Henry v London General Transport Services Ltd

In a claim for unlawful deductions, the employer bears the legal burden, on the balance of probabilities, of proving that employees accepted revised contractual terms. Where revised terms have operated for a lengthy period, employees asserting non-acceptance carry an evidential burden arising from the circumstances. Acceptance may be inferred from conduct, although clear protest and limited continued performance can preserve rights. Prolonged work under, and payment according to, new terms may support affirmation. The Employment Rights Act 1996 does not make acceptance by conduct legally impossible. Custom and practice may incorporate contractual terms, but proof is on the balance of probabilities and a higher standard of strict proof is inappropriate. The appeal was refused and the matter remitted because the tribunal’s reasoning contained errors of law.

Employees at Stockwell bus station challenged reductions in pay introduced under a framework agreement between their employer and the recognised trade union. They declined to sign the revised terms, petitioned for a ballot, worked the new rotas and were paid under the revised terms for about two years before bringing complaints under section 23 of the Employment Rights Act 1996.

The Employment Tribunal found the complaints well founded. The Employment Appeal Tribunal allowed the employer’s appeal, dismissed a cross-appeal on other findings and remitted the complaints for rehearing. The central issues before the Court of Appeal concerned the burden of proof, acceptance by conduct, statutory restrictions on wage deductions, and the incorporation of collective terms through custom and practice. The narrower question on remission was whether the admitted practice operated without a ballot.

1. Disposition. The appeal was refused. The Employment Tribunal’s decision could not stand, and the complaint was remitted in the terms ordered by the Employment Appeal Tribunal. The respondent received two-thirds of the appeal costs, summarily assessed at £8,975.

2. Burden of proof. Lord Justice Pill held that the legal burden of proving acceptance of revised terms lay on the employer, on the balance of probabilities. The Employment Appeal Tribunal’s neutral approach was therefore wrong. However, where revised terms had operated for about two years before proceedings, the employees asserting non-acceptance bore an evidential burden arising from those circumstances.

3. Acceptance by conduct. Acceptance of a contractual variation may be implied. Applying the principle in WE Cox Toner International Ltd v Crook [1981] ICR 323, continued performance after a clear objection does not necessarily amount to affirmation if it is limited and rights are reserved. Conduct only consistent with continued performance normally does. Pill LJ considered it extremely difficult, on the facts found, to conclude that employees who had worked the revised rotas and accepted reduced pay for two years had not accepted the terms. He did not finally determine that issue because it remained for rehearing. The court would not decide it by reference to alleged moral repugnancy.

4. Statutory provisions. Sections 13, 14 and 23 of the Employment Rights Act 1996 did not prevent acceptance by conduct of a variation reducing wages. If accepted, payment under the varied terms was not a deduction under section 31 or payment of less than the wages properly payable under section 13(3).

5. Custom and practice. The burden of proving custom and practice was the balance of probabilities. The word strict was inappropriate because it suggested a higher standard, although clear evidence was required and scrutiny had to be commensurate with the circumstances. If the relevant custom was established, it could cover all contractual terms; the Employment Tribunal had erred in distinguishing fundamental from non-fundamental changes without explaining the legal basis.

6. Remission. The real issue was narrow: whether the accepted practice that a union-employer agreement bound individual employees operated where no ballot had been held. The Court of Appeal declined to analyse the Employment Appeal Tribunal’s broader reasoning or lay down advance guidelines for the rehearing. Lord Justice Longmore and Sir Martin Nourse agreed with Pill LJ.

• Court of Appeal. [2002] EWCA Civ 488: refused the appeal and ordered remission to the Employment Tribunal.
• Employment Appeal Tribunal. Decision delivered on 30 November 2000: allowed the employer’s appeal, dismissed the employees’ cross-appeal on other findings and remitted the complaints for rehearing.
• Employment Tribunal, London South. Decision dated 5 November 1999: found the unlawful-deduction complaints well founded, holding that the revised terms had not been incorporated or affirmed on the evidence.