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Implication / Variation of Terms

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[Thanks to Naomi Cunningham of Outer Temple Chambers for preparing this case summary]

Was an agreement to award a pay increase calculated in one of two alternative ways unenforceable because uncertain? No, says the EAT (Slade J presiding) in Anderson & ors v London Fire & Emergency Planning Authority .

The claimants' union and the respondent had negotiated a 3-year pay settlement as part of a collective agreement, incorporated into the claimants' contracts of employment. The agreement committed the respondent to award a pay increase of either 2.5% or the NJC settlement plus 1%. The ET thought this was no more than an 'agreement to agree'. They relied on two reasons. First, the NJC settlement was yet to be determined at the date of the collective agreement; and secondly, the agreement was silent as to how the choice was to be made between the two options.

The EAT disagreed. The NJC settlement would be certain at the relevant time; and many contracts give parties a choice: so long as they make one of the permitted choices, they are not in breach.

But the claimants' argument that the agreement should be subject to an implied term obliging the respondent to choose the greater of the two possible awards was rejected by the EAT: the words used were clear.