Making changes to contracts

You should be used to the idea that an employer can’t unilaterally impose a change in somebody’s contract of employment, without it being a breach that the employee can potentially accept and bring their employment to an end. We all aim to seek agreement with staff when we are changing things, so we can all move forward happily.

There has always been a grey area where it is possible for somebody to ‘work under protest’ and not accept change, preserving their rights to complain over the particular change but they’d need to be pretty clear about their objection saying, “I’m working under protest” or they risk being seen as having accepted the change.

A case involving a change to staff pay has thrown the cat amongst the pigeons, and in this particular case a pay freeze was imposed meaning that the normal contractual pay progression up a graded scale was suspended. At the time this was imposed the trade unions had threatened industrial action, however in the end the union couldn’t garner sufficient support in a formal ballot. The employer repeated this again a few years later. This time the union lodged a formal collective grievance and a number of staff brought an unlawful deduction from wages claims.

The issue relating to this went all the way to the court of appeal, with them arguing about the contractual status and the right to have a pay increase. When it reached that court, the court took an approach to the interpretation of the situation that was a very pragmatic approach to the operation of the pay spine, and said that everybody had a reasonable expectation to move up that spine on an annual basis. Thus when discussions were entered into with the trade union about the proposed changes they understood that people were being asked to give up their right to that progression. The interesting point for the purposes of this blog is that the court upheld the employees hadn’t agreed to a variation of their contract.

They acknowledged there is probably a spectrum of circumstances. Continuing to work following a pay cut isn’t necessarily acceptance: a court would have to look at the particular circumstances of the case. At the other end of the spectrum will be a case where it is fair to say an employee loses their rights because they have done nothing. Looking at the circumstances, the judge would have to consider whether continuing in work was capable of a different explanation other than accepting the varied terms. They also accepted that protest or objection via a union will negate an inference of acceptance, even if the employees themselves aren’t saying or doing anything. They also noted historical cases where it seemed that after a certain period of time people were taken to have accepted a change and that seems fairly arbitrary: how do you know when that cut off point is?

In the particular case concerned, the employees had themselves been quiet in the face of the change because of their fears of redundancy. The proposed change was wholly disadvantageous to the staff. It was something that had been imposed unilaterally without any attempt to come to an agreement because of the history of dispute. The employer could have said to the staff that if they continued in work beyond a particular date they would be interpreted as having agreed to the change, but they didn’t. The judge said such an ultimatum wouldn’t automatically mean the staff accepted the change but at least it would have made the position clear (and the employer’s argument stronger). The court wasn’t prepared to accept that failing to take industrial action was the same as accepting a variation. The employees were, therefore, entitled to arears of pay equivalent to what they would have earned if the pay progression had operated in the years that it had been frozen.

What is apparent from the case is that there was a fine balance of arguments on both sides and in determining on which side the balance would fall the court effectively went with the employees, attempting to say that faced with a balanced argument a court is inclined to put the burden on the employer of having to show that agreement had been reached.

If you’re introducing any changes you need to be careful to ensure that you have signed agreement to revise terms, for example, on a signature slip at the bottom of a letter, an email reply voting button agreeing acceptance etc. rather than just assuming that because somebody is continuing working, they are happy to accept the change.