Thinking of freezing staff pay?
Why silence is not always golden when changing terms of employment.
When an employer wishes to change an employee’s terms of employment it is best practice to secure the employee’s express written agreement. Where this is not achievable, some employers may impose the new terms anyway and rely on the employee continuing to work as implied agreement to the change. However, this approach comes with significant risks, as highlighted by a recent case in the Court of Appeal.
The case concerned employees of Nottingham City Council. The employees were contractually entitled to incremental pay increases but did not receive them after the Council imposed a two-year pay freeze in 2011. Trade unions representing the employees made their opposition clear but ultimately no industrial action was taken and no employee submitted a grievance. When the Council sought to impose a further freeze in 2013, the employees brought claims for unlawful deductions from wages since 2011.
The Court of Appeal allowed the employees’ claims. Although critical that neither the unions nor the employees had unequivocally rejected the pay freeze when it was implemented, the Court noted that failure to take industrial action and continuing to work was not the same as an implied acceptance.
In reaching its decision the Court highlighted that the change in terms was wholly disadvantageous to the employees, the Council had not made it clear to the employees that continuing to work would be deemed acceptance of the change, and that there had been “strenuous protest” by the unions both up to and beyond the implementation of the pay freeze.
The Court’s decision demonstrates the dangers of relying on an employee’s silence, or failure to state that they are ‘working under protest’, as acceptance of new terms. Although implied consent may apply in some circumstances, this is more likely where a package of both positive and negative changes is introduced and/or an employee has taken some step which can only be understood as an acceptance of the variation.
Where it is not possible to secure employees’ written agreement to a change in terms, we recommend employers take legal advice on the options available. We have extensive experience of handling change of terms scenarios in practice and would be happy to advise further on the risks and benefits of express consent, implied consent or dismissal and re-engagement.