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Creating a precedent

Meredith Hurst Wednesday, April 30, 2014

Employers should beware about creating a precedent that certain payments will be made.

The recent Employment Appeal Tribunal case of Peacock Stores -v- Peregrine & Ors provides this stark reminder.  In this case, the employer had over a number of years consistently paid redundancy payments based on statutory terms but without applying the statutory cap on either years of service or the amount of a weekly wage.  When the employer sought to pay the statutory payment using the statutory calculations, three employees complained and brought an claim for contractual enhanced redundancy payments even though there was no express written policy or procedure setting out how the redundancy payments would be made.  The employees relied solely on past custom and practice.

The outcome of the claim was that the employees were entitled to the enhanced terms.  The Employment Appeal Tribunal upheld this decision.

Custom and practice is often relied upon.  If employers are concerned that their previous practices may cause issues for them in the future, a new written policy and procedure which is properly implemented can help to make future intentions clear. 


Reference:Peacock Stores -v- Peregrine & Ors UKEAT 0315/13/SM