Pay and holiday variation accepted by conduct

Egbayelo v Ocado Central Services Ltd

An employee had accepted, by her subsequent conduct, collectively agreed changes to pay and holiday arrangements that had been in place for several years.

Background

Ms Egbayelo had worked for Ocado as a personal shopper for seven years. In 2011, a year after she started work, Ocado entered into a recognition agreement with USDAW the union and introduced a variation to the contracts of staff such as Ms Egbayelo, such that terms relating to pay, hours and holiday would now be the subject of collective agreements with USDAW. Ocado introduced a variation to the contracts of its affected employees, by way of an on-screen pop-up, that said that their terms and conditions would be varied to include a clause which provided for terms relating to pay, hours and holiday to be the subject of collective bargaining with USDAW. Ms Egbayelo was not a member of USDAW. The evidence was that no-one could have escaped seeing this message. Ms Egbayelo’s evidence was that she did not understand that the message on her screen had applied to non-union members.

Her terms and conditions included the following paragraph (para. 21):

‘Changes to your Terms and Conditions: We reserve the right to make reasonable changes to any of your terms and conditions of employment and you will be notified of minor changes of detail by way of a general notice to all employees or an email or letter (addressed to you and sent to the address we hold for you or delivered to you at work) and any such changes will take effect from the date of the notice’.

Employees joining after the union was recognised (including Ms Egbayelo’s husband) had a clause in their contracts specifically making reference to the collective bargaining agreement. Ms Egbayelo accepted pay increases negotiated by the union and some years later Ocado and USDAW agreed changes to holiday arrangements which reduced holiday entitlement but gave a pay rise. Ms Egbayelo put in writing that she objected to the change in holidays but would accept the pay rise.

Ms Egbayelo sought a declaration from a tribunal as to whether the collectively agreed terms formed part of her terms of employment, and the tribunal held that they did. She appealed, principally on the ground that the tribunal had got it wrong when it held that the introduction of the collective bargaining clause was the type of change that was covered by the wording of her terms and conditions.

EAT decision

Her appeal was dismissed.

Relying on the Court of Appeal decision in Abrahall v Nottingham City Council, the EAT held that by her conduct Ms Egbayelo had accepted the imposition of the collective agreement in her contract and so accepted the collectively agreed contractual changes to pay and conditions that had been in place for a number of years. She was not entitled to cherry pick the changes she liked and those she didn’t. Alternatively, the terms were incorporated by custom and practice given that they were changed by management unilaterally; they were drawn to Ms Egbayelo’s attention and had been in place for some years.

Link to judgment: https://www.bailii.org/uk/cases/UKEAT/2019/0028_19_2205.html

Comment

Where a union is recognised for collective bargaining it is important to remember that there is no contractual relationship between the union and the employer. However, it is settled law that contracts between the employer and the employee can impose collectively agreed terms on the employee, even if they are not a member of the union.

The EAT’s comments on the scope of para. 21 of Mrs Egbayelo’s contract were of most interest, specifically whether it permitted a unilateral variation to introduce collective bargaining of terms.

The clause gave Ocado an express right to vary, to the extent that it introduced a reasonable change. It explained how minor changes of detail would be communicated to staff but did not deal with how more significant changes were to be communicated. The EAT would not have upheld the tribunal’s decision purely on the basis of a change being introduced unilaterally by para. 21 for three reasons:

  • There was a degree of ambiguity as to whether para. 21 allowed reasonable changes that introduce something other than a minor change of detail and, to the extent that there is any ambiguity, such a clause should be construed against the employer.
  • If the tribunal was suggesting that the introduction of collective bargaining, and the change this would then imply for each employee, was simply a minor change of detail, the EAT thought that was open to question; it plainly was not.
  • Even if para. 21 could be relied on to introduce more significant changes, the collective bargaining provision was communicated by way of general notice to employees, which the tribunal seems to have found was the means of communicating minor changes of detail.

Having dismissed the appeal on other grounds though (and being constrained by the tribunal’s findings of fact), these comments of the EAT are what the law calls obiter dicta, i.e. a judge's expression of opinion but not essential to the decision and therefore not legally binding as a precedent.

There is a useful guide to changing terms and conditions in our Knowledge section.