At various times during the employment relationship there may be a need to vary the contract of employment. The most obvious example of a variation of contract is a pay rise.
In the majority of situations, variations are either expressly accepted by the employee (such as by signing a new contract or a letter setting out the change) or it can be inferred by their conduct, such as continuing to work without protest (as is the case when a pay rise is given).
However, problems can arise where the change does not immediately impact on the employee and/or where the change is wholly disadvantageous to them.
Disadvantageous variations
In the recent case of Abrahall v Nottingham County Council, the Court of Appeal confirmed that even where an employee continues to work for a prolonged period of time, without protest, following a variation of contract, their acceptance of the change will not necessarily be inferred.
In the Abrahall case, the court found that the employees had been contractually entitled to annual incremental pay progression. However, the council had unilaterally imposed a 2 year pay freeze. This action was taken as an alternative to making mass redundancies and was made following strenuous objections by the union representing the employees although no industrial action was taken. Neither the council, union nor the employees, clearly set out their positions in relation to the pay freeze once it had been implemented and the employees continued to work without protest.
The Court of Appeal held that in the circumstances of the case, it could not be inferred that the employees had accepted the variation of their contracts despite the lengthy period of time that the employees had worked without protest. As such they were all entitled to back pay in respect of the pay increases they should have received during that 2 year period.
Why wasn’t acceptance of the change inferred?
This case may sound concerning to employers but its impact is likely to be limited to cases where the changes are wholly disadvantageous.
In those cases, depending on the circumstances, it may be possible to infer another explanation as to why the employees continued to work, such as being concerned about being made redundant, as was found to be a factor in the Abrahall case.
Further, where there has been a collective protest or objection by a union on behalf of the employees and then the situation not clarified, by either side, a court may be reluctant to make an inference.
How do I make changes?
Changes that are advantageous to an employee, or changes which are part of a package (such as on promotion) containing some good and some bad parts, are still highly likely to be taken as accepted by the employee if they continue to work without protest.
Where changes are wholly disadvantageous, the following steps should always be carefully considered:
-Can the employee be compensated in some way for the proposed change by you being able to offer them something advantageous?
– Have you consulted the employees (and/or their representatives) over the reasons for the proposed changes?
– Have any suggestions by employees or their representatives been taken on board? If they are not workable, can you clearly explain why?
– Can you agree to review the changes and circumstances after a certain period of time?
– Have you a clear record of their consent to any changes that have been agreed?
In the event that the changes cannot be negotiated, the safest course of action in terms of providing certainty would be to go through a process of dismissal and offering re-engagement on the new terms. Depending on the number of employees involved, this could require you to comply with collective consultation requirements as well as a fair process for the individuals involved.
