Anderson and others v London Fire and Emergency Planning Authority
The case relates to a term in a pay and conditions agreement between the London Fire and Emergency Planning Authority and recognised trade unions. The July 2007 collective agreement provided:
“On 01/04/09 pay will be increased by 2.5% or by the National Joint Council (NJC) for Local Government services settlement plus any uplift required to ensure general pay increases for the period 2007-09 are 1% above the NJC settlements for the same period.”
Prior to the collective agreement, pay for the authority’s workers had followed those agreed by the NJC for Local Government Services. In 2007, it was necessary to make higher pay awards to give effect to changes to terms and conditions. Negotiations resulted in the collective agreement.
The claimants brought claims for unauthorised deductions from wages in respect of the difference between the 2.5% pay increase that they alleged was due and the 1.575% that was in fact paid from April 2009.
The employment tribunal concluded that the pay deal was not apt for incorporation in contracts of employment. The local authority was entitled to pay the lesser of the two options for calculating pay increases because the collective agreement was silent as to which would prevail.
The claimants appealed to the Employment Appeal Tribunal (EAT).
The EAT held that the agreement between the unions and the authority to fix a pay increase by reference to the NJC agreement was sufficiently certain to give rise to a contract. The employment tribunal also erred in concluding that the agreement for a pay increase in 2009 did not have contractual effect because it contained two alternative methods of calculating the increase without giving precedence to either.
The EAT concluded that each option was clear and unambiguous and it was clear that it was for the paying party, the authority, to choose between the two. They were not contractually obliged to pay 2.5%, or whichever alternative would give the higher increase.
In this case, the ultimate result was in the employer’s favour. However, the case highlights the fact that, when agreeing financial arrangements, and in particular pay deals, the contractual documentation needs to be as clear and unambiguous as possible.
This may mean having difficult negotiations up front, but it will lessen the risk of subsequent expensive litigation. However, it is entirely possible for an agreement to provide for alternative measures of calculation of a pay award or other sum.
Ben Gomer, partner, DLA Piper
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