It's not often these days that people are told that they cannot be made redundant, but that's just been confirmed by the High Court in the case of Kaur v MG Rover Group Ltd (2004, IRLR 279).
What were the terms and conditions?
Mrs Kaur was a staff grade employee employed at the Longbridge plant for over 14 years. Her terms and conditions of employment expressly stated that her employment was governed by her contract of employment and, where appropriate, a number of collective agreements made from time to time with the recognised trade unions. There was also a provision giving either party the right to terminate on notice.
In March 2003, Mrs Kaur (plus about 100 other employees) were threatened with compulsory redundancy. She said that Rover was not entitled to make employees of her category and grade redundant because of the collective agreements incorporated into her contract.
What did the agreements say?
There were two main agreements - one that dated from 1992 and the other from 1997. The first called 'The New Deal' set out general principles including a commitment that reductions in manpower would be achieved voluntarily, and setting out changes to terms and conditions of employment.
The second called 'The Way Ahead' provided that there would be no compulsory redundancies, and that any necessary reductions in numbers would be achieved voluntarily.
What did the two parties argue?
Mrs Kaur applied for a declaration that both agreements were incorporated in her contract of employment, giving her a contractual right not to be made compulsorily redundant.
The employers argued that although individual contracts could (and did) incorporate elements of the collective agreements, that did not include the right not to be made compulsorily redundant. It argued that the provision relating to job security was simply a general aspiration.
They also argued that even if the provision could be incorporated, it had to be read subject to the unfettered right of the employers to serve notice to terminate for whatever reason, including compulsory redundancy.
Which terms can be incorporated?
The court said that it had to look at the terms in context to decide whether they can be incorporated or not. If there are general provisions that are not appropriate for incorporation, then it is more difficult to establish that one isolated provision should be.
In this case, the provisions relating to job security in The New Deal agreement were not incorporated into the claimant's contract of employment. These were simply expressions of future aims or expectations.
But the job security provision in The Way Ahead could be incorporated. This was because the words 'there will be no compulsory redundancy' were included in the agreement.
So although no compulsory redundancy was a general aspiration on the part of the company, the inclusion of that specific wording changed the overall thrust of the document. The wording recognised that no compulsory redundancy would be the consequence of, and the assurance behind, the introduction of the Way Ahead which had other important provisions about flexible working which could also be incorporated.
The court therefore made a declaration that the provision in the collective agreement, The Way Ahead, that there would be no compulsory redundancies was incorporated in Mrs Kaur's contract of employment.
What about the right to terminate?
The existence of an express contractual term giving the employers the right to terminate the contract with notice for any reason was not incompatible with the term that there would be no compulsory termination on grounds of redundancy.
The notice provision had to be read subject to the express agreement that the employer will not terminate where the reason is redundancy.