Henry and others v London General Transport Services Ltd [2002] IRLR 473 CA

Disputes over contractual terms have kept lawyers in good business over the centuries. There is an unofficial hierarchy of ways of establishing contractual rights. The ideal is an unambiguous term in a contract signed by both parties. One of the hardest ways of establishing a contractual right is to rely on custom and practice. As the lawyer's clich&233; goes: custom and practice is the last refuge of a scoundrel when no better arguments are to hand.

But the case of Henry and others v London General Transport Services Ltd is a useful reminder of the scope and power of custom and practice and when the principle can be invoked particularly in the arena of collective bargaining.

In this case the TGWU was recognised by the employer and in anticipation of a management buy-out a framework agreement was negotiated with the union, accepted by the union on behalf of its members after a series of workplace meetings and details of the new terms being posted around the workplace. The framework agreement reduced the workers' wages and other terms and conditions. Individuals were also asked to sign new terms and conditions. Of the 1,500 staff, 130 signed a petition objecting to the new changes and asserted they were working under protest. Two years later they commenced wages claims for the balance between the old and the new pay rates.

There were two issues for the Employment Tribunal were the workers bound by the agreement between the employer and the union and had they anyway affirmed the contractual changes by working to the new terms for two years in spite of their petition? 
The tribunal found that although there had been a tradition of collective bargaining with the TGWU for many years, indeed a closed shop before these were outlawed, it was not satisfied that the tradition was sufficient to establish that such fundamental changes were incorporated into individuals' contracts by virtue of collective bargaining. "Strict proof" of the custom and practice had to be shown by the employer (as the party seeking to rely on the custom and practice in this case). Furthermore the petition in protest was sufficient to protect the individuals' rights: they had not elected to affirm the amended terms and conditions of employment by remaining at work.

Neither the Employment Appeal Tribunal nor the Court of Appeal agreed. The tradition of collective bargaining between employers and the recognised trade union was sufficient to establish a custom and practice that fundamental changes such as those in the framework agreement were incorporated into individual contracts. The Court of Appeal has taken the opportunity to set out the principles.

1.In order to a establish custom and practice, clear evidence of the practice is required, but the evidence is assessed on the balance of probabilities, not strict proof;

2.If a custom and practice is established that changes are incorporated into individual contracts through collective bargaining, it can be expected to cover all terms, unless there is evidence that the custom and practice is otherwise.

The Tribunal had also been wrong to find that the employees could still rely on their petition objecting to the changes, after working to the new terms for two years. For a limited period of time they would be able to say they had not agreed the changes, but not after working for two years as normal alongside their colleagues who had agreed the changes.

In this case, unusually it was the employers seeking to rely on custom and practice to establish contractual rights. Their success is a timely reminder that custom and practice can be a useful haven for unions seeking to show that long held practices amount to contractual rights.