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Does Continuing to Work Following an Employer's Breach of Contract Indicate Acceptance of the Breach?

on Friday, 27 April 2018.

In the recent case of Abrahall & Ors v Nottingham City Council & Anor, the Court of Appeal considered whether or not continuing to work following a pay cut that was held to be a breach of contract amounted to acceptance of the lower rates of pay.

The Facts

Nottingham City Council implemented a two-year pay freeze in April 2011. At the time trade unions opposed the proposal and consulted with their members about taking industrial action. Turnout was not high enough to justify a formal ballot but the trade union continued to voice its objections for several months following the pay freeze. In April 2013 the Council decided to impose another freeze. This time several hundred affected employees brought a claim for unlawful deductions of wages on the basis that they had a contractual entitlement to incremental pay increases.

The litigation concerned two key points. First, did the employees have a contractual right to pay increases? Secondly, if they did have such a contractual right, had they waived their right to recover lost salary by continuing to work after the pay freeze had been implemented? 

The Court of Appeal Decision

The employees succeeded in showing they had a contractual right to pay increases. The Court held that all of the employees were contractually entitled to pay progression and accordingly that the withholding of the applicable increments with effect from 1 April 2011 was a breach of contract. It went on to consider the question of whether the employees had waived their right to claim lost pay by continuing to work. 

The Court decided that, on the facts of this case, the employees had not waived their right to claim lost pay by continuing to work. Whilst continuing to work after a contractual variation imposed in breach of contract can amount to a waiver of claims, the facts of each case will be key. 

In this case, given that 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 each of the individual employees. The Court highlighted that their decision would have been easier if the union or its members had stated clearly that they did not accept the pay freeze at the time it was implemented. 

Best Practice

This case highlights the issues employers can face when seeking to make changes to terms of employment without obtaining express consent.

If changes to terms and conditions are proposed, obtaining express consent from each employee affected will protect the employer from claims for breach of contract. However, it can be very time consuming for employers to try and get signed consent letters form a large number of employees. If it is decided to proceed on the basis of deemed consent, employers should give notice of the proposed change and make it clear that, if an employee wishes to object, they must do so in advance of a particular date. 

Employers should be aware that if changes are wholly disadvantageous and unions or employees continue to object after implementation it may be difficult to rely on deemed consent.

It remains the case that, after a period of time, employees who continue to work will have waived their right to bring claims. However, determining when that point is may be difficult. 


For more information, please contact Michael Halsey in our Employment law team on 020 7665 0842.

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