Binding communications about pay…

Can an employer be contractually bound by the communications of an HR consultant? Yes, said the Employment Appeal Tribunal (“EAT”) in Hershaw & ors v Sheffield City Council


The Claimants were a group of 12 Market Patrol Officers employed by Sheffield City Council (“the Council”). They appealed against the variation of their grade and pay, following the implementation of a review in 2009 under the national Local Government Single Status pay and grading agreement.

Following an appeal hearing on 22 March 2011 at which the appeal body reserved its decision, the Claimants were not officially informed of the outcome of their appeal and their pay remained the same. They therefore raised a grievance about their pay in August 2011, which was investigated by an HR consultant.

The HR consultant had no authority to make a decision about pay, but she was authorised by the Council to communicate the grievance outcome to the Claimants. The HR consultant wrote to them on 10 October 2011, recording that the Council’s appeal body had decided that they should be placed on ‘job profile CE3 at Grade 5’ (previously they had been employed on ‘job profile CE2 at Grade 3’). Further correspondence confirming this decision and the consequent pay level was sent to the Claimants in January 2012 by an HR officer of the Council.

However, there was no change to the Claimants’ pay and the Council subsequently realised that a mistake had been made in the HR Consultant’s letter (it made reference to an incorrect higher grade than that to which it had been determined the Claimants were entitled). The Council’s appeal panel reconvened in May 2012 and confirmed that it had decided in March 2011, that the Claimants’ pay scale should be ‘CE2, Grade 4’ not ‘CE3, Grade 5’ as previously communicated to the Claimants. The Claimants then brought claims in the Employment Tribunal (ET) for unlawful deduction from wages.

ET Decision

The Employment Judge dismissed the Claimants’ unlawful deduction from wages claims on the basis that the HR Consultant’s letter communicating the appeal panel’s decision to the Claimants was not a contractual document and therefore binding. Rather, he found it was a response to a grievance and the HR Consultant had no actual or ostensible authority to make pay and grading decisions. The Judge did not therefore decide whether the letter was a mistake, as that would only have been necessary if he had found the HR consultant’s letter was contractual.

EAT Decision

The EAT upheld the Claimants’ appeal and decided that:

  1. The letter of 10 October 2011 was capable of being contractually binding because the HR consultant had authority to tell the Claimants what had been decided regarding their pay following their grievance, even if she was not authorised to decide questions of pay herself. Further, the Claimants were not required to take any formal action to accept the pay rise, (as had been argued by the Council) it was enough simply that the Claimants continued to work.
  2. The issue of ‘mistake’ was critical and this would be remitted to a fresh ET to determine.

Learning points

This case reinforces that employers should be careful about whom they authorise to communicate with their staff and also that they are aware of the contents of such communications, in order to avoid creating contractual rights or unusual decisions that were not intended.

Employers should also be careful when an ‘independent person’ is involved in their internal procedures, for example where such a person is brought in to investigate or hear a disciplinary/grievance case. Remember that it is the employer who makes the decision in such circumstances and there should be careful scrutiny of any findings or recommendations made by an independent person, before an employer’s decision is made and communicated to the relevant staff.  Any questionable findings or recommendations by an independent person can therefore be considered/addressed before any decision is made and communicated to staff to minimise the risk of issues arising as a consequence.

Watch this space for the decision about whether the Council successfully claim that the initial letter was a mistake…


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