The recent Court of Appeal decision in CSC Computer Sciences Ltd v McAlinden & Others is a useful reminder to HR practitioners that an employer's communication and conduct can create a legal right through custom and practice.
A group of about 200 employees were TUPE transferred from IT Services Limited (ITS) to CSC Computer Sciences Ltd (CSC) on 1 April 2000. CSC mistakenly thought that it was a contractual term of the ITS employees' contracts that they would be given an annual pay rise in line with the Retail Price Index (RPI). It was not clear on what basis CSC believed this but for the next seven years they gave the ex ITS employees RPI pay increases, even when its other employees were given lower pay rises. Over those seven years CSC conveyed the impression through its communication with the ex ITS employees that the RPI pay increase was contractual.
In 2008 CSC negotiated a deal with the trade union it recognised for collective bargaining purposes to award pay increases to the ex ITS employees below RPI. However, it later transpired that the trade union was not recognised in respect of the ex ITS employees and the deal CSC thought it had struck had no effect. In 2010 a group of ex ITS employees brought grievances and Tribunal claims arguing that they were entitled to an RPI pay increase. The Employment Tribunal and Employment Appeal Tribunal found in their favour. So too did the Court of Appeal which found that, despite CSC's mistaken belief that the ex ITS employees were entitled to an RPI increase, its communications and actions conveyed a belief that the ex ITS employees had a contractual right to the RPI increase and evidenced an intention to be bound by such a term. Therefore, the right to an annual RPI increase in salary was implied into the ex ITS employees' contracts.