EAT decision highlights value of clear contracts and written variation clauses in consultancy arrangements

Background

The EAT dismissed the appeal. It confirmed that the written consultancy agreement included both an entire agreement clause and a no oral variation clause. These provisions made clear that the agreement represented the whole of the parties’ contractual relationship and could only be varied by a signed written agreement.

Although the Employment Judge had mistakenly treated the alleged oral agreement as valid despite those clauses, the EAT found that this did not affect the outcome. The core issue was the interpretation of the original written agreement. Applying established principles of contractual interpretation, the EAT concluded that the 40% fee only applied to work the consultant had personally undertaken. There was no basis for extending this percentage to fees generated by other fee earners.

The EAT also rejected the argument that the consultant had suffered an unlawful deduction from wages. On the proper construction of the agreement, he was only entitled to £5,000 per month in respect of the work he had done for client A. As there had been no failure to pay sums properly due, no deduction had occurred.

Learning points for employers

This case highlights the value of clear, consistent consultancy agreements—particularly where pay is linked to fees generated. Employers should ensure contracts state whether payment relates only to the consultant’s own work or includes work by others. Entire agreement and no oral variation clauses will usually be upheld, so any changes to key terms should be put in writing and signed. Relying on informal arrangements risks uncertainty and dispute.

For more information or advice, please contact Ella Straker in our Employment team.