The next step

The Court of Appeal's ruling in the case mentioned in the article

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Variation of terms of contract of employment letter (in exercise of a contractual power)

[Letter]

Accepting contractual variations

Interesting case

In April 2011 Nottingham City Council decided to implement a two-year pay freeze. Many of the Council’s employees belonged to trade unions who informally challenged the Council’s decision. However, no formal industrial action was ever taken and no employee raised a grievance or otherwise objected to the pay freeze.

Unlawful deduction

In April 2013 the Council decided to impose a further pay freeze. This time, with the help of the unions, several hundred employees raised a collective grievance. They subsequently issued a tribunal claim for unlawful deductions from wages. The case turned on two key points:

• did the employees have a contractual right to pay increases?
• if they did, had they accepted a contractual variation by continuing to work after the pay freeze had been implemented?

Court of Appeal

The case ended up in the Court of Appeal (see The next step ) which found that under the terms of their employment contracts the employees had a contractual right to pay increases and the April 2011 pay freeze amounted to a breach of contract. The Council argued that in the absence of any protests or objections i.e. industrial action or formal grievances, the affected employees had accepted the contractual variation. What was the Court’s view?

No acceptance

It held that the employees hadn’t accepted the contractual variation by their actions. It also confirmed that an employee’s acceptance of a contractual variation must be clear and unequivocal. If there is any ambiguity, the courts will always give the employee the benefit of the doubt, especially where the contractual variation is detrimental to the employee. In this case, there was ambiguity because the unions had opposed the pay freeze.

Don’t make assumptions

If you propose a contractual variation, or seek to enforce a contractual right that allows you to make one, and those affected continue to turn up to work, don’t assume that their conduct amounts to consent to the contractual change.

Tip 1. If you have a specific contractual right to vary an employment contract, and the change is justified on business grounds, you can advise the employee that any objections must be received by a certain date. If they remain silent, you can go ahead and implement the change (see The next step ).

Tip 2. You can’t take this approach if you have no contractual right to vary a contract. In this instance, the employee must give their express consent to a change before you can implement it.

For the Court of Appeal’s ruling in this case and a free variation of terms of contract of employment letter (in exercise of a contractual power), visit http://tipsandadvice-personnel.co.uk/download (PS 20.15.05).