A collective agreement in place between Mirror Group Newspapers and the British Association of Journalists, the terms of which were incorporated into individual contacts of employment, provides for enhanced redundancy payments (ERP). The agreement made no reference to any requirement that an employee had to sign a compromise agreement before receiving such a payment, but nevertheless it had always been the practice to do so. When Mr Garratt was made redundant, he refused to sign a compromise agreement and did not receive an ERP.

A county court rejected Mr Garratt’s breach of contract claim. The court found Mr Garratt’s contract contained a term, implied through custom and practice, that receiving the ERP was conditional upon entering into a compromise agreement. The Court of Appeal agreed. For a term to be implied by custom and practice it has to be reasonable, certain and well known throughout the organisation. No employee had received an ERP since 1993 without entering into a compromise agreement and Mr Garratt was well aware that he would have to sign one to receive it. This meant that the practice was sufficiently well established to have become an implied contractual term.

It is understandable that employers may wish to insist upon compromise agreements in such circumstances, but even though the employer was successful in this case, the wisest course is to have a clear, written express term that an enhanced payment will be conditional upon a compromise agreement being entered into.

Garratt v Mirror Group Newspapers Ltd [2011] IRLR 591