Mr Higgins v Entrust Support Services Ltd: 6011487/2024
JUDGMENT
[1]On the assumption that the enhanced redundancy payment payable by way of Regulation 6 of the Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2006 and associated policies is contractual, it is not ultra vires.[2]The claimant pursues a breach of contract claim under the Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994. Note: written reasons will not be provided unless requested at the Hearing itself or in writing within 14 days of the sending of the written record of the decision, Rule 62(3). Case Number: 6011487/2024[3]The tribunal has no jurisdiction to hear this claim because the claim was not arising or outstanding on termination of employment, and it is therefore dismissed. Case No:6011487.24REASONS
Judgment and oral reasons were announced at the conclusion of the hearing on 11 July 2025, and a written judgment was sent to the parties on 17 July 2025. These written reasons are provided following a request made by the claimant on 23 July 2025.Background
[1]Whilst this case had been listed for a final hearing today it was quite evident, at the start of the hearing, that there would be insufficient time to conclude this hearing within one day. Both parties were keen to make progress, rather than postpone, with the delay that this would entail. The respondent suggested as an alternative that I could convert this hearing to a preliminary hearing and deal with three preliminary issues.[2]I explained to the claimant that under the Rules it is permissible to convert a final hearing to a preliminary hearing. I also explained that, ordinarily at least, where there is a preliminary hearing to determine preliminary issues the parties should be given at least 14 days notice of the date of the hearing and the issues to be determined, Rule 53(2). I explained that under Rule 5(7) I could shorten this timescale, and that I would likely do so if both parties agreed to this. The claimant was content with this; he told me a number of times that he wished to proceed today. He confirmed that he had sufficient notice of the preliminary issues to be decided, because they formed part of what would have been decided at the final hearing in any event.[3]After discussion with the parties it was, therefore, agreed that I would convert this final hearing to a preliminary hearing to deal with three preliminary issues as follows:3.1 On the assumption (for the purposes of this hearing only) that the claimant had a contractual entitlement to an enhanced redundancy payment, as set out in Regulation 6 of the Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2006 (referred to as the 2006 Regulations in these reasons), and the policies that implemented that, whether such contractual entitlement was ultra vires and therefore void.3.2 Whether the claimant’s breach of contract claim is pursued under the Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994, as the respondent asserted, or whether there is a stand alone right under the TUPE Regulations to pursue a breach of contract claim, as the claimant asserted, and,3.3 If it is pursued under the Extension of Jurisdiction Order, whether the claim for breach of contract arose or was outstanding on termination of employment in accordance with Article 3(c) of the Extension of Jurisdiction Order. Background[4]I heard no evidence and therefore made no findings of fact. I summarise the relevant background as follows:4.1 Staffordshire County Council (SCC) first employed the claimant in 2000. The Council operated what was termed a non contractual enhanced redundancy scheme, which was created pursuant to the 2006 Regulations. These Regulations grant local authorities the statutory power to operate a redundancy scheme which disapplies the cap on a week’s pay, and it also empowers them to pay additional discretionary redundancy compensation.4.2 The most relevant parts of those Regulations for today’s purposes were Regulation 6 and Regulation 7.4.3 Regulation 6 is headed discretionary compensation and it states that if a person’s employment comes to an end additional compensation may be awarded which should not exceed 104 weeks pay and that, for the purpose of calculating redundancy payments, there will be no limit on a weeks pay.4.4 Regulation 6(2) states: Where this Regulation applies, the employing authority may, not later than six months after the termination date, decide to pay compensation under this Regulation and in that event shall, as soon as is reasonably practicable after the decision, notify the person in whose favour it has been made, giving details of the amount of compensation.4.5 Regulation 7 obliges local authorities to keep any enhanced payments scheme under review. It states;4.6 Regulation 7(1): Each employing authority must formulate, publish and keep under review the policy that they apply in the exercise of their discretionary powers under Regulations 5 and 6.4.7 Regulation 7(2): If the authority decides to change their policy, they must publish a statement of the amended policy and may not give effect to any policy change until one month after the date of publication.4.8 Regulation 7(3): In formulating and reviewing their policy the authority must –(a) have regard to the extent to which the exercise of their discretionary powers (in accordance with the policy), unless properly limited, could lead to a serious loss of confidence in the public service; and(b) be satisfied that the policy is workable, affordable and reasonable having regard to the foreseeable costs.4.9 The details of SCC’s enhanced redundancy scheme, including the payment to be made under Regulation 6, were set out in certain policy documents, in which the scheme was always described as noncontractual.4.10 In April 2013 the claimant’s employment transferred to Entrust. It is not disputed that the transfer took place under the Transfer of Undertakings Regulations. Entrust is a private sector employer which is 51% owned by Capita Business Services Ltd and 49% owned by Staffordshire County Council.4.11 It is not disputed that post transfer the enhanced redundancy scheme continued to apply to the claimant and others whose employment had transferred, and that it has continued to be operated by Entrust.4.12 On 15 April 2024 the claimant was dismissed by way of redundancy. Whilst he did receive certain enhancements to his redundancy pay (specifically an enhanced payment as set out under Regulation 5 of the 2006 Regulations) he did not receive enhanced redundancy pay in accordance with Regulation 6. It is the claimant’s case that a payment of £35,720.80p should have been made to him under Regulation 6, and that this is a sum to which he is contractually entitled. Whilst the respondent does not dispute that £35,720.80p is the sum that would be due to the claimant under Regulation 6 if a contractual entitlement had arisen, it is the respondent’s case that there is no entitlement to this payment, and that it is discretionary only. The Law Ultra viresThe Law
[5]The ability of a public body to enter into a contract, or to agree certain contractual terms, may be limited by statute. In broad terms, if a public body exceeds the powers delegated to it under legislation then it will be acting ultra vires, i.e. beyond its powers. A contract entered into ultra vires by a public authority is null and void, School Facility Management v Governing Body of Christ the King College 2020 PTSR 1913. The Extension of Jurisdiction Order 1994[6]Relevantly, Article 3 states: Proceedings may be brought before an employment tribunal in respect of the claim of an employee for the recovery of damages or any other sum if: (c) the claim arises or is outstanding on the termination of the employee’s employment.[7]What was meant by this was considered in the case of Peninsula Business Services v Sweeney [2004] IRLR 49. This was a claim concerning outstanding commission payments. The claimant worked as a sales executive. Under the terms of the scheme commission was payable at the end of each calendar month following payment by the customer of 25% of the fee. Customers often opted to buy packages on three year contracts under which they were entitled to pay in 36 equal instalments. This meant that it was only after nine months that the customer would have paid 25% of the fee, and so only at the end of month 10 that the employee would be entitled to be paid a commission. None of the commission claimed for by the claimant had become due at the point he resigned (i.e. none of the customers had at that point paid 25% of the fee). The issue was whether the outstanding commission claimed for by the claimant could be said to arise or be outstanding on the termination of the claimant’s employment.[8]It was explained by the Employment Appeal Tribunal that a claim will only be “outstanding” if at the date of termination it is immediately enforceable but remains unsatisfied, see paragraph 50. It was also explained, paragraph 51, that the claim for commission could not be said to have “arisen” on the date of termination. That is because the claimant was no more entitled to sue for unpaid commission on the day of his resignation than he was the day before. It had not arisen in a temporal sense on the date of termination, see Miller Bros v FP Butler Ltd v Johnston [2002] IRLR 386. All that he had, at the date of his termination, was a prospective right to the payment of commission (once the customer had paid 25% of the fee), but since he could not sue for payment until the right had matured into an actual right the tribunal had no jurisdiction to deal with his claim. In essence, this case confirmed that if a payment is contingently due it is not possible to claim payment until the contingency has happened. The Transfer of Undertakings Regulations 2006 Note: the 2014 Amendment Regulations do not apply as they only apply in respect of transfers which took place on or after 30 January 2014.[9]By way of Regulation 4(2), on the completion of a relevant transfer “all of the transferor’s rights, powers, duties and liabilities under or in connection with any such contract (i.e. the employment contracts of those who have transferred) shall be transferred by virtue of this Regulation to the transferee”. Thus, by way of Regulation 4(2), contractual terms and conditions transfer.[10]The Regulations provide for specific claims to be brought by employees (if appropriate) under the Regulations in respect of a failure to inform and consult, see Regulation 15. The Regulations also specify that where either before or after a relevant transfer, any employee of the transferor or transferee is dismissed, that employee is to be treated for the purposes of Part 10 of the 1996 Act (unfair dismissal) as unfairly dismissed if the sole principal reason for the dismissal is the transfer. Pausing there, it can be seen that there is no stand alone right to bring an unfair dismissal claim under the Tupe Regulations. Any claim for unfair dismissal based on the Tupe Regulations is brought under the Employment Rights Act, in the usual way. The Regulations are silent as to an employee’s right to bring a breach of contract claim where there has been a breach of a transferred contractual term. Submissions[11]Mr White, for the respondent, submitted written submissions, although these addressed a wider range of issues than those being dealt with as preliminary issues, as they had been prepared for the purposes for the final hearing. He supplemented these with oral submissions. He submitted that this was clearly a claim presented pursuant to the Extension of Jurisdiction Order. The effect of Tupe was to transfer rights and liabilities, but what the Tupe Regulations did not do is change the context of those rights and how they are enforced. Breach of contract claims had to be brought under the Extension of Jurisdiction Order.[12]As it was a claim brought under the Extension of Jurisdiction Order it required to be one that arose or was outstanding on the termination of the claimant’s employment. The payment at issue here was the discretionary lump sum payable under Regulation 6 of the 2006 Regulations. Under the terms of that Regulation the employer was entitled to make the relevant payment, if it decided to do so, at any time up to 6 months after the end of employment, Regulation 6(2). Insofar as the claimant did have any enforceable right to compensation under the scheme, therefore, it was not a right that arose or was outstanding immediately upon termination of employment. The respondent relied on the case of Peninsula Business Services v Sweeney [2004] IRLR 49. Moreover, the respondent submitted, all that Regulation 6(2) in fact stipulated was that the respondent should make a decision about whether to make a payment under this Regulation within six months of an employee’s termination date, and if it decides to do so to notify the person in whose favour the payment will be made as soon as reasonably practicable with, presumably, payment following on at some point after that.[13]Mr White further submitted that if the scheme would otherwise have given rise to contractual rights as a matter of contract law, any such right was ultra vires and therefore void. This submission was based on Regulation 7 of the 2006 Regulations, which specified that each employing authority must formulate, publish and keep under review the policy that they apply in the exercise of their discretionary powers under Regulation 5 and 6. The scheme was, therefore, created pursuant to statutory provisions that expressly required the scheme’s terms and existence to be kept under review. It was submitted that to create what was described as an “irrevocable contractual right” to enhanced redundancy on particular terms was entirely at odds with the statutory scheme under which the SCC scheme was made, and in particular the need to keep the scheme under review. Accordingly, it was said, any contractual right would have been ultra vires, because it flew in the face of what the Council was required to do under Regulation 7. A contract entered into by a public body is, if ultra vires, void from the beginning, School Facility Management v Governing Body of Christ the King College [2020] PTSR 1913.[14]I raised with Mr White that, for many years now, the claimant has been employed by a private sector employer. Even if any contractual right was ultra vires whilst the claimant was employed by Staffordshire County Council that did not, it seemed to me, necessarily provide an answer to whether a contractual term could be implied through custom and practice post transfer. Mr White submitted that it was not the claimant’s pleaded case that a contractual term could be implied post transfer, although he acknowledged that the claimant had specifically referred to the case of Allen v TRW Systems UKEAT/0083/12.[15]The claimant’s submissions were very brief. He stated that the policy had transferred over in 2013 and this policy clearly stated that he was entitled to an enhanced discretionary redundancy payment. The SCC policy stated that an additional lump sum would be paid and by way of custom and practice this was paid automatically on redundancy. He submitted that there were examples in emails of others being told that they would receive this payment.Conclusions
[16]As set out above, the respondent submitted that the statutory obligation to keep the enhanced redundancy scheme under review was fundamentally inconsistent with there being a contractual entitlement to the enhanced redundancy payment. Therefore, had there been a contractual right to the enhanced redundancy payment, this would be ultra vires. I did not agree with this submission. That is because contractual terms can and do exist that contain express flexibility clauses allowing employers to review, change and indeed revoke contract terms. There was no fundamental inconsistency, in my view therefore, between there being a contractual right to an enhanced redundancy payment and a requirement to keep under review the enhanced redundancy terms.[17]In any event, the concept of ultra vires applies to public bodies. Entrust is not a public body, it is a private sector employer. The claimant’s employment transferred to Entrust in 2013 and he was made redundant some 11 years later. The respondent accepts that the redundancy policy which set out the terms in relation to enhanced payments based on the 2006 Regulations transferred to Entrust and was adopted by it. Even if, therefore, the term was originally contractual, ultra vires and therefore void as a matter of contract law, in the 11 years in which the claimant was employed by the respondent post transfer with the policy (in various different guises) in place there could readily have arisen, most likely through custom and practice, an implied term that was contractually binding on the parties. Even if, therefore, the Council had acted ultra vires pretransfer by introducing a contractual right to an enhanced redundancy payment, that would not, in my view, prevent such a term being implied post transfer on the basis of the parties conduct.[18]As set out above, the respondent submitted that to draw this conclusion would be to go outside the scope of the claimant’s pleaded case. I disagreed. I did so for the following reasons. The claimant is a litigant in person, he cannot be expected to set out his claim with the same clarity as a lawyer. That said, it was clearly part of his claim that he had a contractual entitlement to an enhanced redundancy payment under Regulation 6. The exact legal route by which that might be so would, in my view, be one for the judge to determine based on the facts as asserted by the claimant. In any event, the claimant did, in his particulars of claim, refer specifically to the case of Allen v TRW Systems 2013. He provided the case citation, paragraph 21 of the particulars of claim, page 17. He accompanied his particulars of claim with an extract from that case. It is true that the claimant did not then set out in his particulars of claim what he considered the relevance of this case to be but nevertheless Allen is a case in which an appeal was allowed by the Employment Appeal Tribunal against a decision that enhanced redundancy terms in a redundancy policy were not contractual. The issues in that case were whether there was either an implied term or an incorporated term giving employees a contractual right to enhanced redundancy terms.[19]That, in my view, left no doubt that it was part of the claimant’s case that there was an implied term or an incorporated term giving him a contractual right to an enhanced redundancy payment under Regulation 6. Beyond that it is unrealistic, in my view, to expect a litigant in person to plead that in the event that any contract term entered into by the Council was ultra vires the claimant in the alternative argued that a term could be implied from the parties conduct post transfer. It is enough that it is clearly part of the claimant’s case that(i) he has a contractual right to this payment and(ii) this came about by way of either an implied or an incorporated term. Is this a claim brought under the Extension of Jurisdiction Order[20]I had no hesitation in concluding that this was a breach of contract claim bought under the Extension of Jurisdiction Order. The claimant sought to argue that it was not because it was based on a Tupe related breach of contract. But that submission misunderstood the effect of the TUPE Regulations.[21]The Tupe Regulations determine what rights and liabilities, including contractual terms, transfer to the new employer. They provide a mechanism whereby existing contractual terms are maintained post transfer. The Regulations do not, however, deal with how a breach of contract claim can be enforced. The position in relation to unfair dismissal claims, whilst a little different, may perhaps help to explain the point. Regulation 7 makes clear that if the sole or principal reason for a dismissal is the Tupe transfer, that will be automatically unfair, but it also expressly explains that such a claim will still be brought under the Employment Rights Act, i.e. the claim is pursued under the regime under which all unfair dismissal claims are pursued. It is not pursued under the Tupe Regulations. If a contractual term is breached post transfer the remedy for this is a breach of contract claim under the Extension of Jurisdiction Order or, in some instances, a claim for unlawful deduction from wages under the Employment Rights Act. There is nothing within the Tupe Regulations that says otherwise, in fact the Regulations do not address enforcement of breach of contract claims at all. Is the claim arising or outstanding on termination of employment?[22]The wording of the Extension of Jurisdiction Order is clear. The claim must be one that arises or is outstanding on the termination of the employee’s employment. As was made clear in the case of Sweeney “outstanding” on the termination of the claimant’s employment means that the payment in question was already due but remains unpaid and “arising” on termination of employment means falling due for payment on that day. A prospective right to a payment does not fall within the wording of the Order.[23]In that context the wording of Reg 6(2) of the 2006 Regulations is important; “Where this Regulation applies, the employing authority may, not later than six months after the termination date, decide to pay compensation under this Regulation and in that event shall, as soon as reasonably practicable after the decision, notify the person in whose favour it has been made, giving details of the amount of compensation.[24]What this clause obliges the respondent to do is(i) make a decision within six months after the termination date as to whether the enhanced compensation will be paid and(ii) if the decision is made to pay to notify the person of that as soon reasonably practicable. If we assume, for the purposes of this analysis, that this Regulation contains a contractual obligation that the respondent will pay the enhanced compensation it can be seen from the clear wording of the clause that the date for payment is not either before termination - “outstanding on” - or on termination - “arising on”. It is after the date of termination of the contract, in fact up to six months or more after the date of termination of the contract.[25]For those reasons when the claimant’s employment was terminated he had no more than a prospective right to the enhanced redundancy payment and as per Sweeney that means this claim falls outwith the jurisdiction of the Tribunal and must be dismissed.