United Bank Ltd V Akhtar

The Employment Appeal Tribunal held that a tribunal was correct to hold that implications must be read into an express contractual term if necessary, to ensure both that the employee can comply with that express term and that the employer does not destroy the trust between employer and employee.

The Facts

Mr Akhtar was employed in a junior capacity at the bank’s Leeds branch. In June 1987 he was required to move from Leeds to Birmingham at six days’ notice. A clause in his contract stated: “The bank may from time to time require an employee to be transferred temporarily or permanently to any place of business which the bank may have in the UK for which a relocation allowance or other allowances may be payable at the discretion of the bank”. The bank refused to sanction any delay and there was no indication of financial assistance with his move. Mr Akhtar decided to treat the bank’s actions as a fundamental breach of his contract which entitled him to consider himself constructively dismissed.

In the view of the industrial tribunal, the bank’s directive put Mr Akhtar in an impossible position. It held that he had been unfairly, constructively, dismissed.

The Decision: Employment Appeal Tribunal

Before the EAT, the issue to be decided was whether or not the tribunal was right to imply the terms which it did into Mr. Akhtar’s contract of employment, ie that he must be given reasonable notice of a move; that the mobility clause must be operated in such a way as to make it feasible; and that the bank would not conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee. A contractual discretion was not unfettered and could not be exercised in a capricious way.

Implying these terms, as the tribunal had, was consistent with established common law rules that no term could be implied which were contrary to or inconsistent with an express term. The EAT found that there was no conflict between a limit on the way in which discretion could be exercised, on the one hand, and the existence of discretion on the other. The implied terms must also be necessary, not merely reasonable. In addition, the common law recognized that it might be necessary to imply a term where the literal interpretation of the written words of the contract would lead to conduct that would destroy or damage the trust between employer and employee. The tribunal had correctly applied these principles in this case.

The EAT concluded that the bank had failed to do what on a true construction of the contract — it was required to do. It held that the tribunal’s decision should stand, and the employer’s appeal was dismissed.