Variation of contracts, acceptance and absence of protest

A city council recently lost a Court of Appeal battle over whether several hundred of its employees were entitled to incremental pay increases from 2011 to 2013. Craig Ludlow and Sarah Bowen analyse the ruling.

Historically, terms and conditions of employment of local government employees had been governed by collective agreements between local authorities and the trade unions representing the workforces. Terms differed as between employees doing, broadly, manual work and those doing “administrative, professional, technical and clerical work (‘APT&C’). One such difference was in their pay structures. The APT&C employees were paid an annual salary and the jobs done by them were assigned to grades, each of which covered a ‘band’ of points on a ‘spinal column’, each spinal column point (‘SCP’) denoting a particular level of salary. APT&C employees were contractually entitled to move up a point in their pay grade each year until they reached the grade maximum, subject only to ‘satisfactory service’. By contrast, manual employees were paid on a weekly or monthly basis by reference to grades which attracted a particular fixed level of pay, without any provision for progression.

The differences between the two groups of employees became an increasing source of tension and in 1997 agreement was reached between employers and trade unions at national level on a detailed framework for the implementation of so-called ‘single status’ for all local authority employees. The implementation of single status had to be achieved by negotiations at local level and this proved to be a very slow process, a deadline of 2010 eventually being agreed nationally.

One of the fundamental changes to be effected by the introduction of single status was that the grading and pay structure for manual employees should be assimilated to that of APT&C employees, with the creation of a new and simplified single spinal column and a revised system of grades to which the jobs of all employees were allocated on the basis of a job evaluation exercise.

Following the 2010 General Election there was a new climate of austerity in the public sector. At its budget consultative meeting in December 2010 – thus only a few weeks after single status had come into effect – Nottingham City Council (‘the Council’) announced to the trade unions a proposal for “freezing incremental progression for 2 years” – that is, that employees would not move up the spinal column in either 2011 or 2012. A formal decision was made on 8 March 2011 and the freeze took effect from 1 April.

The unions did not agree to the proposed freeze, but it was implemented nonetheless, and there were accordingly no incremental pay increases in 2011 or 2012. Not a single employee raised a grievance about the initial 2 year pay freeze, whether individually or collectively with others. The unions did not raise a formal dispute with the Council either, neither was there any kind of formal or informal industrial action. No letters were written after the March 2011 decision by or on behalf of affected employees to the effect that they did not accept the pay freeze and / or were working under protest. Equally, nothing was said or written by or on behalf of employees to the effect that they did accept it.

At the end of the 2 year period, in early 2013, the Council resolved to extend the freeze for a further period. This time the unions responded in April 2013 by activating a formal collective grievance procedure. This did not produce a resolution.

The Issue

The Claimants’ case was that the employees had a contractual right to an annual increment in each of the years 2011 – 2013. The Council’s answer was two-fold: (a) it was denied that that under any of the single status contracts employees had any contractual entitlement to an annual increment; (b) even if there had once been such an entitlement, by their conduct in continuing to work without protest after the implementation of the freeze, the Claimants were to be taken to have accepted a variation in their contracts under which pay progression was suspended for the two years in question. This was only a partial answer to the claim, since the Council accepted that the lodging of the grievance against the further freeze implemented in 2013 precluded any argument that the Claimants had accepted any contractual variation in that respect.

The Court of Appeal’s decision in Abrahall v Nottingham City Council [2018] EWCA Civ 796 was that the Claimants had a contractual right to pay progression and gave some guidance on whether acceptance of a variation of a term of a contract of employment should be inferred, including:

• The inference must arise unequivocally. If the conduct of the employee in continuing to work is reasonably capable of a different explanation it cannot be treated as constituting acceptance of the new terms.
• 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 employee should have the benefit of any (reasonable) doubt.
• Protest or objection at the collective level may be sufficient to negative any inference that by continuing to work individual employees are accepting a reduction in their contractual entitlement to pay, even if they themselves say nothing.
• Where the variation is wholly disadvantageous to the employee (i.e. where there is no compensating advantage), acceptance is less likely to be inferred.
• 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.

Craig Ludlow and Sarah Bowen are barristers at 3PB. Craig can be contacted on 020 7583 8055 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it , while Sarah can be reached on 0121 289 4333 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it .