Hershaw and Ors v Sheffield City Council
In this case a group of market patrol officers employed by the Council had their pay varied following a review of the Council’s pay and grading structure. They launched an internal appeal, but they were not notified of the outcome and their monthly pay did not change. They lodged a grievance, which was investigated by an HR consultant. Although she had no authority herself to make a decision about pay, she was authorised to communicate the result of the grievance. She wrote to the claimants setting out the appeal body’s decision, which was to regrade the employees. However, they still did not receive any increase in pay, despite the higher grading. They therefore brought a test case of unauthorised deduction from wages.
The employment tribunal rejected the claim, finding that the letter did not have a contractual nature and that the HR consultant did not have ostensible authority to bind the Council to a variation of contract. The employees appealed, arguing, among other things, that the letter created a contractual entitlement to the pay level stated therein.
The Employment Appeal Tribunal (EAT) allowed the appeal on this point. It held where an additional benefit is offered for the foreseeable future to an employee, with no apparent downside, the parties will be taken to have agreed that the benefit is thenceforth a term of the contract, and the employee will readily (and usually) be taken to have accepted it as such merely by continuing to work. Nothing formal is required by way of acceptance. The pay rise takes effect the moment that an employee with notification of it continues in the work he or she has been doing previously. The EAT went on to overturn the tribunal’s decision that the letter was incapable of having contractual effect. Although its purpose was to record the outcome of a grievance, the grievance was centrally about pay. As the employees had simply not been told of the outcome of the original appeal, the lodging of a grievance was the only formal step they could take. It could not be argued that the HR consultant did not have authority to agree a pay increase – she was not purporting to give her own view as to what the pay should be but giving the employer’s answer to the grievance on its behalf.
In Practice
“This case is a warning to small businesses in particular, who will often use external HR consultants to undertake disciplinary and grievance procedures”, says Employment Associate Paul Burton. They will be bound by decisions communicated to staff by the consultant and should ensure they agree with what the consultant is saying before they actually inform the staff in writing. The alternative would be for the consultant to expressly state that what they saying is only their own personal opinion and cannot be considered binding on the employer.
At Frettens, all of our solicitors offer a free initial meeting or chat on the phone to answer your questions. If this article raises issues for you or your business, please call us on 01202 499255 andKate or Paul will be happy to discuss it with you.
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