KB-2025-001016 - [2025] EWHC 2023 (KB)

What are the contractual terms?

There was no real dispute between the parties as to the relevant law. The general principles of contractual interpretation were those set out by Lord Neuberger in Arnold v Britton [2015] AC 1619 at [15]:

“When interpreting a written contract, the Court is concerned to identify the intention of the parties by reference to what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean . . . And it does so by focussing on the meaning of the relevant words . . . in their documentary, factual and commercial context. That meaning has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the lease, (iii) the overall purpose of the clause and the lease, (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of the parties’ intentions”.

With respect to incorporation from a document external to the contract of employment itself, this can be done expressly (where the document is specifically referred to in the contract of employment) or impliedly. If the external document is incorporated, then it is well accepted that the Court must determine whether any particular provision is “apt” to be a term of the contract: see Alexander v. Standard Telephones & Cables Ltd (No.2) [1991] IRLR 286 at [31].

In determining whether a provision is apt to be a term of the contract, in Hussain v Surrey & Sussex Healthcare NHS Trust [2011] EWHC 1670 at paras 168, 169, Andrew Smith J helpfully set out a number of the relevant indicia in the context of analogous provisions (a document entitled “Practitioners Disciplinary Procedure”, which was a locally negotiated procedure for handling concerns about conduct and capability), as follows:

“168.

There is no single test as to whether an employer and employee intended to agree that provisions of an agreement such as the Practitioners Disciplinary Procedure should be contractual between them (rather than advisory or hortatory or an expression of aspiration), and if so which provisions. The indicia that a provision is to be taken to have contractual status which are, I think, of some relevance to this case include these:

i)

The importance of the provision to the contractual working relationship between the employer and the employee and its relationship to the contractual arrangements between them: as I understand it, it is common ground in this case that, because parts of the Practitioners Disciplinary Procedure are contractual, in some circumstances the Trust might exclude Dr Hussain or bring disciplinary proceedings for misconduct against her. The implication of this, as it seems to me, is that provisions important to implementing the agreement about exclusion and about conduct hearings are also apt to be contractual: the more important the provision to the structure of the procedures, the more likely it is that the parties intended it to be contractual.

As Auld LJ said in Keeley v Fosroc International Ltd, [2006] IRLR 961 (which concerned whether provisions relating to enhanced redundancy payments in a Staff Handbook were enforceable as part of individual contracts of employment),

“Highly relevant in any consideration, contextual or otherwise, of an “incorporated” provision in an employment contract, is the importance of the provision to the over-all bargain, here, the employee’s remuneration package – what he undertook to work for. A provision of that sort, even if couched in terms of information or explanation, or expressed in discretionary terms, may still be apt for construction as a terms of his contract … .” (at para 34).

ii)

The level of detail prescribed by the provision: as Penry-Davey J said in Kulkarni v Milton Keynes Hospital NHS Trust, [2008] IRLR 949 at para 25, the courts should not “become involved in the micro-management of conduct hearings”, and the parties to the contract of employment are not to be taken to have intended that they should be. (In the Court of Appeal in Kulkarni, (loc cit) at para 22, Smith LJ endorsed this observation of Penry-Davis J.)

iii)

The certainty of what the provision requires: as Swift J observed (in Hameed (loc cit) at para 68), if a provision is vague or discursive, it is the less apt to have contractual status.

iv)

The context of the provision: a provision included amongst other provisions that are contractual is itself more likely to have been intended to have contractual status than one included among other provisions which provide guidance or are otherwise not apt to be contractual.

v)

Whether the provision is workable, or would be if it were taken to have contractual status; the parties are not to be taken to have intended to introduce into their contract of employment terms which, if enforced, not be workable or make business sense: see Malone v British Airways, [2010] EWCA Civ 1225 at para 62.

169.

This is not, of course, an exhaustive list of considerations which might bear upon whether a provision in a collective agreement is apt to have contractual status. In particular, the wording of the provision is also of significance. I observe that in the Practitioners Disciplinary Procedure some provisions are expressed in terms of what “must” be done and others in terms of what “should” be done. I have already (at paragraph 135 above) commented upon the significance of this in the specific context of paragraph 1.15. I am otherwise unable to discern from the procedure as a whole any pattern to this varying terminology, and generally I do not regard the use of “should” rather than “must” as indicative that a provision in it is not intended to be contractual or is not apt to have contractual status”.

The analysis in Hussain was said by McCombe LJ in Sparks v. Department for Transport [2016] ICR 695 at [17], to be among “the most helpful” authorities in resolving the issues that had to be determined in the case before them.

The contract between a doctor and their employing Trust will also include the implied term that “the employer may not without reasonable and proper cause conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of confidence between employer and employee and trust between them”: see Malik v Bank of Credit and Commerce International [1998] AC 20, p45F-G (endorsing Browne-Wilkinson J’s dictum in Woods v. W. M. Car Services (Peterborough) Ltd. [1981] I.C.R. 666, 670). The caveat of “reasonable and proper cause” entails a high threshold: see Stevens v University of Birmingham [2017] ICR 96 at [99].

In Chakrabarty v Ipswich Hospital NHS Trust [2014] EWHC 2735, Simler J did not accept that a general obligation to act fairly was implied into a contract of employment. Simler J observed at [114] that “where the authorities contemplate questions of fairness, they do so in the context of the implied term of trust and confidence, or on a narrower basis by reference to an implied term that disciplinary processes will be conducted fairly, without unjustified delay.” See also, Chhabra v West London Mental Health NHS Trust [2014] ICR 194, where Lord Hodge found that the doctor in that case had, in the context of a disciplinary process, “an implied contractual right to a fair process”.

Prohibition against “sidestepping”

In a number of cases involving doctors, the Court has focused on the importance of following the proper procedures where capability or conduct is concerned, and has cautioned against employers who have sought to “side-step” those procedures by labelling the matters of concern as “some other substantial reason”.

“Some other substantial reason” is one of the potentially fair reasons for dismissal under the statutory unfair dismissal regime. Section 98(1) of the Employment Rights Act 1996 provides that:

“In determining for the purposes of this Part whether the dismissal of an employee is fair or unfair, it is for the employer to show—

(a)

the reason (or, if more than one, the principal reason) for the dismissal, and

(b)

that it is either a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held”.

(emphasis added). A reason falls within subsection (2) if it:

“(a)

relates to the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do,

(b)

relates to the conduct of the employee,

(c)

is that the employee was redundant, or

(d)

is that the employee could not continue to work in the position which he held without contravention (either on his part or on that of his employer) of a duty or restriction imposed by or under an enactment”.

In Kerslake v North West London Hospitals NHS Trust, [2012] EWHC 1999 (QB), His Honour Judge Curran (sitting as a Judge of the High Court) held at [182] that the Trust in that case was not permitted to dismiss a doctor under the guise of ‘some other substantial reason’ if the real reason for dismissal was capability or misconduct. This was referred to as “sidestepping” and would be an impermissible circumvention of the procedures contained in MHPS.

HHJ Curran cited as authority for this proposition the judgment of Holroyd J, determining an application for an interim injunction in Lauffer v Barking, Havering and Redbridge University Hospitals NHS Trust [2009] EWHC 2360 (QB). In Lauffer, Holroyde J had held at [39] that the contractual provision relating to ‘some other substantial reason’ was a residual category of cases where there was no misconduct or capability issue, “for example, a clash of personalities”. Holroyd J accepted the submission that “the MHPS inspired scheme cannot, as he puts it, be sidestepped by relabelling”.

The application of MHPS

There have been a number of cases in which provisions of MHPS have been considered by the Courts, and the approach to interpreting those provisions has been discussed. In Chakrabarty, Simler J observed at [116] that:

“An important part of the relevant background here is the way in which the MHPS framework was agreed. Its essential character is that of a collective agreement negotiated by officials from the Department of Health and representatives from affected bodies including the NCAS’s predecessor body. Accordingly it is all the more important that it should not be construed as a statute but rather, a practical, purposive interpretation is appropriate having regard to the statutory functions of the NCAS and the way in which the NCAS performs those functions. Its discursive terms ought not to be read in a way that would introduce unhelpful inflexibility or make its application unduly restrictive. Mr Sutton also contends and I accept, the MHPS framework is a procedure designed to govern the resolution of concerns about a practitioner’s conduct or capability arising in the context of the employment relationship. A proper interpretation of MHPS can therefore be expected to reflect the hierarchical character of that relationship where the ultimate decision-making power and responsibility is vested in the employer who is entitled to exercise a contractual right through a disciplinary or capability process to terminate the employment”.

In Burn v Alder Hey NHS Foundation Trust, [2021] EWHC 1674 (QB), Thornton J observed at [11(d)] that:

“The Court should work on the basis that the parties to MHPS considered that it struck a fair balance between the important, potentially competing interests. These are: a public interest in the effective and efficient management of the conduct, capability and performance of medical professionals; and the interests of the practitioner for whom there is potentially a great deal at stake for the practitioner and for whom the procedure may provide them with an opportunity for vindication or, at least, that the faithful application of the procedure would ensure fairness (Smo v Hywel Dda University Health Board [2020] EWHC 727 (QB))”.