If an employee works without protest following changes to their terms of employment, they will be deemed to have accepted them, right? Don’t count on it, says the Court of Appeal in Abrahall v Nottingham City Council.
An employer who wants to make adverse changes to its terms of employment is likely to be met with some resistance. That resistance can take several forms: industrial action, resignation (followed by a claim for constructive dismissal); or an employee might remain in employment and pursue a claim for breach of contract / unlawful deduction from wages (known as ‘standing and suing’).
Alternatively, an employee might do nothing. They have not expressly accepted the changes (e.g. by signing a new contract), but nor have they taken any form of opposing action – they just stay quiet and keep working. What then, is the status of the variation?
Silence and Implied Acceptance
The case law on acceptance of contractual variations tends to look firstly at the question of whether or not the change has an ‘immediate impact’ on the employee. Take, for example, an employer imposing a 5% pay cut. The effects are felt immediately by the employee. If the employee continues to work without objection, he/she will likely be deemed to have accepted the change. In contrast, if the employer introduced a new mobility clause or a restrictive covenant into the contract, this has little or no bearing on the employee’s day-to-day work. As such, his/her silence cannot be interpreted as an implied agreement to the new terms.
Working Under Protest
But what about the situation where an employee has communicated an objection to the change and is merely ‘working under protest’? Clearly the employee has not accepted the change and so this should be sufficient to preserve any legal claims, but for how long? Is there a cut-off point at which the objection, without some form of further action, is converted into acceptance by the fact of the employee continuing to work?
These issues were considered by the Court of Appeal in Abrahall.
The Council had imposed a two-year pay freeze, meaning the employees would not receive annual increments to which they were contractually entitled. The employees’ union balloted on strike action, but none was taken, and no employee raised a grievance or pursued any claim throughout the two-year period.
When the Council subsequently sought to extend the freeze period, the unions activated a collective grievance procedure and employees sued for unlawful deductions from wages.
The key issue before the Court was whether the employees were deemed to have accepted a variation to their contract by working for two years under the pay freeze without complaint.
Time does not heal all wounds
A critical factor in the Court’s determination was the fact that union had initially made clear that they opposed the change. That ‘collective objection’ was sufficient for the employees to be working under protest, even though the employees themselves had not complained.
But even so, this was an ‘immediate impact’ type of situation and so it could certainly be argued that, after two years without action, that initial objection had fallen away and turned into acceptance.
Not so, said the Court, ruling that the employees had not accepted the change to their contracts and were entitled to pursue their claims. As the change was wholly detrimental to the employees, a decision not to take steps to remedy it (such as industrial action or legal proceedings) was not the same as a decision to accept the variation. In short, an unequivocal “no” cannot be turned into a “yes” simply by silence over a period of time.
Action Stations
Employers making contractual changes cannot be complacent about employee acceptance and need to be live to the risk that they are storing up claims for the future. If express agreement to the changes cannot be secured through consultation or inducement, employers may have to consider more advanced strategies such as dismissing staff with the offer of immediate re-engagement on the new terms. This is a complex area and professional advice should be sought to fully understand the risks involved.