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Be careful what you write – HR letter had contractual effect

The Employment Appeal Tribunal (“EAT”) has held that a letter sent from an HR Consultant to employees confirming the outcome of their grievance concerning pay created a contractual right to higher pay.

In Hershaw and ors v Sheffield City Council the HR Consultant did not have authority to grant the pay increase, however she was held out as having authority. Further, the employees simply needed to continue working to affirm the contractual variation. They did not need to expressly accept.

The grievances were raised by a group of market patrol officers who were disgruntled following a review by the Council which did not result in a pay increase. They launched an internal appeal regarding the failure to increase following regrading. They did not learn of the outcome of the appeal so later lodged a grievance which the HR Consultant investigated. The HR Consultant communicated the outcome of the grievance to the employees but no change in pay was forthcoming. A claim for unlawful deduction of wages was issued in the Employment Tribunals. The claim was rejected. The Tribunal held that the letter had no contractual effect and there was no authority to vary the employees’ contracts. The employees appealed.

The EAT allowed the appeal. The EAT considered previous case law on the question of whether the employees had validly accepted the contractual variation. The Tribunal held that where a variation is offered, and there is no downside, acceptance will be implied where the employees continue to work. No formal acceptance is required. The change took effect from the date of the notification of the change (the date of the letter). The EAT overturned the Employment Tribunal’s decision confirming that the letter from the HR Consultant did have contractual effect.

HR Consultants would do well to check with the employer before communicating with the employees as they could bind an employer even where this is not the intention. Many employers outsource their HR work to minimise their time spent in this area but this is never without risk. This case illustrates this point.

If you would like to discuss this with a member of our team, please contact Emily Yeardley, our employment solicitor.

Posted in: Employment

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