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When does silence and carrying on with the job amount to an agreement to vary a contract of employment?

30th April 2018

There are many reasons why an employer may want or need to vary the terms of the contracts of employment of their staff. Changes to the work, technological changes, changing customer demands and needs to restructure the business often lead employers to need to make changes to the staff contracts. Often there is no problem in making such changes. Obviously where the changes result in clear benefits to the staff- such as increases in pay, or benefits, there will rarely be a problem. Difficulties are more likely to be found when the changes are controversial- such as changes in the hours of work, or re-organisation of the business, or in times when a business needs to make significant cost savings resulting in reductions in benefits to staff.

The best outcome is for the staff to agree the changes that are needed, with new documentation to prove that both the employer and employee are in agreement. But clear agreement is not always possible, and this leaves both the employer and employee in muddy ground, sometimes now knowing what is and is not in their contract anymore, or what the employee can and cannot be required to do in their work for the employer.   

Confusion can arise when the employee continues to do their work for the employer, particularly if the employee has not indicated that they have accepted the changes to their terms and conditions that have been proposed or made by their employer. This will often lead to both the employer and employee needing to know how far (if at all) the silence of the employee can amount to agreement to changes to their terms and conditions of employment, particularly when the employee continues to do the work.

The Court of Appeal has recently examined some of the issues raised when employees continue to provide their work after their employer seeks to make and then goes ahead with making changes to the terms and conditions of their staff.

Essentially in the case of Abrahall v Nottingham City Council the Court of Appeal was asked to consider if when an employee that works without protest after a variation of contract is imposed on them that agreement to the variation of the contract can be inferred.

In this case, Nottingham City Council decided in 2011 to impose a two-year pay freeze. This also involved the usual incremental annual pay progression increases being suspended too. At the time the trade unions opposed the pay freeze, and threatened industrial action. In response the Council argued that the step was required in order to avoid compulsory redundancies. The unions consulted their members, but turnout was too low to justify a formal ballot. Nevertheless, the union expressed its opposition to the pay freeze at a number of meetings with the Council. However, no formal dispute was raised and no employee raised a grievance.

In 2013 the City Council proposed an extension of the pay freeze. At that point the unions activated a collective grievance procedure. Claims were then brought by hundreds of employees for unlawful deductions on the basis that they had a contractual right to the incremental pay increases.    

The Employment Tribunal and appeal courts were required to determine if the staff in question had a contractual right to the incremental pay progression, and if they should be regarded as having accepted a change in their contracts of employment by working for two years under the terms of the pay freeze.

At the Employment Tribunal the claims were rejected. The case was complicated by the fact that there were three groups of employees to be considered, who enjoyed different terms and conditions of employment, and different collective agreements. The judge in the Employment Tribunal went to consider case of Solectron Scotland Ltd v Roper, in deciding if by continuing working the employees had impliedly agreed to the variation in their contracts. The view taken by the Employment Judge was that the inactions of the employees over the two years pay freeze had NOT amounted to an agreement to change the terms of their contracts.

The decisions of the Employment were appealed to the Employment Appeals Tribunal and upwards to the Court of Appeal.

The Court of Appeal ruled that the staff were entitled to the pay progression. The Court also concluded that there had been no variation of the contracts of employment. The Court rejected the assertion that by simply continuing to work without further direct complaint for two years under the pay freezer that the staff had agreed to the variation (ie the pay freeze including a freeze to the annual incremental pay progression). The employees argued that continuing to work alone could never amount to an implied agreement to change the terms of employment.  Similarly, the Court of Appeal also ruled that it is not the case that continuing to work after a contractual payment will always amount to an agreement to vary the terms of employment. The particular circumstances were always to be considered before reaching a conclusion on this issue.

The Court of Appeal took the view that the background of the risks of redundancy of roles being clear if the pay freeze had not been implemented was only a factor that should be taken into account, and it was not decisive in ascertaining the reasons for the lack of objection to the fay freeze by the employees themselves. It was noted that the unions had not stated clearly that they had objected to the pay freeze at the moment it was implemented, and they had also failed to make it clear that staff were continuing to work without prejudice to the entitlement to the incremental pay rises. The Council argued throughout that there was no automatic entitlement to the incremental pay rises.

Given that the stop of the annual incremental pay increase was entirely to the detriment of the employees and was not something that they were told required their agreement, the Court concluded that the staff could not be taken to have agreed to the variation by simply continuing to work. The Court noted that the decision not to take industrial action is not the same as a decision to accept the changes, and the Court also noted that the unions did not indicate that they would take no further steps at all about the pay freeze.

The relevance for future cases the Court of Appeal set out some guidelines on the approach to consider when acceptance of a variation takes place in similar cases;-

1 Determine the question objectively,

2 Acceptance of a variation should only be inferred from conduct where there is no other reasonable interpretation of the conduct in question other than as acceptance of the variation,

3 Where a variation is detrimental to the employee (such as a pay reduction), acceptance of the variation is less likely to be inferred,

4 Collective protest may be enough to demonstrate that the change has not been accepted, even if the individuals did not protest, and

5 An employer is unlikely to be able to rely on silence as agreement if all along they informed the staff that there was no variation of contract, and so agreement was not necessary.

The lesson for employers is clearly to do all they can to explain the situation clearly to their staff, including the reasons for the need for change, and consider their responses and address their concerns. Then the employer should try to obtain express, signed agreement to the change. If the express agreement cannot be obtained the employer needs to spell out the consequences for each employee very clearly and seek their agreement. However, there will always be occasions when agreement cannot be reached. In these cases, the employer needs to be cautious about treating silence with continued work as agreement. From the view of the employee the individual should always raise their concerns and reasons for disagreement clearly and comprehensively. If they cannot be resolved quickly the employee might consider working “under protest”, ie continuing to work but objecting to the proposed variation to their terms and conditions. Obviously that stand-off cannot last for long, and eventually the employee will need to decide if and how they want to enforce their rights to the original contractual terms.              

If you need any further advice on any matter raised in this article do not hesitate to contact us at Hallett Employment Law Services Ltd.

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