Secretary of State for the Home Department v James Cox & Ors.

19 May 2023

[2023] EWCA Civ 551

Court of Appeal

A union sued because employers stopped letting them deduct union dues from employees' pay. The court said the employees' contracts allowed this, but the contract didn't actually let the union sue if it stopped. So the union lost.

Key Facts

•Three appeals involving individual claimants employed by the Home Office, DEFRA, or HMRC, all members of the PCS union.
•Union subscriptions were collected via check-off arrangements (employer deducting from wages).
•Check-off arrangements were withdrawn in 2014-2015.
•High Court held check-off was a contractual term, and claimants hadn't accepted variation or waived rights.
•High Court held PCS could enforce the check-off term via the Contracts (Rights of Third Parties) Act 1999.
•Appeals concerned whether claimants accepted variation/waived rights, and whether PCS could enforce the term.

Legal Principles

Acceptance of contract variation by continuing work depends on unequivocal inference from facts; protest at collective level may negate inference of individual acceptance; time may be a factor but not determinative.

Abrahall v Nottingham City Council [2018] EWCA Civ 796

For a third party to enforce a contract term, the contract must either expressly provide for it or the term must purport to confer a benefit on the third party, unless the parties to the contract didn't intend the third party to enforce it.

Contracts (Rights of Third Parties) Act 1999, sections 1(1)(a), (b), and 1(2)

Contract interpretation involves ascertaining the meaning a reasonable person would understand, considering available background knowledge.

Investors Compensation Scheme Ltd. v West Bromwich Building Society [1998] 1 WLR 896

Fundamental variation of employment contract terms may amount to entering into a new contract.

Potter v North Cumbria Acute Hospitals NHS Trust [2009] IRLR 900

Outcomes

Appeals dismissed regarding whether claimants accepted variation/waived rights.

Judges were entitled to find no unequivocal acceptance; collective protest existed; employer conduct was equivocal; direct debit payments were mitigation, not acceptance.

Appeals allowed regarding whether PCS could enforce the check-off term.

The court found that the parties to the contract of employment did not intend the contractual term for offering check-off facilities to employees to be enforceable by PCS, considering the context of the unenforceable collective agreement and the nature of the contractual term as an offer of a facility.

Third ground of appeal (new contracts) rendered moot by the outcome of the second issue.

Since PCS couldn’t enforce the term, the question of whether new contracts existed after 11 May 2000 became irrelevant. However, the Court expressed concerns about insufficient evidence in the lower court’s analysis of fundamental changes to contracts that would create new contracts.

Similar Cases

Secretary of State for the Department for Environment, Food and Rural Affairs v Public and Commercial Services Union

[2024] UKSC 41

National Union of Rail, Maritime and Transport Workers and another v Tyne and Wear Passenger Transport Executive T/A Nexus

[2024] UKSC 37