Abrahall & Ors v Nottingham City Council & Anor

An employee may accept a contractual variation through continued work, including a disadvantageous reduction in contractual pay. Acceptance arises only where the employee’s conduct, viewed objectively and in context, unequivocally demonstrates agreement. The employee receives the benefit of any reasonable doubt.

Collective protest may prevent individual employees’ continued work from signifying acceptance. Relevant considerations include whether the change was wholly disadvantageous, whether the employer clearly sought agreement, whether the employer asserted that no variation was needed, and whether protests continued after implementation.

Contractual documents must be construed together and in their known context. A pay structure comprising grades and multiple spinal column points may confer a contractual right to annual progression, even where the principal contract does not state that right expressly.

The Council introduced a single-status pay structure under which jobs were assigned to grades containing several spinal column points. It subsequently froze incremental pay progression. Employees brought unlawful deduction from wages claims under Part II of the Employment Rights Act 1996, alleging a contractual entitlement to annual increments.

The Employment Tribunal dismissed all lead claims. The Employment Appeal Tribunal allowed the claims of employees who had positively accepted the new terms but dismissed those of employees dismissed and re-engaged on those terms and employees recruited after their introduction.

The Council appealed concerning the first group. The other two groups cross-appealed. The issues were whether each group had a contractual right to progression and, if so, whether continued work without sustained individual protest amounted to acceptance of the pay freeze.

1. The Council’s appeal was dismissed and the employees’ cross-appeals were allowed. All three groups had a contractual right to progress annually through the spinal column until reaching the maximum for their grade. Withholding the increments was therefore a breach of contract.

2. The principal contract’s references to a pay band and spinal column point, construed in their known context, implied a system of progression. For employees who accepted the new terms directly, the accompanying booklet expressly amplified the contract by stating that pay would increase annually. The collective agreement and Pay Policy did not remove that entitlement. The existence of grades containing several pay points inherently contemplated regular progression, while the non-contractual provisions addressed the special position of employees entering a grade part-way through a year.

3. Employees dismissed and re-engaged reasonably expected the same substantive terms as colleagues who had accepted the changes directly. Their refusal to accept the original offer did not signify agreement to less favourable re-engagement terms. New recruits likewise acquired the right through the principal contract and the incorporated contractual part of the Pay Policy.

4. An employee may in principle accept a contractual pay reduction through continued work. The inference is fact-sensitive and must arise unequivocally. Conduct reasonably capable of another explanation is insufficient, and the employee receives the benefit of any reasonable doubt. Collective protest may negative an inference of individual acceptance, even where individual employees remain silent.

5. No variation was accepted here. The freeze was wholly disadvantageous; the Council did not present it as requiring individual agreement and maintained that it already possessed the right to impose it. The unions protested before and after implementation, and abandoning industrial action did not itself signify contractual agreement. Later silence could represent resigned tolerance of a breach rather than consent. The Employment Tribunal was entitled to conclude that the employees had not unequivocally changed their position.

6. Sir Patrick Elias agreed and emphasised that disadvantageous variations may exceptionally be accepted by conduct, including to avoid redundancy. On these facts, however, neither side clarified its position after the initial objections. The Senior President of Tribunals agreed with both judgments.

1. Court of Appeal (Civil Division): The Council’s appeal concerning group 1 was dismissed. The cross-appeals of groups 2 and 3 were allowed. All three groups were entitled to arrears reflecting the frozen pay progression.
2. Employment Appeal Tribunal: Mitting J allowed the employees’ appeal for group 1 but dismissed it for groups 2 and 3.
3. Employment Tribunal: Employment Judge Camp dismissed the claims of all lead claimants.