This case concerns the variation of contractual terms and whether, by continuing to work, the claimants accepted the changes imposed, namely a two-year freeze on their pay.

The Court of Appeal was posed with the question of whether there was a contractual right to incremental pay progression; and whether the employees were deemed to have accepted the variation of their contracts by continuing to work without protest under the pay freeze.

In March 2011, the Council imposed a two-year pay freeze meaning the usual incremental pay progression was suspended and employees would not move up the spinal column. Trade unions voiced opposition to the proposal, threatening industrial action, however, greater numbers were needed to justify a formal ballot. The union asserted its resistance to the pay freeze yet no formal grievance or trade dispute was initiated.

It was only when the Council sought to extend the freeze that unions activated a collective grievance procedure and numerous affected employees brought claims for unlawful deductions arguing they had a contractual entitlement to incremental pay increases.

The employment judge held the claimants did not have a contractual right to annual pay progression, yet said that their actions or inactions did not amount to acceptance of rearrangements in their pay.

On appeal, the EAT concluded only one part of the group was contractually entitled to pay increases and agreed with the employment judge that their continuing to work did not amount to acceptance.

The Court of Appeal rejected this argument, stating all of the claimants were contractually entitled to pay progression. Underhill LJ claimed continuation of an employee’s normal working activities can in some circumstances constitute acceptance. He said the question depends on the particular circumstances of the case and identified a number of principles to apply when determining whether acceptance should be inferred:

1. The question is to be determined objectively;
2. If the employee's conduct in continuing to work is reasonably capable of a different explanation it cannot be treated as constituting acceptance of the new terms;
3. Where the variation is wholly detrimental or a disadvantage to the employee in question, acceptance is less likely to be inferred;
4. Collective protest may be sufficient to negative any inference of acceptance.

The Court of Appeal held the claimants’ motivation to continue working (i.e. the threat of collective redundancy) was relevant but not decisive. Underhill LJ said it was regrettable that the claimants or their union did not announce at the time of implementation that they did not accept the pay freeze and that their continuing to work was without prejudice to that position.

However, as the stay in pay was detrimental in its entirety, and as union members voiced some opposition to its implementation, continuing to work could not be taken as unequivocal acceptance of the variation of terms.

“I find it hard to see how the Claimants' continuing to work … could be taken as an unequivocal acceptance of a variation which might have been the subject of industrial action. A decision not to take industrial action is not the same as a decision to accept a variation, and there is no suggestion that the unions made it clear that they would take no further steps, still less that they would now reluctantly agree to the freeze”
www.bailii.org/ew/cases/EWCA/Civ/2018/796.html