Does silence constitute acceptance to a contractual variation?

The Court of Appeal has recently confirmed in Abrahall and others v Nottingham City Council that a group of employees’ silence did not constitute acceptance to a contractual variation unilaterally imposed by their employer.

The employer advised it would impose a pay freeze across its business for a two-year period in response to the austerity in the public sector that followed on from the 2010 General Election. The trade unions disagreed with this decision and consulted with their members about taking industrial action prior to its implementation. Despite the trade unions’ and members’ opposition to the pay freeze, no industrial action was taken. The employees continued to work at the employers’ organisation and failed to raise any complaints during this period. Had this pay freeze not been imposed the employees would have been entitled to an annual pay increment during this period.

At the end of the two years the employer proposed to extend the pay freeze for a further period. It was at this point, following the failure of a grievance procedure, that claims were made against the employer for unlawful deduction of wages. The employees claimed they each had a contractual right to the annual increment and so were owed the amount they would have earned during the two-year period the pay freeze was imposed. The employment tribunal dismissed the claims in their entirety. The EAT allowed one out of five of the groups of employees to appeal. This decision was appealed by the Respondent and two other groups of employees cross appealed. 

The Court of Appeal ruled in favour of these three groups and held that their silence did not amount to acceptance to the contractual variation. The employees were entitled to receive the pay they would have received had the pay freeze not been imposed.

The judge cited previous case law and relayed the point made by Elias J that if employees continue to work without protest following implementation of a contractual variation, taking the good parts as well as the bad, it is usually easy to infer that they have accepted the package in its entirety.  But where that is not the case it is more difficult to say that they are not simply putting up with a breach of contract because they are not prepared to take positive steps to remedy it, whether by taking industrial action or by bringing proceedings. 

This decision highlights the uncertainty an employer may face if it relies upon implied acceptance rather than an express agreement between itself and the employee. In practice, employees will often agree to a variation of their contract of employment by conduct. This is more likely to be inferred where the variation is to the employee's benefit, for example, a salary increase. On the other hand, if a variation is to the employee's disadvantage and there is either no compensating advantage given to the employee there may be more difficulty in determining whether there has been acceptance by conduct, such as in this case.