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Variation of Contracts: When Silence = Acceptance

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If an employee works without protest after a variation of contract is imposed, should acceptance be inferred?

Not necessarily, held the Court of Appeal in Abrahall v Nottingham City Council.

When Nottingham City Council sought to regularise a variety of pay systems, it implemented a single system with pay scales determined on a spinal column points basis. The Court of Appeal found the employees were contractually entitled to annual incremental pay progression.

Soon after the new system was implemented, the council brought in a two-year pay freeze. Throughout that period, there was no industrial action (save for a consultative ballot) and no affected employee raised a grievance. When Nottingham proposed an extension of the freeze, the unions activated a collective grievance procedure and then brought these claims.

Apart from deciding whether there was a contractual right to incremental pay progression, the key issue before the Court of Appeal was whether the employees should be taken to have accepted a variation of their contracts by working for two years under the pay freeze.

The Court of Appeal held that they should not, setting out a number of helpful principles on whether acceptance should be inferred, including:

• the question is to be determined objectively;

• acceptance of a variation of contract should only be inferred from conduct where that conduct brooks no other reasonable explanation save for acceptance;

• where the variation is wholly disadvantageous, acceptance is less likely to be inferred;

• collective protest may suffice to negative any inference otherwise to be drawn even if the individual employees themselves say nothing;

• an employer's reliance on inferred acceptance will be weakened where the employer represented that there was no variation of contract and thus that acceptance was unnecessary.

Thanks to Jason Braier of Field Court Chambers for preparing this case summary.