From time to time, employers make unilateral changes to their employees’ terms and conditions, hoping that the employees do not object.  The assumption is that if the changes are implemented and the employees do nothing about it, after a while, the employer can infer that the change has been agreed.  But is this a reasonable assumption to make?

Abrahall v Nottingham City Council

In a recent case heard by the Court of Appeal, employees of Nottingham City Council did not receive the annual pay increase to which they were contractually entitled, because the council had unilaterally implemented a two-year pay freeze.  When the pay freeze was introduced, the employees (and their unions) expressed their dissatisfaction, but took no industrial action and raised no internal grievances.  However, after 2 years, the council proposed to extend the pay freeze.  At this point, the unions objected and the affected employees brought claims against the council, alleging that their contracts of employment had been breached.

A question arose as to whether, by their conduct, the council’s employees had effectively agreed to the variation of their contracts of employment in relation to the pay freeze.

The Court of Appeal’s decision

The Court of Appeal concluded that the employees had not agreed to the variation of their contracts of employment.  The Court suggested that the bar should be set quite high in cases such as these.  In effect, acceptance should only be inferred where the conduct of the employee(s) can only lead to the conclusion that they have accepted a variation to their contracts.  The more disadvantageous the variation, the less likely it is that an inference of agreement can be made.  Furthermore, an employer’s case is weakened if they have previously argued that no contractual variation is taking place; this might be the case if the employer has argued that it has the power to make the change(s) in question, within the terms of the original contract.

What does this mean?

This case underlines the risks associated with employers implementing contractual variations without clearly given consent.  It is possible for lengthy periods of time could go by, with the employee still enjoying the right to claim that the contract of employment has been broken.  With this in mind, if you are thinking about varying the terms and conditions on which you employ your staff, you would be well advised to take specific legal advice.