• Background

    Nottingham City Council had a scheme in which each year, depending on how satisfactorily the employees performed their job roles, there was an incremental pay rise which they could receive. This scheme was written within the employees’ employment contracts. However, in March 2011 Nottingham City Council decided to bring in a two year pay freeze, therefore no employee received an incremental pay rise between 2011-2013. No employee brought a grievance against this variation.

    Once the two year pay freeze came to an end, the Council wanted to extend the duration of it. In April 2013 the Unions responded to this by starting a formal collective grievance procedure.

    The Claim

    The Claimants were claiming for unlawful deduction of wages under Part II of the Employment Rights Act 1996. In addition, they had a contractual right to an annual increment.

    The Council argued that due to the Claimants continuing to work, their actions amounted to an acceptance of the variation.

    The Employment Tribunal (ET) dismissed the Claimants’ claims. They appealed to the Employment Appeal Tribunal (EAT).

    Held

    The EAT found that the key issue to decide was whether employees should be taken as having accepted a variation in their contracts by working the two years under the pay freeze.

    The EAT set out principles as to whether acceptance should be inferred, these included the following:

    • The question must be determined objectively.
    • Acceptance of variation of contract should only be inferred from conduct where that conduct allows no other reasonable explanation save for acceptance.
    • Where the variation is wholly disadvantageous, acceptance is less likely to be inferred.
    • Collective protest may suffice to negate any inference otherwise to be drawn even if the individual employees themselves do not say anything.
    • 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.

    The EAT held that silence should not be presumed to be acceptance of variation of their contracts. Consequently, the Respondents had breached the employees’ contracts.

    Therefore, the employees were entitled to the increased loss of earnings which they had not been paid between 2011 and 2013.

    Conclusion

    It is concluded from the result of this case that silence does not necessarily equal acceptance of a variation in a contract.

    This means employers must be very careful when making variation to employee contracts, the variations must be consented to and signed by each employee as silence from an employee does not make the variation legally binding.

    Contact

    For advice regarding unlawful deduction in wages, please contact our Employment Team.

    This content is correct at time of publication

    Can we help?

    Take a look at our Employment Advice page for useful information, resources, guidance, details of our team and how we may be able to help you