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Unlawful deductions from wages in switch from weekly to monthly pay
Gower v Post Office Ltd
Continuing to work and receive pay (and an employer loan) did not amount to acceptance of a unilaterally-imposed contractual variation.
The Post Office wanted to switch 1,230 weekly paid staff onto being paid monthly. Mr Gower had a contractual entitlement to be paid weekly. His appointment letter stipulated that variations of his terms and conditions ‘will be subject to discussion or negotiation between the Post Office and the appropriate trade unions’.
The Post Office began negotiating with the CWU over the proposed contractual changes. No agreement was reached. It wrote to Mr Gower informing that the switch to monthly pay would take effect from 3 February and that he had 10 days from the date of the letter to object; a lack of objection to agreement being equated with agreement. Mr Gower promptly objected within the 10 days saying that he didn’t agree to the change and that if it was imposed, he regarded his employer as being in breach of contract. The Post Office ignored this and wrote again saying the change would take effect as planned. Mr Gower replied, reiterating his objection. Soon after he applied for a loan of four weeks advance pay. He remained in employment but was thereafter paid monthly.
Mr Gower couldn’t bring a breach of contract claim because he was still employed because he had not chosen to treat himself as constructively dismissed and the Post Officehadn’t dismissed him. Therefore, his claim was framed as an unlawful deduction from wages.
There was clearly no express power to vary in Mr Gower’s contract and this was acknowledged by his employer. Despite this, the Post Office tried three ways to defend its actions:
- It argued that because it had some negotiation with the union, this entitled it to vary Mr Gower’s contract. The tribunal gave this short shrift: ‘the terms relied upon [by the Post Office] do not even come close to establish in a unilateral right to change such a core term. The language used in the contracts has not clearly and an ambiguously reserved a right … to amend the pay frequency unilaterally’.
- It argued that it was necessary to imply a term into the contracts to vary pay. The tribunal didn’t agree: ‘a contractual term may be implied only if it is necessary to make the contract work. If there is an express contractual term for the matter in question, then this argument just does not work’.
- It argued that by continuing to work and receive pay – and because he’d accepted a loan from them - Mr Gower had impliedly agreed to the change to his pay frequency. Not so said the tribunal: ‘it would be manifestly incorrect to construe an absence of explicitly saying “we are working under protest” as acceptance by [Mr Gower] of the new terms’.
By not paying his wages weekly, the Post Office had subjected Mr Gower to a series of unlawful deductions. He was awarded one week’s pay: his employer had mitigated its effective breach of contract by providing a loan, so Mr Gower hadn’t lost out financially.
Mr Gower was also awarded two weeks’ pay under s. 38 of the Employment Act 2002 which states that compensation can be awarded if an employer is in breach of its duty to provide written employment particulars or, as here, particulars of change. When the Post Office varied his contract it provided Mr Gower with an amended statement of written particulars which it should not have done so.
Link to judgment: http://www.bailii.org/uk/cases/UKET/2017/3200588_2017.pdf
Effectively, imposing a contractual variation will only work where an employer has reserved a specific right to do so in the contract. If there is no such right, then an employer can try and impose it and risk a constructive dismissal claim or risk the employee remaining employed but making it clear they do not agree to the change. A safer course of action for the Post Office would have been to terminate Mr Gower’s contract (with notice) and offer him a fresh contract on the new terms – indeed the judge hinted as much. While this would have been a dismissal, for ‘some other substantial reason’ (SOSR), with careful handling/consultation etc. the Post Office would have been on safer legal ground. However, it should always be remembered that if this is likely to result in 20 or more employees being ‘dismissed’ then collective consultation is triggered, because of the wide definition of ‘redundancy’ in the Trade Union & Labour Relations (Consolidation) Act 1992. See also our guide - Changing Terms and Conditions of Employment.