The employees in Abrahall v Nottingham City Council received incremental annual pay rises until March 2011, when the council imposed a two-year pay freeze. The council said that the only alternative was additional redundancies. The relevant union opposed the proposal and threatened, but did not take, strike action. When the pay freeze was imposed, the union communicated its opposition but raised no formal dispute and no employee raised a grievance. When the Council decided to impose a further freeze in April 2013, several hundred employees brought claims for unlawful deductions from wages dating back to 2011.
The Court of Appeal decided that the employees were contractually entitled to pay progression. It then had to decide whether the employees had implicitly agreed to the pay freeze. The judgment made a number of important findings regarding employees continuing to work following a reduction in contractual terms:
- Whether this constitutes acceptance of the reduction always depends on the particular circumstances of the case.
- It will only count as accepting the reduction if there is no other objectively reasonable basis which could explain the employees’ continuing to work.
- Objection or protest at the collective level can be enough to show employees have not accepted the reduction, even where individuals have not raised grievances
- Employees can be taken to have agreed to the reduction in contractual terms by continuing to work for a period of time. However, it is difficult to identify precisely when that point has been reached on anything other than a fairly arbitrary basis.
The Court of Appeal decided that the employees had not agreed to the reduction even though they waited until 2 years later before bringing tribunal claims. They had protested through their trade unions at the time of the breach, and their continuing to work could not be taken as unequivocal acceptance of a change that was wholly to their disadvantage.
It is important that businesses are aware that this is different from constructive unfair dismissal cases, where employees have to resign within a short timeframe in response to a fundamental breach of contract in order to succeed in a claim. Employees who are too late to claim constructive unfair dismissal can still succeed in claims for deduction of wages.