Thorne & Ors v House of Commons Commission

Annual pay progression is not contractually guaranteed merely because employment documents refer to progression through a pay band. Where the contractual scheme provides for changes to pay and conditions to be negotiated annually with recognised trade unions, the continuation and amount of progression payments depend on a concluded agreement for the relevant period.

A time-limited collective pay agreement may be incorporated into individual contracts without creating an entitlement to equivalent payments after the agreement expires. An implied term cannot contradict the express contractual machinery governing future pay negotiations.

The claimants were employees or former employees of the House of Commons Commission. They contended that their contracts, read with the Staff Handbook and collective pay agreements, entitled them to annual progression payments until they reached the maximum of their pay bands.

The last collective agreement covered the years beginning 1 April 2008, 2009 and 2010. No subsequent agreement had been concluded. The claimants relied on express contractual terms and, alternatively, custom and practice. The central issue was whether the contractual arrangements created an entitlement to progression payments after 31 March 2011.

1. The claim failed. The claimants established neither the express nor the implied contractual terms alleged.
2. Applying the ordinary principles of contractual interpretation stated in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, the court read the letters of appointment, Staff Handbook and collective agreements together.
3. Paragraph 9.3.2 of the Staff Handbook established a mechanism under which changes to pay and conditions were negotiated with recognised trade unions, subject to limits approved by the Commission. That mechanism was inconsistent with an automatic right to specified future increases.
4. The 2008–2010 pay agreement was expressly limited to those years. Its incorporation into individual contracts did not create a contractual entitlement to progression payments in later years. There was no progression scheme presently in existence after the expiry of the agreement.
5. The wording in the first and second claimants’ appointment letters and paragraph 9.2.2 of the Handbook was too vague to specify either the amount or frequency of progression. The third claimant’s documents specified annual progression, but not its amount. That amount remained subject to negotiation under paragraph 9.3.2.
6. Paragraphs 9.4.5 and 9.4.6 concerned pay arrangements on promotion or appointment within a reporting year. They were subject to whether progression or revalorisation had been agreed for that financial year.
7. Following the principles summarised in Park Cakes Ltd v Shumba [2013] EWCA Civ 974, no implied term could be imposed where it contradicted the express contractual machinery. The claim was therefore dismissed.