Unilateral promise within an employment context

A short Outer House judgment of Lord Malcolm from the end of July 2016 has caught this blogger’s attention for its reference to the peculiarly Scots obligation of unilateral promise. In Fisher v Applied Drilling Technology international Ltd the pursuer was arguing that his employer had undertaken to offer him an enhanced redundancy package. There was nothing express in his contract of employment making the commitment, rather the pursuer’s case rested on the basis of “an implied term arising from what is said to be a longstanding policy or practice to offer enhanced redundancy payments” (para [1]). Such an approach would usually rest upon a contractual analysis, but Lord Malcolm makes an interesting suggesting in paragraph 24 of his judgment:

“[24] In Park Cakes (paragraph 35) it was noted that an analysis by way of offer and acceptance “may seem rather artificial, as it sometimes does in this field”. In Scotland, unlike south of the border, we might discuss this in terms of an enforceable unilateral promise created by an inference from facts and circumstances which bar an employer from denying liability. In any event, it seems plain that no hard and fast rules can be laid down. Every case will depend upon its own facts, with phrases such as “reasonableness”, “notoriety”, “certainty” and “widespread knowledge and understanding” regularly figuring in judges’ opinions. The open-ended nature of the description of the proper approach to questions of this nature, as outlined in the cases referred to at the hearing, militates against dismissal without evidence.”

This is worthy of note. Lord Malcolm is suggesting that an employer might be taken to have made an implied unilateral promise to offer the employee an enhanced redundancy package, the implication deriving from an established common practice of the employer (the practice is described in paragraph [2] of the judgment).

The defender’s plea to have the action dismissed was rejected by Lord Malcolm, so we will expect to see much more being said about the conduct of the employer which could amount to an implied promise as the action proceeds. But it offers an attractive added dimension to the case of an employee in the position of the pursuer: a unilateral promissory based approach would not need to demonstrate any actions constituting acceptance on the part of the employee, merely actions which might demonstrate an intention on the part of the employer to be bound. Of course, given that the promise is said to be an implied one, one would expect the employee to have to demonstrate very clear conduct from which the inference of promissory intent can be implied.

Lord Malcolm draws attention to the requirements needed for a promise at the end of his judgment (paragraph [26]), when he notes:

“paragraph 35 in Lord Hodge’s judgment in Royal Bank of Scotland [v Carlyle] is of interest. It highlights that Scots law will enforce a unilateral undertaking that is intended to have legal effect, notwithstanding an absence of consideration. Such an undertaking may, but need not be, collateral to a separate contract, and will be subject to an objective test, ie that which a reasonable outside observer would infer from all the circumstances.”

It will be of interest to follow the progress of this case to see whether the pursuer takes sufficient care to describe the conduct from which an unequivocal promissory intent could be inferred by a reasonable observer.

This entry was posted in Contract, Unilateral Promise. Bookmark the permalink.

One Response to Unilateral promise within an employment context

  1. Eric Clive says:

    A minor quibble, Martin. You refer to the “Scots obligation of unilateral promise”. Would you not say that a valid promise was a source of obligation rather than an obligation? On the case itself I guess the Requirements of Writing Act would be no problem because the promise would have been made in the course of business.

Leave a Reply

Your email address will not be published. Required fields are marked *