Case of the week: Morgan v Network Europe Group Ltd

Morgan v Network Europe Group Ltd

FACTS

Mr Morgan commenced employment as a storekeeper with Network Europe Group Ltd on 1 November 2005. He signed a statement of terms and conditions and confirmed receipt of the company handbook. Neither made any provision for payments during a lay-off.

In March 2008, Mr Morgan was issued with a new handbook that stated that, together with the contract of employment, it set out the main terms and conditions of employment. The new handbook included a provision providing for lay-off without pay, other than the statutory guarantee payment. The provision was not specifically brought to employees’ attention.

Network Europe Group Ltd alleged that employees had also been issued with new contracts of employment, but no copy was produced. Mr Morgan brought a claim for unauthorised deductions from wages in respect of a period of lay-off between 27 February and 22 May 2009.

DECISION

The employment tribunal held that Mr Morgan was bound by the new handbook. Network Europe Group Ltd had the contractual right to lay him off without full pay and the unauthorised deductions claim failed. Mr Morgan appealed to the Employment Appeal Tribunal (EAT). The EAT overturned the decision of the employment tribunal.

The EAT held that there was no agreed variation of the contract of employment. Mr Morgan could not be deemed to have accepted the new lay-off term. The term was not drawn to his attention and it was not one that affected Mr Morgan until he was actually laid off in 2009, at which point he promptly raised a grievance. This was consistent only with him not accepting the lay-off variation.

It said that there will be deemed acceptance only where the employee’s conduct in continuing to work is only referable to having accepted the new terms. The EAT found that Network Europe Group Ltd had made unauthorised deductions in respect of his normal pay, less the guarantee payments received for the period of lay-off.

IMPLICATIONS

This case demonstrates the importance of getting explicit employee agreement to changes to terms and conditions, rather than attempting to rely on deemed acceptance, particularly where the changes could have adverse financial consequences for the employee.

Employees should be asked to sign and return a copy of new contractual terms to confirm that they agree to be bound by them. The imposition of a change by the employer (rather than by agreement or by termination of existing contracts and re-engagement) means that the employee has an ongoing claim for breach of contract and the employer may be forced to reverse the change.

The main issue will be whether or not the employee can be said to have impliedly accepted the change by reason of his or her continuing in employment. As this case shows, it will be difficult for the employer to show deemed acceptance of the new terms in circumstances where the change in question will not impact on the employee until a later date. This would also be the case where, for example, an employer attempts to change contractual sick pay, maternity or redundancy benefits.

As the change may not affect employees until a later stage, the mere fact that the employee does not explicitly object may not be sufficient to show acceptance, although it will assist the employer if the proposed change has been brought clearly to the attention of the employees.

Clare Gregory, partner, DLA Piper