Pay Progression – Deemed Acceptance

Labour & European Law Review Weekly Issue 578 11 July 2018

Although it is not always easy for courts to know when to infer acceptance by an employee of a change to their terms and conditions, the Court of Appeal held in Abrahall and ors v Nottingham City Council and anor that if there is a reasonable alternative explanation for why the employees continued to work, then they cannot be deemed to have accepted the new terms.

Thompsons was instructed by Unison, Unite and the GMB to act on behalf of their members.

Basic facts

In 2010, a new “single status” pay system was introduced at the Council which assimilated manual and white collar pay and conditions. The vast majority of those affected agreed in writing to the changes. In March 2011, Nottingham City Council decided not to award incremental pay increases to their employees over the following two years. The unions consulted their members about taking industrial action, but the turnout was too low to justify a full formal ballot.

In early 2013, the Council decided to extend the freeze for a further period, although this time fewer employees were affected. In April 2013 a number of union members started a formal collective grievance procedure but, as this did not resolve matters, they lodged claims for unlawful deduction of wages on the basis that they had a contractual entitlement to annual pay increases.

The Council argued firstly that none of the claimants had a contractual right to the increments; and secondly, that even if they did, they had forfeited that right by virtue of working without protest after the implementation of the pay freezes.

Tribunal and EAT decisions

The tribunal held that, taking the documentation as a whole, none of the claimants had a contractual right to incremental pay increases. As such, it dismissed all the claims.

The EAT allowed the appeal in relation to some staff but dismissed the rest of the claims. The Council appealed the decision in relation to the successful group and the unions cross appealed in relation to the other groups.

Decision of Court of Appeal

The Court of Appeal dismissed the Council’s appeal and instead found that all the claimants had a contractual right to pay progression. As a result, it held that they were entitled to arrears of pay equivalent to what they would have earned if their pay had not been frozen.

With regard to the question as to when courts can infer acceptance of new terms and conditions from the conduct of an employee who has continued to work, the Court held that each case will turn on its own facts. First and foremost, however, if there is a reasonable alternative explanation as to why the employees continued to work, then they cannot be deemed to have accepted the new terms. Indeed, the judge went on to hold that “It is not right to infer that an employee has agreed to a significant diminution in his or her rights unless their conduct, viewed objectively, clearly evinces an intention to do so. To put it another way, the employees should have the benefit of any (reasonable) doubt”. Any changes that are wholly disadvantageous to the employee are also less likely to be deemed to be accepted.

Secondly, if the employees have collectively protested or objected to the new conditions, even if they themselves said nothing, this might be enough to negate the inference that they had accepted a reduction in their contractual entitlement to pay.

The judge accepted, however, that there may come a time when acceptance has to be inferred although again it was difficult to formulate when that “period of time” might arrive.