When silence amounts to acceptance of change in contract

Should an employee’s acceptance of a change to his contract be inferred if he continues to work?

Not necessarily, according to the Court of Appeal in a case in which the Court had to decide whether continuing to work following a pay freeze that was ruled to be a breach of contract prevented the employees from claiming arrears of pay.

The claimants in that case were Council employees who received incremental annual pay rises until March 2011, when the Council imposed a two-year pay freeze. At the time, the union voiced its objection to the pay freeze but did not take industrial action and no individual employee raised a grievance. However, when the Council decided to impose a further pay freeze in April 2013, several hundred employees brought claims for the wage arrears dating back to 2011.

Upholding the employees’ claims, the Court of Appeal ruled that the pay freeze in 2011 was a breach of their contract under which they had a right to pay increases. The employees had not waived their right to claim breach of contract by continuing to work for 2 years.

The Court of Appeal listed the principles for whether acceptance should be inferred, including:

• acceptance of a variation of contract should only be inferred from conduct which 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

The Court decided that these employees had not waived their right to claim lost pay by continuing to work. Whilst continuing to work after a change in contract imposed in breach of contract can amount to a waiver of the right to claim, the facts of each case will be crucial. In this case, as the change was wholly disadvantageous to the employees and was not put to them as something on which their agreement was required, and given that the unions had continued to object after the date the pay freeze was implemented, it was difficult to conclude that continuing to work amounted to acceptance of the pay freeze by the employees.