United Kingdom Employment Appeal Tribunal
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URL: http://www.bailii.org/uk/cases/UKEAT/2016/0010_16_0405.html
Cite as: [2016] UKEAT 0010_16_0405, [2016] UKEAT 10_16_405
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EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8AE
At the Tribunal
Before
THE HONOURABLE MR JUSTICE MITTING
MRS M ABRAHALL & OTHERS APPELLANTS
(2) NOTTINGHAM BENEFITS & REVENUES LTD RESPONDENTS
Transcript of Proceedings
JUDGMENT
APPEARANCES
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(One of Her Majesty’s Counsel) Instructed by: Thompsons Solicitors City Gate East Tollhouse Hill Nottingham NG1 5FS
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(One of Her Majesty’s Counsel) Instructed by: HR Law Direct Ltd Arbor Lodge Blidworth Waye Papplewick Nottingham NG15 8GB
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SUMMARY
CONTRACT OF EMPLOYMENT
Whether local authority employees, most of whom had been contractually entitled to an annual increment within grade, and the remainder of whom accepted a promise of it, were deprived of it by the terms of a collective agreement made subsequently (in most cases). They were not, because the collective terms did not, on a true interpretation, take away the right.
THE HONOURABLE MR JUSTICE MITTING
1. In 2010 Nottingham City Council and its subsidiary, Nottingham Benefits & Revenues Ltd, which I treat together, employed 7,200 people, approximately 600 in schools and 6,600 in other capacities. This case concerns the latter. Staff in this category were paid under two distinct systems. Manual workers, about 40 per cent of the total, were paid a wage plus overtime, bonuses and allowances. Any increase in pay was negotiated year on year by their recognised unions. Administrative, professional, technical and clerical (“APTC”) staff, about 60 per cent of the total, were paid a salary, which was fixed by reference to a grade, within which there was provision for an annual increment based on length of satisfactory service up to a ceiling; a Spinal Column Point (“SCP”) system. A member of the APTC staff who had not reached the ceiling for his grade would receive an annual increment in addition to any pay increase negotiated by his recognised union. The distinction was believed to operate unfairly as between men and women. A national collective agreement made in 1997 between the Local Government Association and registered trade unions set out a detailed framework for achieving the aim of removing this distinction. Prior to 2010 long running negotiations between the Respondents and the three recognised unions - GMB, Unite and Unison - took place in an attempt to achieve a collectively agreed solution. They did not succeed.
2. In accordance with the national agreement, the Respondents remain determined to achieve pay arrangements that abolished the principal differences between the two pay structures then in place, so-called “single status”. Accordingly, on 26 March 2010 their appointments and conditions of service committee (“ACOS”) agreed a proposal for revised terms and conditions that was to be put individually to each relevant member of staff. It was, by a letter of 21 April 2010, addressed to each of them. It explained that the Respondents now sought individual agreement to the proposed terms and conditions from each employee. It gave the employee two options: one, to agree to a variation in his contract and to compromise any claim that he may have had in respect of past employment with the Respondents in return for a payment of £100 plus, in the case of some employees, who would suffer a detriment under the proposed terms, a more substantial sum to offset the detriment; two, to submit to dismissal and immediate re-engagement on new terms without agreeing to the compromise terms, in which event the employee would not receive any further payment. The letter enclosed a copy of the proposed new terms and conditions, an information booklet entitled “Single Status” explaining them, a single sheet setting out conditions relevant to the individual employee and a response form. Both the letter and the booklet contained in heavy type the following statement:
“NOTE: The new arrangements that you are being asked to agree are also subject to consultation with the trade unions throughout the consultation period and although you are being asked to agree to the new arrangements as proposed, should the trade unions agree alternative arrangements in relation to any part of the package these collectively agreed terms will replace those that you have already agreed.”
3. The preamble to the proposed new terms and conditions stated:
“… Where relevant, it [the statement] will replace in their entirety all existing terms and conditions, agreements and arrangements whether in writing or otherwise.”
4. Clause 5 of the terms and conditions stated:
“Terms and Conditions of Employment
The terms and conditions of your employment are governed by the National Joint Council for Local Government Services National Agreement on Pay and Conditions of Service (the “Green Book”), as amended, superseded, overridden or supplemented by:
● the contractual provisions contained within the Council’s People Management Handbook; and/or
● such local agreements reached between the Council and the recognised trade unions as amended from time to time or other terms and conditions (including but not limited to the terms of this statement) as amended from time to time which, in each case, the Council has expressly stated are to have contractual effect.
A copy of the Handbook, which contains certain policies and rules relating to your employment and which may be amended from time to time by the Council (or any documents which may replace the Handbook) [and Green Book] is available from your Human Resources team or the Council’s intranet pages. Policies which have contractual effect will be expressly stated as so.”
5. Clause 8 provided:
“Pay
Your starting salary is [SALARY] in accordance with band [BAND] spinal column point (scp) [SCP].
…”
6. The remainder of clause 8 dealt with the manner by which and the intervals at which payment would be made. The response form required those who accepted to sign the following statement:
“OPTION 1
I agree to accept the changes to my terms and conditions of employment as outlined in the letter dated 21st April 2010, associated booklet and the example core contract enclosed with this letter.”
7. The “associated booklet” was the “Single Status” booklet already referred to. On page 9 of the booklet under the heading “Your grade and the proposed pay structure in detail”, it stated:
“The proposed pay and grading structure uses the current Spinal Column Points (SCPs) system from point 4 to 55, split into new grades containing four or five Spinal Column Points.
Under the new pay and grade system, all employees will gain a Spinal Column Point each year until they reach the top of the grade (the maximum Spinal Column Point).”
8. The grades and the minimum and maximum SCPs were then set out. Examples were given of three employees - “Tom”, “Jeff” and “Pam” - who would respectively gain, lose or potentially gain from the new terms. As this case only concerns employees in the first and third category, it is only necessary to set out the examples of “Tom” and “Pam”:
“Tom’s job is currently Scale 5.
He is paid on SCP23 and would earn an average salary of £20,198 this financial year.
His job is Tier 6 F on the new pay structure. The minimum Spinal Column Point for Tier 6 F is SCP27 (£22,958).
Tom will therefore commence on SCP27 (the minimum SCP for his new grade). His new salary is £22,958. Tom’s salary will then increase by one increment each financial year until he has reached the top of the grade, SCP30.”
“Pam is currently on scale SO2, SCP33 and her salary is £27,849.
Her job is now a Tier 5 G on the new pay structure. The minimum Spinal Column Point for her new grade is Spinal Column Point 31 (£26,276) and the maximum Spinal Column Point is 35 (£29,236).
As Pam’s current salary matches Spinal Column Point 33 which falls within the new grade, she will be transferred onto this Spinal Column Point and her salary will not change. Pam’s salary will increase by one increment each financial year until she has reached the top of the grade, Spinal Column Point 35.
Pam’s current salary £27,849 (Spinal Column Point 33)
Pam’s new salary £27,849 (Spinal Column Point 33).
Although Pam’s salary has stayed the same, she has actually gained ‘headroom’ as she is able to progress through the grade to the maximum Spinal Column Point, which is higher than the maximum Spinal Column Point for her old grade. …”
9. By 7 June 2010 78 per cent of relevant employees had accepted the new terms. By 4 August 2010 90 per cent had. All but a handful of the remainder submitted to dismissal and immediate re-engagement, or option 2. Following further negotiations, the Respondents and the three recognised unions signed a collective agreement on terms and conditions of service on 20 July 2010 or, in the case of Unite, on 2 August 2010. In paragraph 3 it listed policies and procedures in the “People Management Handbook”, which currently had contractual effect and would continue to do so. It also listed the following:
“In addition, paragraph 3 ‘Pay System’, paragraph 6 ‘Allowances’ and paragraph 9 ‘Pay Protection’ of the new Pay Policy will have contractual force where they are applicable. The remaining paragraphs of the Pay Policy will remain non-contractual.”
10. A version of the pay policy dated November 2010 was produced to the Employment Tribunal. It is common ground that a version in either identical or very similar terms must have been in existence in July 2010 when the collective agreement was first signed. It contained the following:
“3. Pay system
3.1. The Council has adopted the Greater London Provincial Council (GLPC) system as its method to value all posts covered by the Green Book. The GLPC system measures all jobs on a systematic basis against a set number of factors. All relevant posts are evaluated under this system, and the job evaluation score then determines which pay grade and band a job is assigned to. The pay and grade structure is set out in the table below:
…”
11. There then follows a table listing the bands, grades and SCP minimum and maximum. It continues:
“3.3. Each grade contains a range of spinal column points (scp) which defines the minimum and maximum pay range for each grade. The current values of each scp are available on the intranet and in Appendix 1 of the Pay Policy.
…
5. Appointments to new grade
5.1. Subject to paragraph 5.2, employees will normally start in a new grade on the minimum scp for the grade. No employee will be allowed to move above the maximum for their grade. New starters in grade who start between the 1st April and 30th September will receive an increment on 1 April the following year; new starters in grade between 1 October and 31 March will receive an increment after six months’ employment in that grade. Thereafter, they will receive increments on 1 April each year until the maximum of the grade is reached.
5.2. In seeking to recruit from outside the organisation it is possible that there may be the need to offer more than the minimum of the grade. …”
There is then explanatory text to guide those making offers to outside recruits.
12. At the ACOS committee meeting on 8 March 2011 it was resolved that, “The annual increments to be frozen from 1 April 2011 for two years”. The unions protested. Strike ballots were held by two of them, resulting in a vote in favour of industrial action but in a number insufficient to secure legal protection for it. Nothing else was done until a further partial freeze of annual increments was resolved upon in early 2013. This prompted an internal collective grievance and, when that failed to produce an answer satisfactory to the unions and their members, a claim to the Employment Tribunal by a large number of them that money had since 1 April 2011 been unlawfully deducted from their wages under section 13 of the Employment Rights Act 1996 (“ERA”). Each Claimant sought a declaration:
“… that they have a contractual entitlement to receive a yearly incremental rise subject to reaching the maximum spinal column point for their job.”
13. Four groups of lead Claimants were identified: (1) those who accepted the Respondent’s offer before 1 November 2010, (2) those who submitted to dismissal and re-engagement on 1 November 2010, (3) those who began employment after 1 November 2010, and (4) one Claimant who claimed that he had been made a promise on behalf of the Respondents before he began employment on 1 April 2011. In a detailed and careful Reserved Judgment sent to the parties on 14 August 2015 Employment Judge Camp rejected the claims of all four groups. All appealed. The Respondents cross-appeal on a ground of resistance rejected by the Employment Judge.
14. The questions raised by the appeal are mainly questions of law arising out of facts that are in essence undisputed. It is therefore possible to deal with the principal questions - in other words, all of those other than the issue of variation, on which the Respondents rely - by asking and answering the questions first and then only briefly dealing with the answers given by the Employment Judge. I intend no disrespect to his careful and detailed Judgment and to his reasoning by adopting this course.
15. I take the first group of Claimants first. Given that their legal rights are to be determined by reference to a variation of their contract, its terms must first be considered. About 60 per cent were employed on standard terms for APTC staff, set out in a written statement of particulars of employment. Each contained the following:
“6. PAY
Your commencing salary is <salary> per annum within the salary scale for Grade <grade>.
This covers the NJC Spinal Column Point Range from <point> to <point> with current corresponding salaries of <salary> to <salary>.
Subject to satisfactory service your salary will rise within the above scale by annual increments up to the maximum of the scale. The next such increment will be paid on <increment date> and thereafter any such increments due will be paid on 1 April.”
16. Before the changes that took effect on 1 November 2010 each APTC Claimant in the first group therefore had a contractual entitlement to an annual increment payable as from 1 April in each year succeeding the first period of employment up to the maximum for the scale or grade in which their job was placed. Nothing in local or collective agreements referred to in paragraph 5 supplemented, still less qualified, that right.
17. Manual workers had no such entitlement. Their terms and conditions of employment referred a significant but unknown number of years ago to nationally agreed terms contained in the “White Book” and more recently to the “Green Book” already referred to. That pay was simply stated as an hourly and weekly rate. In simple terms the advantage of “single status” for them was that they would be placed on the Spinal Column Point system; the disadvantage was that they, or some of them, would lose bonuses and possibly allowances as well that they had previously enjoyed.
18. In the case of each category of employees the task of the Tribunal was and is to discern the effect produced by the variation agreed upon the employee’s acceptance of the Respondents’ proposal of 21 April 2010 by reference to the objectively ascertained intention of the parties - in other words, of the Respondents and the individual employees - to the contracts of employment and not, at least not principally, of the parties to the collective agreement signed on 20 July and 2 August 2010 or to the collectively agreed pay policy.
19. There is no suggestion that any individual Claimant expressed any relevant reservation when signing and returning the response form accepting option 1. Therefore the intention of all Claimants in this group, as well as that of the Respondents, can be taken objectively to have been the same. The starting point for determining the intention of the parties is the express terms of the statement of the main terms and conditions of employment proffered with the letter of 21 April 2010. All that they said expressly about pay was the opening sentence of paragraph 8 to which I have already referred. There was no express term equivalent to paragraph 6 of the existing terms and conditions of APTC staff. The task of this Tribunal is one of interpretation. The approach is that set out in the first three paragraphs summarised by Lord Hoffmann in ICS Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912H-913A:
“(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
(2) The background was famously referred to by Lord Wilberforce as the “matrix of fact”, but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.
(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. …”
20. If the factual matrix, as explained by Lord Hoffmann, had not included the terms of the existing contracts that the Respondents sought to vary, an interpretation that included no right to an annual increment within a grade for both APTC staff and manual workers would be permissible, but the factual matrix makes that construction problematic in particular in the case of APTC staff. Subject to the effect of paragraph 5 of the terms and conditions of employment proffered to the APTC staff, an existing member of that staff would reasonably assume that there was to be no change in entitlement other than in some cases the change in the Spinal Point in the relevant grade at which he would be placed when the new terms came into effect. His view would have been informed by the paragraph cited from the “Single Status” booklet sent to him at the same time as the new statement of terms and conditions and in particular by the example of “Pam”. The same intention would be attributed to the Respondents unless, which no one has suggested, they were seeking deliberately to mislead their APTC staff in the booklet.
21. The Respondent’s case is that the right to an annual increment was abrogated by the first and/or second bullet points of paragraph 5 of the terms and conditions because the terms and conditions in the Green Book were “overridden or supplemented” by the contractual provisions contained in the pay policy and/or by a local agreement between the Respondents and the three unions “which … the Council has expressly stated are to have contractual effect”. Paragraph 5 of the pay policy expressly referred to in paragraph 3 of the collective agreement deals with the increments for all employees. They include all existing APTC staff because all were moving to a new grade under the new arrangements and so were “new starters in grade”. If therefore the APTC staff had an existing contractual right to an annual increment, it was removed by paragraph 5 of the terms and conditions and paragraph 5 of the pay policy. As far as the manual workers go, they were not afforded a right by the new terms and conditions that they had not enjoyed before.
22. I deal with the two categories within group 1 distinctly. As far as the APTC staff in post before 1 November 2010 who signed option 1 are concerned, I do not accept Mr Laddie QC’s submission, for four reasons:
(1) Both at common law and by statute, the removal of a valuable contractual right in an employment contract can only be achieved by clear language. In Khatri v Cooperatieve Centrale Raiffeisen-Boerenleenbank BA [2010] EWCA Civ 397, the employers contended that an obscurely worded alteration to a contractual bonus scheme had had the effect of making it discretionary. The Court of Appeal, allowing an appeal against the first instance Judge, held that that contention was unarguable. Jacob LJ, with whom Longmore and Rix LJJ agreed, said at paragraph 39:
“39. I reach this conclusion with no regret. If banks decide to reward their employees by means of purely discretionary bonuses then they should say so openly and not seek to dress up such a bonus with the language of entitlement qualified by a slight phrase which does not make it absolutely clear that there is in fact no entitlement at all. If you are to give with one hand and take away with the other, you must make that clear.”
Those comments apply with at least equal force here. Further, the change, if effected by paragraph 5 of the pay policy, was one that the Respondents were by section 4(1) ERA 1996 required to give to an affected employee in a written statement containing particulars of the change. This was not done. Mr Laddie QC submits that the reference to the Council’s people management handbook in which the pay policy was to be found sufficed. It did not. The change in the scale or rate of remuneration or the method of calculating it, of which particulars must be given within two months of the start of employment under section 1(4)(a), is not one of those specified in section 4(4) and (5), in respect of which notice may be given by reference to another document or to a collective agreement. Mr Laddie QC further submits that a change in terms can be effected even if the employer does not fulfil its statutory duty under section 4(1). I agree that it can, but I am unwilling to attribute to the Respondents seeking to inform its employees about the effects of significant changes in the manner in which their pay was to be calculated a duplicitous intent to conceal an important change affecting most of them. The natural construction of the contractual documents is that the Respondents neither subjectively nor objectively intended to withdraw an entitlement to an annual increment within grade for its APTC staff, nor objectively can they be taken to have accepted such a change by exercising option 1.
(2) Interpreted against the background of the documents sent to the employees under cover of the letter of 21 April 2010, paragraph 5 of the pay policy did no more than set out the Respondents’ intentions, which were not contractually binding, as to the timing of the first increment for those first placed in a grade during the financial year 1 April to 31 March. It had no application to those who were placed in the new graded structure on 1 November 2010. The grade and point in the Spinal Column at which they were placed was expressly stated in the statement personal to them, which identified both individually. Mr Laddie QC submits that paragraph 5 of the pay policy applied to all APTC staff because they were all being placed in a new grade within the new structure. This is, with respect, an untenable submission. There was no question that existing APTC staff would “normally start in the new grade on the minimum SCP for the grade”; they started at the Spinal Column Point identified in the varied contract to which they had agreed. They and the Respondents would have regarded it as a bizarre suggestion that existing staff like “Pam” transferred to the new grade at the same rate of pay as the old would by reason only of the fact that the transfer occurred on 1 November 2010 not receive their annual increment until six months later, 1 May 2011, rather than the usual date of 1 April 2011. They cannot be taken to have agreed to such a pointless and administratively troublesome change.
(3) Paragraph 5 of the pay policy did not purport to qualify paragraph 3. Mr Segal QC submits that the only possible construction of paragraph 3 is that it confers a contractual right on each employee to whom it applies to an annual increment within a grade. I do not accept that submission. It is silent as to this. Construed without reference to other documents, it leaves the question undetermined. The fact that “new starters in grade” do not have a contractual right to an increment does not determine by necessary or even reasonable implication that others do. Read in isolation, paragraph 3 leaves a loose end.
(4) Paragraph 3 of the pay policy does not have to be read in isolation. It must be read in the light of all of the documents sent to APTC staff under cover of the letter of 21 April 2010. For the reasons explained, they make it clear beyond doubt that subject to a subsequent collective agreement APTC staff are entitled to an increment within their grade. Collective agreements that do not clearly deprive them of that right - which neither the pay policy nor the collective agreement signed on 20 July and 2 August 2010 do - cannot affect it. The fact that paragraph 5 of the pay policy neither asserts nor confirms it is therefore irrelevant.
23. I am, for those reasons, satisfied that APTC staff who accepted option 1 were, subject to Mr Laddie QC’s variation point, entitled to an increase on 1 April 2011 and in subsequent years up to the maximum for their grade.
24. What of the manual workers in group 1? Their position is the same as that of APTC staff, with one significant qualification. It is not suggested that if the Respondent’s interpretation of their contract is correct they were being deprived of an established contractual right. Nevertheless, despite the lack of clarity of the pay policy and the collective agreement and of paragraph 5 of the terms and conditions of employment sent to them on 21 April 2010, I am satisfied that they did become contractually entitled to an annual increment within grade when they agreed to option 1, essentially for three reasons:
(1) Option 1 expressly signified their acceptance of the changes to their contract outlined in the “Single Status” booklet. It expressly stated that “all employees will gain a Spinal Column Point each year” (my emphasis) and illustrated this by reference to the example of “Tom” in unequivocal language.
(2) As in the case of the APTC staff, the pay policy and collective agreement, properly construed, did not take away a right thus created.
(3) To hold otherwise would risk frustrating the purpose of “single status” to eliminate unlawful discrimination between male and female employees doing work of equal value or, as was put in the letter of 21 April 2010, “to develop a new pay and grading structure based on the principles of equality”. The means chosen included placing low-paid manual workers, usually women, on a higher grade at the minimum Spinal Column Point. If there were no entitlement to an annual increment, the achievement of equality would at best be deferred.
25. I am therefore satisfied that manual workers who accepted option 1, like their APTC colleagues, were, subject to the variation issue, entitled to an increment on 1 April 2011 and on 1 April in subsequent years up to the maximum for their grade.
26. It follows that I accept the Employment Judge’s conclusion and substantially his reasoning in determining that but for paragraph 5 of the pay policy both categories of employee within group 1 would have been contractually entitled to the increment but, for the reasons that I have explained, I disagree with his conclusion that paragraph 5 of the pay policy overrode the express term of their contract to that effect.
27. I now turn to group 2, those who were dismissed and accepted re-engagement. The option that they signed stated:
“OPTION 2: NOT AGREEING TO ACCEPT THE CHANGES (BUT ACCEPTING RE-EMPLOYMENT)
I do not want to accept the changes to my terms and conditions of employment as outlined in the letter dated 4 August 2010, associated booklet and the contract(s) enclosed with this letter. I understand that I am not eligible to receive any payment. I do wish to accept the offer of re-employment, and I enclose a copy of my signed contract(s).”
28. The only contractual documents that they accepted were the standard terms and conditions of employment and the single sheet personal to them. The only terms that they contained, on the face of the document, were paragraphs 8 and 5 of the standard terms and conditions of employment and, by incorporation, the pay policy and collective agreement signed on 20 July and 2 August 2010. None of them expressly incorporates a contractual entitlement to an annual increment. For the reasons already explained, the pay policy does not determine this issue. The “Single Status” booklet is not an aid to construction of the new contract, because the employee has expressly stated his wish not to accept the changes outlined in it. A court cannot by interpretation create a term to which the parties to the contract have not assented. I acknowledge that this conclusion will lead to an anomaly within the Respondents’ established workforce. The anomaly arises because of the different contractual terms that those who accepted dismissal and re-employment agreed to. The fact that it exists is insufficient justification to depart from the language of the contract.
29. It therefore follows that I agree with the Employment Judge’s conclusion on group 2 Claimants, albeit for reasons different from those that he gave.
30. The entitlement of group 3 Claimants can be no greater than that of their group 2 colleagues. It follows that their claim must also be dismissed, for the same reasons.
31. I now turn to the issue of variation. Mr Laddie QC accepts that the Employment Judge’s statement in paragraph 132 of his Judgment of the law to be applied is correct. I agree that it is and therefore need do no more than cite it verbatim:
“132. However, during the course of the hearing, I have been persuaded by Mr Segal that my concerns about Solectron [Scotland Ltd v Roper [2004] IRLR 4 EAT per Elias P, as he then was] are misplaced and are based on a misunderstanding or misinterpretation of the decision. Analysing the case correctly:
132.1. the point to be derived from Solectron is encompassed within the phrase, “only referable”. By that phrase, the EAT means no more and no less than that it is, in principle, possible for agreement to a contractual variation to be inferred from the employee silently continuing to work, but that in practice, the circumstances must be such as to make silently continuing to work a clear and unequivocal indication of such agreement;
132.2. when, in the above-quoted passage, the EAT stated, “if an employer varies the contractual terms by, for example, changing the wage or perhaps altering the job duties … If they [the employees] reject the change they must either refuse to implement it or make it plain that by acceding to it, they are doing so without prejudice to their contractual rights”, it was not purporting to suggest that, in such circumstances, silence is as a matter of law always to be equated with agreement and that there will be a contractual variation unless there is some kind of protest. All the EAT was doing was setting out an example of a situation in which “it may [Employment Judge’s emphasis] be possible to infer that they have by their conduct after a period of time accepted the change in terms and conditions”;
132.3. in short, there is no special rule, peculiar to contracts of employment, that if there is a unilaterally imposed change to a contractual term with immediate practical effects, agreement to the change is necessarily to be inferred from silence or the absence of complaint. The common law relating to contractual variation is no different in relation to contracts of employment from that in relation to other kinds of contract.”
32. Mr Laddie QC submits that his application of that correct test to the facts produced a perverse outcome. The heart of the Employment Judge’s reasoning is in paragraphs 135 and 136. Again, I set them out verbatim:
“135. Applying logic, let alone law, it does not remotely follow from the fact that an employee does not for some time do anything about his employer’s breach of contract out of fear of losing his job, nor from the fact that he would in all probability never have brought a claim against the employer had the employer not subsequently compounded the breach of contract in some way, that he has agreed to his contract being varied.
135.1. An employee’s failure to complain about a breach of contract that is referable to his fear of losing his job if he does so is manifestly not, “only referable to his having accepted the new terms imposed by the employer”.
135.2. There are many reasons why someone might decide not to pursue a breach of contract claim and there is no basis for assuming, just because the breach arises in the employment context, that the only reason is agreement to a contractual variation and consequent acceptance that there has, in fact, been no breach of contract.
136. Further, this case cannot sensibly be characterised as one where there was no relevant complaint or protest. The Unions protested vehemently before the ACOS decision of 8 March 2011 and afterwards made clear that they did not accept the decision, by, amongst other things, balloting their members and by the above-mentioned statement made by Mr Oz Taylor of Unite at the meeting on 27 May 2011 [that was a statement to the effect that his union would do whatever was necessary to challenge the decision]. There was nothing unequivocal about the Unions’ words and actions in this respect - they were unequivocally indicating that the Unions, and through them the claimants, did not agree to the changes being made. I see no logical basis for concluding that that unequivocal “no” was transformed into an unequivocal “yes” simply by silence over a period of time. The respondent [sic] might very well reasonably have assumed from the Unions’ and the claimants’ silence on the point after May 2011 that they probably weren’t, despite their threats, going to do anything about the incremental pay freeze, such as bring a claim about it. That is not, though, the same as agreeing to it. Resigned acceptance to the fact that one’s employer has decided to freeze one’s pay in breach of contract is not the same as agreement to the pay freeze; there is nothing peculiar or contradictory in employees adopting as their stance, “we don’t like it; we don’t agree to it; but for our own reasons we have decided not to do anything about it”.”
33. I agree with the Employment Judge’s reasoning and believe his conclusion to be unimpeachable.
34. I wish to add one further observation only. Ordinary principles of the law of contract apply to contracts of employment, as was made clear in Geys v Societe Generale [2013] 1 AC 523, thus a repudiatory breach must be accepted by the innocent party before the contract is terminated. In the case of a breach of an employment contract that is capable of being treated as a repudiatory breach, such as a deliberate short payment of wages, the innocent party - in this case the employee - may well lose the right to accept a repudiatory breach and so to terminate the contract by accepting short wages for a significant period. It is rightly common ground that the Respondents’ employees lost the right to treat their contract as repudiated at some time after 30 April 2011 by their conduct in continuing to work for no more pay, but it does not follow that by that means they are to be taken to have accepted that their contract has been varied to their disadvantage or that they have waived their right to sue for the shortfall. It is in the employer’s power to put the point beyond doubt by giving written particulars of a change in an employee’s terms as to remuneration under section 4 ERA 1996. Then the employee will be faced with a choice: accept or not - whereas here the employer did no such thing. The employee does not lose the right to sue for breach of contract and is not to be taken to have accepted an adverse variation to his contract simply by continuing to work without further protest.
35. For the reasons that I have explained, the appeal is allowed in relation to group 1 Claimants and dismissed in relation to groups 2, 3 and - insofar as his appeal was ever pursued - the group 4 Claimant.