Nicola Butterworth: Employees’ conduct is not a guaranteed agreement to new contractual terms

Nicola Butterworth

In the age of austerity, compounded by technological advances and the uncertainty of Brexit, many UK businesses continue to face tough challenges. With the biggest organisations announcing profit warnings, and other organisations struggling to make ends meet, faced with the need to cut operating costs, one option open to employers is to implement pay cuts or reduce staff benefits.

This will inevitably necessitate a change to employees’ terms and conditions of employment, which requires the agreement of both parties to be effective.

In practice, employees will often implicitly agree to a variation to their contract imposed by their employer by their conduct, through continuing to work and observing their mutual obligations. However, this is not always so.

In the case of Abrahall v Nottingham City Council, the Court of Appeal clarified the approach in determining whether conduct may constitute acceptance of a variation. Where the variation to the contract is disadvantageous to the employee, then any inference that the employee has agreed, through their conduct, to the variation, must arise unequivocally. Any different explanation for continuing to work, or collective protest or objection, could negate any such inference.

This can leave employers in a difficult situation as to when it can be inferred that employees have, through their conduct, accepted the new terms that have been imposed.

Employers should be slow to rely on implied acceptance for contractual changes, especially where the changes are clearly disadvantageous and objections to them have been voiced by employees or their unions prior to implementation.

The best course remains to secure the employees’ express agreement to the new terms, but where this cannot be achieved, employers are increasingly likely to consider taking the bold step of lawfully terminating the employee’s employment and offering re-employment on new terms, particularly if they want certainty going forward.

Nicola Butterworth is an employment law associate at Howes Percival