Continuing to work and affirmation of contractual changes

Abrahall v Nottingham City Council

Employees who continued to work following their employer’s imposition of a pay freeze did not thereby agree to a variation of contract, despite the fact that their tribunal claim wasn’t begun until two years later.

Background

Nottingham City Council implemented a two-year pay freeze in April 2011 with the result that the usual incremental pay progression was suspended. At the time unions opposed the proposal and consulted with their members about taking industrial action. Turnout wasn’t high enough to justify a formal ballot, but the union continued to voice its objections for several months following the pay freeze. No affected employees raised any objections. In April 2013 the council decided to extend the pay freeze for a further period for some of its workforce and the unions responded by activating a formal collective grievance procedure, which did not resolve the situation. Several hundred affected employees then brought a tribunal claim for unlawful deductions from wages – on the basis that they had a contractual right to incremental pay increases.

There were two issues for the Court of Appeal. Did the employees have a contractual right to incremental pay progression? If they did, had they waived their right to recover lost salary by continuing to work after the pay freeze had been implemented?

Court of Appeal decision

The court held that the employees had, at the time of implementation of the pay freeze, a contractual right to pay progression and withholding the annual increments from April 2011 was a breach of contract. It then looked at the issue of variation and acceptance.

On the particular facts, the employees had not waived their right to lost pay by continuing to work. Whilst the court rejected the employees’ argument that continuing to work following a contractual pay cut can never amount to acceptance of the variation, nor was it the case that continuing to work following a contractual pay cut will always be treated as acceptance. It all depends on the particular circumstances of the case. The court identified certain applicable principles on whether acceptance should be inferred:

  • Acceptance of a variation of contract should only be inferred from conduct where that conduct admits no other reasonable explanation save for acceptance – if the employee’s conduct in continuing to work is reasonably capable of a different explanation it cannot be treated as constituting acceptance of the new terms.
  • Where the variation is wholly disadvantageous, acceptance is less likely to be inferred.
  • A protest or objection at the collective level may be sufficient to negative any inference of acceptance, even if individual employees themselves say nothing.
  • An employer's reliance on inferred acceptance will be weakened where the employer represented that there was no variation of contract and thus that acceptance was unnecessary.

Link to judgment: http://www.bailii.org/ew/cases/EWCA/Civ/2018/796.html

Comment

While such cases are always fact-sensitive, this decision is a useful reminder that varying terms and conditions is a very tricky area – and that relying on implied acceptance is risky. Express consent is always the recommended route. Deemed consent can work but only if you’ve given notice of the proposed change and made it clear that, if an employee wishes to object, they must do so in advance of a particular date. We have a guide to changing T&Cs in the Knowledge section.