KEITH CRANE & Ors v SECRETARY OF STATE FOR THE DEPARTMENT FOR ENVIRONMENT, FOOD AND RURAL AFFAIRS (DEFRA)

Check-off arrangements may form contractual terms of civil servants’ employment where the governing documents use obligatory language and limit the circumstances in which the facility may be withdrawn. Continued employment after withdrawal does not unequivocally establish acceptance of a variation where there has been clear collective objection, related litigation, or other circumstances consistent with preserving contractual rights. Direct-debit arrangements may be reasonable mitigation rather than acceptance.

Waiver by estoppel requires a clear and unequivocal promise or representation that strict legal rights will not be enforced, together with reliance or an inequitable change of position. Under the Contracts (Rights of Third Parties) Act 1999, a union may enforce contractual check-off provisions where they confer a benefit and the contract contains no sufficient indication against enforcement.

The Individual Claimants were civil servants employed by DEFRA or its agencies and members of PCS. Their union subscriptions had historically been collected through payroll check-off. DEFRA removed the facility in January 2015 after consultation.

The claim concerned whether check-off was contractually binding, whether the Individual Claimants had accepted its removal or waived any resulting breach, and whether PCS could enforce the relevant terms as a third party under the Contracts (Rights of Third Parties) Act 1999. The court also considered whether any variation would nevertheless be ineffective against PCS under that Act.

1. Contractual entitlement. The check-off provisions formed part of the contractual framework. The language of the Civil Service Pay and Conditions of Service Code was obligatory, not merely authorising. The limited express power to withdraw check-off during official industrial action confirmed that there was no wider unilateral power of withdrawal. The same conclusions applied to the Civil Service Management Code and departmental documents.
2. No implied notice term. There was no implied term permitting DEFRA to withdraw contractual check-off on reasonable notice. Such a term was not necessary for business efficacy and was not obvious in the employment context.
3. No acceptance or waiver. Continued employment could in principle amount to acceptance of an immediate contractual variation, but the inference had to be unequivocal. Collective protest by PCS was sufficient to negative acceptance even though the Individual Claimants themselves did not object. The ongoing Cavanagh litigation, the absence of any withdrawal of PCS’s objection, and the equivocal conduct of both sides prevented that inference. Moving to direct debit was reasonable mitigation and was equally consistent with rejecting the breach. Later role changes did not replace all existing terms. Waiver by estoppel also failed because there was no clear and unequivocal representation and no sufficient reliance or change of position.
4. PCS’s third-party rights. The check-off provisions conferred a benefit on PCS. Nothing in the contractual material displaced the statutory presumption that a third party may enforce such a term under section 1 of the Contracts (Rights of Third Parties) Act 1999. The defence under section 3 failed because the Individual Claimants had not waived the breach.
5. Alternative section 2 analysis. Even if there had been an agreed variation by conduct, it would have been ineffective against PCS under section 2 because PCS had not consented. PCS had assented to and relied on the check-off term through its long use of the arrangement and its objection to removal.

The principal issues were therefore determined in favour of the Claimants.