UK: Contract: Benefits Provided by Third-Party Provider

Authors: Ruth Bonino, Corinna Harris, Chris Holme, and Sophie Jackson

The claimants, employed by Heathrow Express, were contractually entitled to discounted rail travel, which they were aware was provided by a third party. Initially, the benefit was lifelong for employees who retired or were made redundant after at least five years’ service. An agreement between Heathrow Express and third-party provider, Rail Delivery Group (RDG), the sector’s membership body, allowed for the benefit to be curtailed or withdrawn. Subsequently, RDG notified Heathrow Express that the lifelong benefit would be retained only for employees whose employment commenced before 31 March 1996 and who retired or were made redundant.

The claimants had over five years’ service when they were made redundant in 2020 but had commenced employment after 31 March 1996 so were no longer entitled to the lifelong rail travel benefit. They subsequently brought breach of contract claims in relation to Heathrow Express’ refusal to provide this benefit. An employment tribunal dismissed their claims on the basis that the terms of the scheme, including the withdrawal terms contained in the agreement between Heathrow Express and RDG, had been incorporated into the claimants’ employment contracts.

On appeal, the EAT found that there was no proper basis for finding that the agreement between Heathrow Express and RDG had been incorporated into the claimants’ contracts. This was because they were not party to that agreement, reference was not made to it in their employment contracts, they hadn’t been provided with a copy of it and didn’t know of its existence. The EAT concluded however that the tribunal’s finding – that the claimants, who had been made redundant after over five years’ service, had an incorporated contractual right to enjoy the lifelong rail travel benefit after dismissal – could stand.

This means that the claimants had accrued the contractual right, and that Heathrow Express could not unilaterally remove it (relying on the agreement with RDG).  The claims therefore succeeded.

Key Action Points for Human Resources and In-House Counsel

Employers that provide contractual benefits with the support of a third-party provider should ensure there is unambiguous and express communication to employees of the limits of the employer’s commitment to provide that benefit by reference to what has been agreed with the third-party provider.

Adekoya & Others v Heathrow Express Operating Company Ltd