Queen’s Bench Division
Employees of the House of Commons Commission had failed to establish that the express or implied terms of their contract of employment gave them a contractual right to annual pay increases until they reached the top of their pay scale for their respective pay bands.
The three claimant employees (T) of the defendant commission claimed a contractual right to annual pay increases.
The claimants had been employed by the commission, which was a statutory body established by the House of Commons (Administration) Act 1978 and was responsible for the administration and services of the House of Commons. The commission employed staff in various roles and in bands in order to discharge its statutory functions. Paragraph 9.3.2 of the staff handbook stated that at the start of each financial year the commission would approve pay-negotiating remits which set the limit within which pay increases could be negotiated with trade unions. That limit was based on recommendations of the management board that took into account the need to stay "broadly in line" with civil service pay. The last pay agreement for the years commencing April 2008-2010 expired in March 2011. In June 2010 the Government announced in its emergency budget a two-year pay freeze for all public sector workforces under ministerial control, and that progression payments would be payable to staff where there was a contractual entitlement, but not otherwise. T had not received progression payments since 2011. The issue was whether T had a contractual right to annual pay increases until they had reached the top scale for their respective bands. T were selected as a representative sample of staff.
T submitted that (1) their contracts of employment contained express terms in respect of pay progression: (i) it was subject to satisfactory performance; (ii) it progressed unless and until they reached the statutory maxima applicable to their pay band in force at the time; (iii) each claimant was contractually entitled to pay progression through their pay band; (iv) in the absence of further collective agreements in respect of the period after April 1 20011, the existing arrangements applicable to pay progression continued to apply; (iv) in the absence of variation by collective agreement, the express terms relating to pay progression in their contracts of employment continued to apply; (2) alternatively those terms constituted implied terms by reference to custom and practice.
HELD: (1) The starting point was the actual words used in the letters of appointment, staff handbook and collectively-negotiated pay agreements. Paragraph 9.3.2. of the staff handbook expressly provided a mechanism for determining pay rises which was at variance with the automatic right to specific increases. It set out a system by which changes to pay and conditions had to be negotiated with the trade unions who then balloted their members and the limits within which increases could be negotiated fell to be approved at the start of the financial year by the defendants based on the recommendations of the management board and taking into account the statutory duty to stay "broadly in line" with civil service pay. It was clear from the terms of the 2008-2010 pay agreement that it was an agreement that covered those specific years. There was no collective agreement pursuant to para.9.3.2 of the staff handbook for the year commencing April 1, 2011 or any subsequent year. There was evidence of the offers that had been made to reach agreement on a pay deal for 2011 and for 2013-2015, which had not been accepted. T's contention that the 2008-2010 agreement afforded them the right to ongoing specified pay rises was rejected; the terms of the 2008-2010 pay deal were incorporated into individual contracts of employment. However, that collective agreement did not give T contractual entitlement to year-on-year progression payments. There was no progression scheme currently in existence. Further, a commitment to long-term year-on-year pay rises would have involved a commitment to pay annual pay increases, by way of progression, to every existing employee until he reached the top of his scale; to any new recruit on the same basis; and to each employee promoted until he reached the top of his new pay band. That would have been a very significant commitment which temporally and financially would have been at odds with the express contractual term of para9,3,2 of the handbook. There was no express term in T's contracts of employment that gave them the contractual entitlement to annual pay increases until they had reached the top scale for their respective bands (see paras 40-43, 58 of judgment). (2) Terms could not be implied which contradicted the express terms. The implied terms which T contended for were inconsistent with the express terms set out in the letters of appointment, read with para.9.3.2 and the 2008-2010 pay agreement. The earlier collective agreements evidenced the practice of following the mechanism set out in para.9.3.2, Shumba v Park Cakes Ltd  EWCA Civ 974,  I.R.L.R. 800 applied (paras 60, 61).
 IRLR 260
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