24 July 2014 #Employment
The EAT in the case of Hershaw and others v Sheffield City Council has held that an employer was bound by the rates of pay included in a grievance appeal letter that was written by a HR consultant.
The Council had sought to reduce its patrol officers’ pay following a pay review. The employees lodged a grievance so the Council engaged a HR consultant to investigate. Whilst the consultant had no authority to make a decision about the employees’ pay; she was authorised to communicate the outcome of the grievance to them. Following an investigation, the consultant wrote to the employees stating that their pay should be increased from pay band 3 to 5. However, the employer, having realised that a mistake had been made, reconvened the appeal panel who decided that the employees should be on pay band 4.
The EAT however held that the employer was bound by the rates of pay as set out in the consultant’s letter (i.e. pay band 5). The Judge stated that where an employee is offered a benefit “with no apparent downside, the parties will be taken to have agreed that henceforth that is to be a term of the contract”. Furthermore, nothing was required of the employees in order to accept the new term, therefore it was found to be a binding contractual term.
A Tribunal will now decide whether the terms of the letter should be void on the grounds of mistake. The Council will inevitably argue that the employees ought reasonably to have known that this letter was a mistake and therefore should not have relied upon its contents.
This case serves as a useful reminder when drafting letters, emails etc. Recording an outcome in a letter should be approached with caution and drafted carefully to ensure that the terms accurately reflect the employer’s intention. Furthermore, any correspondence drafted by third parties should be also be checked to limit the possibility of challenge.