The case background

In this case, when the Claimants started working for the Respondent, they were offered the benefit of a discounted travel card as per their employment contracts. These cards were issued under an agreement called the Association of Train Operating Companies Agreement (ATOC Agreement). Under the ATOC Agreement, it stated that if the employees were made redundant after 5 years or more of service, they would get lifelong travel benefits.

The Rail Delivery Group were the company that operated the travel benefits and a third party separate from the Respondent. The Respondent and the Rail Delivery Group had a separate agreement between them, which allowed the Respondent access to the travel benefits.

The Respondent was informed by the Rail Delivery Group that they would no longer be offering the lifelong travel benefits to any of the Respondent’s employees who were to be made redundant after 5 years or more. The Respondent did not inform the Claimants about this change to the terms of their employment contracts. 

The Respondent then offered the Claimants voluntary redundancy, which they all accepted. The Claimants all had more than 5 years’ service. 

After the Claimants were made redundant, they sought to use their lifelong travel benefit. The Respondent refused to honour this. The Claimants then claimed a breach of contract. 

The decision by the Employment Tribunal

Initially, the Tribunal found that the ATOC Agreement formed part of the Claimants’ employment contracts with the Respondent. The Tribunal also held that the agreement between the Rail Delivery Group and the Respondent was also incorporated in the Claimants’ employment contracts. In the agreement between the Rail Delivery Group and the Respondent, there was a clause which allowed the Rail Delivery Group the right to withdraw the benefit. The Tribunal found that this clause also gave a contractual right to the Respondent to withdraw the benefit from the Claimants.

The appeal

The decision was appealed. The Employment Appeal Tribunal (EAT) disagreed with the decision above. They stated that the Claimants were not aware of the agreement between the Rail Delivery Group and the Respondent. This agreement was not included or referred to in their employment contracts or in the ATOC Agreement. The EAT held that due to this fact, the terms of the agreement between the Rail Delivery Group and the Respondent could not be incorporated into the Claimants’ employment contracts, and the Respondent could not rely on this to remove the travel benefit.

The importance of reviewing employment contracts

This case outlines that employers must notify their employees of changes to their employment contracts. Even though the benefit was provided by a third party, the employer was still liable to provide this benefit as it was incorporated into their employees’ contractual terms, and they did not inform and/or consult with them regarding the changes.

It also highlights the benefit of having stand-alone policies for benefits such as these, and not making them contractual, so the employer can reserve the right to amend the policy at any time to fit in with changes out of their control (such as a third party withdrawing the contract). 

If you require any assistance in reviewing your employment contracts or policies, our team of employment lawyers can help. We have years of experience helping businesses put the correct documentation in place and ensure they are abiding by the law when making changes to contracts of terms. Please contact us today to discuss your concerns and requirements.