
termination was redundancy. In this connection, the plaintiffs referred me to the statutory definition of dismissal 'by
reason of redundancy' which is contained in s.81 of the 1978 Act. The plaintiffs submitted that each plaintiff's
damages must be assessed by reference to his full expected period of employment up to his retirement age,
subject to his duty to mitigate his loss and less an allowance for contingencies. As time passed the risk of a given
employee being dismissed on grounds of redundancy would, if the seniority principle continued to be applied,
steadily reduce and, indeed, would become equivalent to the contingency that the defendants would close down the
whole of their operation at Southampton, or at least the relevant parts of it. Other contingencies would include such
things as death, illness or accident, or the choice of a given employee to terminate his contract of employment
voluntarily.
45
The plaintiffs' argument therefore raised a subsidiary submission that the defendants had no right, even on notice,
to terminate their obligation to apply the seniority principle. In this context they pointed out that no party, in the
absence of some express provision, has the right to vary that contract unilaterally; they also relied upon the wording
of the collective agreements.
46
Each side before me relied upon the decision of the Court of Appeal in the case of Gunton v London Borough of
Richmond-upon-Thames [1980] IRLR 321. That case would appear to be strongly in favour of the defendants'
submissions. The plaintiff, Mr Gunton, alleged that his contract of employment as a college registrar with the
defendant council had been wrongfully terminated by the council in breach of contract. Under his contract he was
entitled to one month's notice. On 14 January 1976 the council gave him notice that his contract would terminate on
14 February. The giving of this notice by the council was held to be in breach of contract.
47
The complication was that his contract of employment also made provision for disciplinary procedures; these were
entitled 'Regulations as to staff discipline including dismissal and suspension of officers and workmen' and had
been adopted by the council. By the latter half of 1975 the plaintiff's conduct as an employee had reached the stage
where the defendant's Director of Education recommended his dismissal 'on the grounds of his conduct being
wholly inconsistent with the terms of his contract'. The Town Clerk then purported to put in train the disciplinary
procedures. But he failed fully to follow all the steps that the regulations required. As a result, when at a later stage
the council sent the notice of 14 January, they were, as the County Court judge held, not entitled to do so and were
under an obligation first to complete the disciplinary procedures. That was the breach. The notice was invalid and to
serve the notice at that time was an unlawful repudiation of the council's contractual obligations.
48
The County Court judge then directed an enquiry as to damages on the basis that the plaintiff was entitled to remain
in the council's employment until retirement age unless in the meantime he became liable to redundancy or
dismissal under the disciplinary procedures, allowance being made for the plaintiff to mitigate his loss. It was
against this part of the decision of the County Court judge that the appeal was brought.
49
The Court of Appeal held that damages should not be assessed on that basis but simply on the basis that the
disciplinary procedures should have been completed in a reasonable time and thereafter that the defendant would
have given the plaintiff one month's notice regardless of the outcome of the disciplinary procedure. Each member of
the Court of Appeal expressly rejected the submission that the notice provision ceased to govern the assessment of
damages for wrongful dismissal. Lord Justice Shaw said at p.324 (4):
'I do not consider that the regulations as to staff discipline were designed to deprive the borough council of its contractual
power to determine the contract of service by one month's notice; nor in my view did they have that result.'
Lord Justice Buckley at p.328 (34) said:
'Where a servant is wrongfully dismissed, he is entitled, subject to mitigation, to damages equivalent to the wages he would
have earned under the contract from the date of dismissal to the end of the contract. The date when the contract would
have come to an end, however, must be ascertained on the assumption that the employer would have exercised any power
he may have had to bring the contract to an end in the way most beneficial to himself; that is to say, that he would have
determined the contract at the earliest date at which he could possibly do so ...
[*295]
If a master who is entitled to dismiss a servant on not less than three months' notice, wrongfully purports to dismiss the
servant summarily, the dismissal, being wrongful, is a nullity and the servant can recover as damages for breach of contract
three months' remuneration and no more, subject to mitigation; that is to say, remuneration for the three months following
the summary dismissal ... If the master were to pay the servant one month's remuneration in lieu of notice and were to
exclude him from his employment forthwith, there would be an immediate breach of the contract by the master; the servant
would be entitled to three months' remuneration by way of damages, but would have to give credit for the one month's
remuneration paid in lieu of notice.'
At p.329 (37):
'... in my opinion, the effect of the incorporation into the contract of the disciplinary regulations was to entitle the plaintiff not
to be dismissed on disciplinary grounds until the disciplinary procedures prescribed by the regulations had been carried out.
Some of the preliminary stages in those procedures never were carried out. Accordingly, in my judgement, the plaintiff was
entitled at 14 January 1976, when he was excluded from his employment, to insist upon a right not to be dismissed on
disciplinary grounds until the disciplinary procedures were recommenced and carried out in due order but with reasonable
expedition.
...
...nor in my opinion, was the discretionary power of the council to dismiss the plaintiff on a month's notice limited in any way
apart from the terms of the contract of employment itself relating to disciplinary matters.'
Lord Justice Brightman at p.329 (42) said:
'The plaintiff is entitled to an order for an inquiry as to the damages sustained by him by reason of his wrongful exclusion
from the service of the council from 14 January 1976 until the expiration of a notional one month's notice served on the day
when the proper disciplinary procedures, if followed, could have been concluded.'
At p.330 (48):
'An employee's remedy, if he is unlawfully dismissed by his employer, is damages. He cannot obtain an order for specific
performance because it is not available to compel performance of a contract of service against an unwilling employer. He
cannot sue for his salary or wages as such. By necessity his remedy is confined to damages. An unlawful dismissal is ex
hypothesi a premature dismissal. The damages recoverable, having regard to the plaintiff's duty to mitigate his damages,
are the monies needed to compensate the plaintiff for his net loss of salary or wages during the period for which the
defendant was bound by his contract to employ the plaintiff. In the case of a fixed-term contract, the assessment will extend
over that fixed term. In the case of a contract terminable by notice, the assessment will extend over the period which would
have had to elapse before the defendant could lawfully have dismissed the plaintiff.
...
These [disciplinary] regulations have the effect of defining the steps required to be taken in the interests of the employer
and the employee before the head of department can recommend dismissal to the appropriate committee of the council.
The result was that the council had under the contract a right to dismiss the plaintiff on one month's notice, but they could
not lawfully act on a recommendation for dismissal on a disciplinary ground unless the disciplinary procedure had been
followed; the completion of this procedure was a condition precedent to a valid recommendation for dismissal on a
disciplinary ground [para.52].
What then is the legal position if a notice of requisite contractual length is given to determine an employee's contract of
service, but such notice is the result of a recommendation improperly made and upon which the defendant could not
lawfully act? The plaintiff has suffered a wrong, and so far as damages can do so, he must be put in the same position as if
the wrong had not been done. To assess the damages, the invalid notice should be disregarded. It was a nullity. It should
be assumed that the council gave, as they could have done, a valid one month's notice at the earliest permissible date. It
was argued that a valid one month's notice could have been given on the same day as the void one month's notice, but this
proposition would make a complete nonsense of a protection which purports to be afforded by the disciplinary code, and I
reject this submission. The defendants were intending to dismiss on a disciplinary ground. It would be inconsistent with the
terms of the contract for the defendants to be treated as entitled to give a month's notice until the day when the disciplinary
procedures could have been completed.'
50
171, 191
The Gunton [1980] IRLR 321 case therefore reaffirms the basic contractual principle that damages for the wrongful
termination of a contract are to be assessed by reference to the value of the contractual rights of the injured party
not his expectations. As Lord Justice Diplock said in Laverack v Woods [1967] 1 QB 278 at 294(also a wrongful
dismissal case):
'In an action for breach of contract a defendant is not liable for not doing that which he is not bound to do ... The law is
concerned with legal obligations only and the law of contract only with legal obligations created by mutual agreement
between contractors – not with expectations, however reasonable ... If the contract is broken or wrongly repudiated, the first
task of the assessor of damages is to estimate as best he can what the plaintiff would have gained in money or money's
worth if the defendant had fulfilled his legal obligations and done no more.'
The Court of Appeal in Gunton [1980] IRLR 321 unanimously rejected the approach and decision of the County
Court judge based upon the employee's expectation of continuing employment up to retirement. Where the contract
includes a contractual right of the employer to dismiss the servant on notice, the notice period is the measure of the
contractual rights which the servant has against his employer. Therefore, prima facie, the defendants are right in
their approach in the present case. (Similar conclusions also follow from Dietman v London Borough of Brent [1987]
IRLR 259 and [1988] IRLR 299.
51
However, the plaintiffs before me rely upon the fact that the Court of Appeal in Gunton [1980] IRLR 321 did not
accept the employer's submission that there were no damages payable because the employer had already given
one month's notice to the employee and paid him for the notice period. The Court of Appeal assessed damages on
the basis that he was also entitled to continue in his employment until the expiry of the disciplinary procedure and
the service of a fresh notice of dismissal thereafter. The situation was therefore, on the facts of that case, that the
employers had committed themselves to a procedure which they were obliged to complete. He obtained damages
for being deprived of that contractual right.
52
In the present case the plaintiffs submit that the right not to be selected for redundancy save upon an application of
the principle of seniority displaced the contractual right to terminate the employment upon notice. In the present
case the plaintiffs were not able to rely upon the failure to complete any consultation procedure; the consultations
required by both the collective agreements and by statute had been complied with and completed. The plaintiffs had
therefore to assert that because the actual notices had been based upon redundancy there could be no other
contractual notice; unless and until the defendants had a right, on the seniority principle, to dismiss the relevant
plaintiff on the grounds of redundancy, or, the plaintiffs seemed to submit, some other 'justification' for serving a
notice arose, such as breach of disciplinary requirements, the defendants could not serve a contractual notice.
53
171, 191
This argument confuses the question of liability and damages. Ex hypothesi, for this part of the judgment, it is
accepted that the actual notices served were breaches of contract because they involved the breach of the redun-
[*296]
dancy agreements as incorporated into the individual contracts of employment. But as a matter of damages what is
relevant is the right of the employer to terminate the contract of employment by notice without assigning any reason
or relying upon any other contractual provision. It is at this point that the plaintiffs' arguments breaks down. As a
matter of contract the employer's right to terminate on notice without assigning a reason is unqualified. As a matter
of contract that is the measure of the contractual rights which the plaintiffs had against the defendants.
54
This may seem a rather stark conclusion but it is to be explained by two further factors one of which may be
peculiar to the present case and the other of which is of general application. On the facts of the present case it was
accepted, and therefore not the subject of argument before me, that the compensation which the plaintiffs had
already received rendered academic the precise date of the termination of the employer/employee relationship. It
similarly was accepted and not the subject of argument that the compensation which the plaintiffs had already
received compared favourably with that which they would have received as a result of the exercise of any statutory
rights enforceable before Industrial Tribunals. Therefore no case was advanced before me that the wrongful
dismissal on the grounds of redundancy had deprived the employee of any valuable rights under statute for which
he had not already received corresponding compensation which was at least as great as the value of those rights.
55
The second factor, which is common to all cases, arises from the separation of the contractual and the statutory
schemes. Here the plaintiffs are relying upon contractual rights. Therefore their damages have to be assessed by
reference to the value of those contractual rights. The existence of a parallel system of statutory rights enforceable
before Industrial Tribunals is prima facie irrelevant because it is not those rights that the plaintiffs are seeking to
enforce, nor are they rights which can be enforced otherwise than before an Industrial Tribunal. Once it is
appreciated that the general security of employment which an industrial employee enjoys under English law
normally derives not from his contractual rights but from his statutory rights, it can be seen that there is nothing
surprising in his contractual remedies for wrongful termination of the contract of employment being of limited value.
The statutory scheme imposes restrictions upon the value of the statutory rights and it is not possible for an
employee, absent some special contractual provision, to translate the less valuable statutory rights into contractual
rights and thereby assert a claim to compensation on a different basis.
56
It is to be observed that there can of course be cases where a contract or some other legal provision gives the
employee greater rights than are normally enjoyed by a skilled or unskilled employee in industry. Thus, where an
employee of a public authority can only lawfully be dismissed with the consent or concurrence of some specified
independent or quasi-independent body then the contractual rights may be different (Jones v Lee [1980] IRLR 67).
Similarly certain types of contract do not grant an unqualified right to the employer to give notice of termination to
the employee but provide that it can only be done for certain reasons (Irani v Southampton [1985] IRLR 203 and
South-West Hampshire Health Authority [1985] IRLR 203). Absent these reasons, there is in such cases no right to
terminate even on notice and damages for wrongful termination have to be assessed taking this right of the
employee into account. Such contracts of employment may incorporate into the notice scheme rights of dismissal
which in industrial employment would give rise to a right of summary dismissal.
57
The further argument of the plaintiffs in the context of damages concerned the permanence of the agreements only
to dismiss for redundancy applying the principle of seniority. On 20 July 1989 the defendants gave notice to their
remaining employees that with effect from 20 October 1989 (that is to say three months from the date of the notice)
those employees would be selected for redundancy having regard to experience, skills, aptitude, performance,
suitability for retraining, attendance and disciplinary record and any other relevant personal circumstances; it would
only be when those criteria did not provide a basis for choosing between individual employees that the principle of
seniority, or length of service, would be applied. The unions accepted these changes for the future but not so as to
affect the position of those dismissed under the April/May letters. The plaintiffs argued that a unilateral notice was
ineffective without the agreement of the unions to vary the collective agreements. They further argued that even if
the collective agreements could be unilaterally terminated or varied, the individual contracts of employment could
not be so varied or terminated (eg Robertson v British Gas [1983] IRLR 302 supra).
58
171, 191
This argument of the plaintiffs was clearly mistaken. Collective agreements themselves give rise to no contractual
rights. To terminate a collective agreement is not a legal wrong. In those circumstances it is similarly mistaken to
consider whether there should be implied terms of such collective agreements; the implication of terms by law can
only arise in relation to contracts that create a legal relationship. However, if one were to disregard this difficulty, the
collective agreements are clearly of a character which if they were legal contracts would be terminable by either
side upon reasonable notice.
59
The relevant question is the position under the individual contracts of employment. These are the legal contracts.
An employer is not entitled unilaterally to vary a contract since that would be to impose terms upon the employee to
which the employee has not agreed. The same principles of variation of contract apply to contracts of employment
as to any other contract; it is a consensual exercise (Robertson [1983] IRLR 302 supra; Gibbons v Associated
British Ports [1985] IRLR 376).
60
171, 191
However, it is always open to an employer, as a matter of contract, to say to his employee that after the expiry of
the contractual notice period the employer will only continue the contract of employment on different terms. Such a
notice is equivalent to giving notice to terminate the existing contract and offering a revised contract in continuation
of and substitution for the existing contract. The period of notice has to be the notice that is required to terminate
the existing contract. It is then up to the employee to decide whether he is willing to accept the revised terms. If he
chooses not to, his employment is ended at the expiry of the notice period; if he does accept, then it continues on
the varied terms. If the employee declines to accept the new terms and the employer nevertheless continues to
employ him, then it is the former terms, the terms of the existing contract, which continue to apply (see Gibbons
[1985] IRLR 376 supra). In practice the unions or other representatives of the employees play a valuable role in
negotiating and facilitating variations in the individual contracts of employment and frequently, probably normally,
the matter is dealt with less formally; revised terms of employment are negotiated with the employees'
representatives and adopted by the employees either as a matter of ratification or by implied acceptance by
continuing to work for the employer upon the new terms (compare NCB v Galley [1958] 1 AER 91).
61
171, 191
This analysis reinforces and does not detract from what I have previously said about the correct approach to the
assessment of damages. The plaintiffs do not have a permanent contractual right to insist upon selection for
redundancy only upon the principle of seniority. That was, ex hypothesi, a subsisting right but it was a right which
the defendants could bring to an end by notice. The employer's right to vary the contract is effectively equivalent to
his right to terminate the contract. Similarly, the limitation that the notice provision provides to the contractual rights
of the employee to the continuation of the contract also provides the limitation to his rights to the continuation of the
contract in its existing form.
[*297]
62
Therefore, the plaintiffs' contentions on this point are mistaken. They do not have any permanent right to the
application of the seniority principle and, even if the notice provision is to be construed as being in some way
qualified by other terms of the individual contracts of employment, specifically the redundancy provisions, they
cannot be construed as altering the character of the contract as a whole. It is still a contract which is subject to a
right to terminate on notice and such an argument cannot be used to convert it into some form of permanent
contract. At the best, from the plaintiffs' point of view, such considerations could have the effect of extending the
notice period rather like what occurred in the Gunton [1980] IRLR 321 case. Thus the situation might be that there
would have to be a notice to vary or terminate the contract and, if the variation was accepted, then a further notice
to terminate. However, in the present case no argument of that kind has been advanced, presumably because on
the figures it would not have produced a significantly more advantageous position for the plaintiffs than that which
they did in fact achieve.
63
Accordingly on the second issue in this case, the damages issue, the plaintiffs also fail. The claim to damages
assessed so as to cover a period down to retirement age must be rejected. The notice provisions in the contract are
the relevant criterion for the assessment of their damages and on that basis they have already been fully
compensated.
64
The claim to aggravated damages is made only in the Wall action. It is based upon the fact that before the letters
dated 23 May 1989 were sent by the defendants to the Wall plaintiffs, the Alexander [1990] IRLR 55 plaintiffs had
already obtained an ex parte interim injunction (and undertakings) against the defendants restraining them from
dismissing the Alexander [1990] IRLR 55 plaintiffs pending a further hearing. It is said that this in some way gives
the Wall plaintiffs increased rights in damages against the defendants in respect of their dismissal. These additional
damages have not been quantified and are not put forward as special damages; it seems that the claim must be for
general damages. Aggravated damages are intended to compensate and therefore must correspond to some
identifiable loss flowing from the wrong complained of not already covered by the other items of loss or damage
included in the claim. No such loss or damage has been demonstrated or even alleged.
65
But in any event such a claim to general damages for wrongful dismissal has long been held to be unrecoverable.
In Addis v Gramophone Co [1909] AC 488, the question 'whether in an action for wrongful dismissal the jury, in
assessing the damages, are debarred from taking into their consideration circumstances of hardship and
oppression accompanying the dismissal' was answered in the negative. In that case it was the injury to the plaintiff's
reputation that was specifically held to be irrecoverable but the general principle was reaffirmed that where the
claim is for damages for breach of contract the injured party 'is to be paid adequate compensation in money for the
loss of that which he would have received had his contract been kept and no more'. (Per Lord Atkinson at p.496;
see also British Guiana Credid Crop v Da Silva [1965] 1 WLR 248.) Accordingly the claim in the present case to
aggravated damages cannot on any view be sustained and must be rejected.
66
For the reasons already given, the plaintiffs' claims in these actions fail and judgment must be entered for the
defendants.
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ALEXANDER and Others (Plaintiffs) v. STANDARD TELEPHONES & CABLES LTD (Defendants) (No. 2) WALL and Ot

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ALEXANDER and Others (Plaintiffs) v. STANDARD TELEPHONES & CABLES LTD (Defendants) (No. 2) WALL and Ot

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OverviewAlexander v Standard Telephones and Cables Ltd (No 2); Wall v Standard Telephones and Cables Ltd

Overview | [1991] IRLR 286

ALEXANDER and others (plaintiffs) v. STANDARD TELEPHONES &

Queen's Bench Division, (QBD)

100 Contracts of employment

110.1 Written particulars – legal effect

120.6 Terms of employment – redundancy procedure

160 Effect of collective agreement

171 Wrongful dismissal

191 Remedies – damages

Robertson v British Gas Corporation [1983] IRLR 302 CA

Trade Union and Labour Relations Act 1974 section: 18(1)

Employment Protection (Consolidation) Act 1978 sections: 1, 4, 59, 81

For the Plaintiffs in Wall v STC:Mr J McMULLEN, instructed by Rowley Ashworth

For the Defendants:Mr D SEROTA QC and Mr A CLARKE, instructed by Masons

5. Normal working hours.

7. Sickness and accident pay.

8. Social Security Pensions Act 1975.

9. Grievances and procedures.

10. Disciplinary rules and procedures.

Clause 6 is headed 'Basis of selection for redundancy'. It reads:

Week 5 and thereafter day rate only.'

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