Employees win Court of Appeal dispute with council over pay increases

Nottingham City Council has lost a Court of Appeal battle over whether several hundred of its employees were entitled to incremental pay increases with effect from April 2011.

In Abrahall & Ors v Nottingham City Council & Anor [2018] EWCA Civ 796 the claimants challenged the council’s 2011 decision to stop them receiving pay rises as they moved up salary scales linked to their jobs. The council made a similar decision, albeit affecting fewer employees, in 2013.

The UNISON union claimed the council was guilty of the unlawful deduction of wages under Part II of the Employment Rights Act 1996 because staff had a contractual right to incremental wage progression, and therefore the pay freeze was a breach of contract.

By a judgment sent to the parties on 12 August 2015, Employment Judge Camp, sitting at Nottingham, dismissed the claims in their entirety.

The claimants appealed. By a judgment handed down on 11 May 2016 the Employment Appeal Tribunal (Mitting J, sitting alone) allowed the appeal in relation to one group of claimants but dismissed it in relation to the remaining groups.

What was before the Court of Appeal was the council's appeal as regards the group 1 claimants and a cross-appeal by the group 2 and 3 claimants.It ruled that the claimants in all three groups enjoyed, at the point of the implementation of the freeze, a contractual right to pay progression, and accordingly that the withholding of the applicable increments with effect from 1 April 2011 was a breach of contract.

UNISON general secretary Dave Prentis said: “The judges have found unanimously in favour of the council employees. Nottingham City Council was completely in the wrong to try to prevent its staff from getting the pay rises they were due.

“In any organisation, where salary scales are linked to jobs, employees’ contracts of employment state that each year, as they gain more experience and move up a point, their wages should increase.

“While there’s much sympathy for cash-strapped councils struggling to provide services for local communities, while the government is slashing their funding, Nottingham shouldn’t have been making its employees pay the price. Now staff can look forward to receiving all the cash they are owed.”

Claire Horne, an employment rights solicitor at Thompsons who advised the claimants, said: “This represents a significant win for those employees who were at the receiving end of austerity measures for a number of years.”

A spokesman for Nottingham City Council said: “We are extremely disappointed with the Court of Appeal’s decision in relation to the historical freeze on incremental pay rises in connection with the council’s former employment contracts. This could result in a major additional cost at a time when our budget is under huge pressure as a result of Government cuts.

“The freeze on incremental pay rises was introduced in 2011 as part of the £232m of savings the council had to make, with its main Government grant cut by two-thirds. The decision to freeze these pay rises was taken to avoid cuts to jobs and services wherever possible and has saved the equivalent of around 1,000 full time jobs.

“Had it not been introduced, further significant cuts to services and job losses would have been unavoidable.”

The spokesman added: “We will review the detail of the decision to assess the full financial implications for the council. As these could be significant, we are planning to lodge a further appeal.”