New case on changing benefits in employment contracts
In a recent Employment Appeals Tribunal (EAT) case, Adekoya v Heathrow Express Operating Company, the EAT found that the Company could not unilaterally withdraw a life time travel benefit.
In this case, the Company offered its employees a discounted travel card through a third-party provider. Initially, this was offered as a lifelong benefit to employees who were made redundant or retired if they had at least 5 years’ service. The benefit was issued under agreements, which had been entered into between the Company and the third-party provider. The third-party provider relied upon the terms of one of these agreements, a reciprocal agreement, to change the lifelong benefit so that it only applied to employees who had commenced employment before 31 March 1996. The employees were not party to this reciprocal agreement or aware of its existence and the Company did not communicate this change to its employees.
The Claimants took voluntary redundancy and subsequently discovered that they no longer had the travel benefit. They all had at least 5 years’ service but had commenced employment after 31 March 1996. The Company refused to honour the lifelong travel benefit and a breach of contract claim was brought. An Employment Tribunal dismissed the claims. This was based on a finding that the agreement between the Company and the third-party provider had been incorporated into the Claimants’ contracts of employment and the right to receive the lifelong benefit had been varied. The Claimants appealed this decision.
The EAT disagreed and overturned the Employment Tribunal’s decision. The EAT concluded that the Claimants were not party to the reciprocal agreement between the Company and the third-party provider; no reference was made to it in their contracts of employment; the Claimants were not aware of its existence; and they had not been provided with a copy. The fact that the Claimants were aware of the benefit on offer was not enough to support a finding that the agreement between the Company and the third-party provider had been incorporated into the Claimants’ contracts of employment (meaning the benefit could be withdrawn or varied).
This case serves as an important reminder for employers to ensure that if they introduce any benefit to its employees, the offer is made in writing and explicitly subject to the terms of the provider of the benefit. If you are an employer looking to change or withdraw benefits offered to employees or you would like us to review the contractual terms upon which you offer employee benefits, please do get in touch with a member of the team.
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