The Court of Appeal has handed down judgment in the case of NHS Foundation Trust L v Dr MN [2026] EWCA Civ 71, providing important guidance on the question of whether contractual effect should be given to provisions contained in workplace disciplinary policies, as well as the correct approach to appeals against costs orders.
Background facts
Dr MN, a consultant in diabetes and general paediatrics, brought proceedings for breach of contract arising from the Trust’s decision that the role of Case Manager in an internal investigation would be undertaken by the Trust’s Director of Corporate affairs and not the Medical Director. The relevant local policy, which was stated to be designed to be consistent with the national framework “Maintaining High Professional Standards in the Modern NHS” (“MHPS”), provided that:
“The Medical Director will act as Case Manager in cases involving Clinical Leaders ie Clinical Directors and Service Group Leads and consultants and may delegate this role to a senior manager to oversee the case on his or her behalf in other cases.”
The Trust disputed that the above provision was incorporated into the doctor’s contract of employment and, if it were, that it provided a mandatory requirement for the Medical Director to act as Case Manager in respect of consultants. The High Court (Sheldon J.) had resolved those issues in favour of the doctor. The Trust appealed that decision to the Court of Appeal. The Court of Appeal (Newey; Singh and Nugee LJJ) dismissed the appeal, holding that the term was apt for incorporation into the individual contract of employment and that it provided an important procedural protection to which the Trust was obliged to give effect.
The Court of Appeal also dismissed the Trust’s appeal against the Order of Sheldon J that the Trust should pay the doctor’s costs in full (subject to assessment failing agreement).
Guidance on the approach to incorporation of policies
The Court of Appeal revisited the established principles relating to incorporation of workplace policies into the contracts of the individual employee, and endorsed the two stage analysis: firstly, whether the policy is generally incorporated and secondly whether the particular provision relied upon is apt to have contractual effect. Singh LJ, giving the lead judgment, reiterated that what is important is to seek to identify what the parties must objectively have intended on the basis the words used and their context.
In doing so he noted the helpful, non-exhaustive indicia set out by Andrew Smith J in Hussain v Surrey and Sussex Healthcare NHS Trust [2011] EWHC 1670, namely: (1) the importance of the provision to the contractual working relationship between employer and employee; (2) the level of detail prescribed by the provision; (3) the certainty of what the provision requires; (4) the context of the provision; (5) whether provision is workable.
Singh LJ also noted that it is helpful to consider whether, had the provision in question been set out in the same terms in a formal contractual document, it could seriously have been argued as a matter of construction that it was not apt to be viewed as contractual in nature.
Applying these criteria and noting the importance of the clause and finding that, had the language been set out directly in the individual contract it would have been regarded as giving rise to a contractual requirement, Singh LJ held that the provision was apt to have contractual effect and was incorporated into the doctor’s contract of employment.
Guidance on the approach to the proper interpretation of mandatory obligations
Singh LJ also observed that, when interpreting incorporated documents, the usual approach to the interpretation of contract applies, including the principles applicable to terms implied in fact.
Singh LJ agreed with the view of Sheldon J that the words “will act” in this context gave rise to a mandatory obligation. He also agreed with Sheldon J that, where necessary, a term could be implied that the Medical Director may delegate his function of Case Manager to another person in circumstances such as insuperable conflict of interest or illness, neither of which was present in this case. He held that such implication would not give rise to uncertainty. Nor would it detract from mandatory nature of the express obligation.
Guidance on the approach to appeals against costs
In rejecting the Trust’s appeal against the judge’s decision to award the claimant his costs in full, the Court of Appeal emphasised that the appellate court will not interfere with the exercise of a broad discretion in respect of costs unless the judge erred in principle, failed to have regard to a relevant consideration or had regard to an irrelevant consideration, or exercised his discretion in a manner which was not reasonably open to him.
In declining to interfere with the High Court’s costs order, Singh LJ noted that the trial judge was more familiar than the Court of Appeal with the full range of issues and the entirety of the evidence before him and was better placed to make an assessment of whether it would be just to order the Trust to pay the Doctor’s costs in full, even though not every issued needed to be decided or was decided in his favour.
You can read the full judgment here.
Read the BBC’s coverage of the judgment here.
Dr MN was represented by Mark Sutton KC and Nicola Newbegin, instructed by Rosie Shapiro and Rukmanie Hodges of DWF LLP.
The Trust was represented by Simon Gorton KC and Jack Mitchell, instructed by James Upton and Laura Myles of Hill Dickinson.
All Counsel are members of Old Square Chambers.
