A question we are often asked by employers is “If an employee works without protest after a variation of contract is imposed, should acceptance by the employee be inferred?” Interestingly, a recent case in the Court of Appeal has just considered this point.
Background of the Case
In the case of Abrahall v Nottingham City Council, Nottingham City Council tried to regularise a variety of pay systems.
Soon after a new system was implemented, the Council adopted a two-year pay freeze. Throughout that period there was no industrial action (apart from a consultative ballot) and no affected employee raised a grievance.
When the Council proposed an extension of the freeze the Unions activated a collective grievance process and then brought these claims.
Court of Appeal Decision
In this case, the Court of Appeal did have to decide whether there was a contractual right to incremental pay progression and they found the employees were contractually entitled to annual incremental pay progression.
However, the main issue it had to decide on was whether the employees should be taken to have accepted a variation of their contracts for working for two years (without protest) under the pay freeze.
The Court of Appeal held it should not be concluded that the employees had accepted the variation to their contracts just because they did not protest for two years.
The Court also set out some principles on whether acceptance of the contact should be inferred. These principles are helpful to employers and HR personnel when considering this question and include but are not limited to the following:
a) the question is to be determined objectively;
b) acceptance of a variation of contract should only be inferred from conduct where that conduct shows no other reasonable explanation save for acceptance;
c) where the variation is wholly disadvantageous, acceptance is less likely to be inferred;
d) collective protest may suffice to negative any inference otherwise to be drawn even if the individual employees themselves say nothing; and
e) an employee’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.
It would seem therefore that to some degree, silence does not equal acceptance of the new employment contract!
Variation of employment contracts is a key area of employment law and HR and occurs in all areas of business. It is often an area that confuses employers and that can also result in grievances and employment disputes and claims, if an employer does not understand its legal position or fails to adopt the correct approach and content in communications with employees.
Farleys Employment Law & HR team are experts in variation of contracts of employment, handling employee grievances, disputes and defence of Employment Tribunal claims and settlements. For further information or assistance please contact us on 0845 287 0939 or contact us by email.