To establish that an employer has breached a fundamental term of the contract, the employee has to show that it is, in fact, already a contract term and not just a statement of intent.

In Judge v Crown Leisure Ltd (2005, IRLR 823), the Court of Appeal has said that the terms of a contractual promise must be "certain" and not "vague" to be capable of being enforced.

 

What were the basic facts?

Crown Leisure employed four special operations managers, one of whom was paid considerably more than the other three, following a transfer from a related company in June 2001. The company had made clear to all four managers that it would equalise their salaries in "due course".

Mr Fannon, the special operations director, wrote to Mr Judge in May 2002, apologising for the fact that their salaries had still not been equalised, but assuring him that was still his intention.

The two men then met a year later in June 2003, and Mr Fannon explained that, with the increase and the substantial bonuses that Mr Judge had just received, this was about as far as he could go in establishing parity with the other manager.

Mr Judge then resigned from his job, alleging that the company had failed to honour a contractual promise to equalise his salary with the higher paid manager. He also alleged that Mr Fannon had explicitly promised at an office party in December 2001 to put him on the higher salary scale within two years. Mr Fannon said no such conversation had ever taken place.

 

What did the tribunals decide?

The tribunal said that "for there to be a legally binding and enforceable contractual commitment, there must be certainty as to the contractual commitment entered into, or alternatively facts from which certainty can be established. Otherwise, a 'promise' amounts to nothing more than a statement of intention."

On that basis, it decided that the letter of May 2002 was nothing more than a "statement of intention". As far as the conversation at the Christmas party was concerned, it did not accept the evidence of either of the parties.

Instead, it said that Mr Fannon probably did give Mr Judge some "words of comfort", but it did not believe that he had entered into any legally binding contractual commitment with him in such an environment.

The company was not, therefore, in fundamental breach and Mr Judge had not been constructively dismissed. The employment appeal tribunal agreed with that decision.

 

What did the Court of Appeal decide?

The court agreed with the tribunal, saying that the words uttered at the party did not amount to a contractual promise. They were too vague and uncertain. They were, in effect, just a reiteration of the previous statement that Mr Fannon had made of a general intention to bring about parity of salary or remuneration "in due course".

The tribunal rejected Mr Judge's allegation that Mr Fannon had promised to bring about parity within two years. Had he done so, the court said that "a promise to achieve parity within two years might well be sufficiently certain to be capable of enforcement."

The court also said that Mr Judge had misunderstood the tribunal's decision when he argued that it had applied the wrong legal test for establishing whether there was an intention to create "legal relations".

In the court's view, that question had never arisen. These two men were already employer and employee, so there was an existing legal relationship between them. "If words had been uttered that were capable of amounting to a contractual promise, it could not sensibly have been suggested that there was no intention to create legal relations. The real point was that the ET found that the words uttered did not amount to a contractual promise."