In Hershaw v Sheffield City Council UKEAT/0033/14/BA, the Employment Appeal Tribunal (EAT) considered whether a grievance outcome letter from an HR consultant setting out better terms of pay for the aggrieved employees was contractually binding on their employer.
The Claimants were employed as market patrol officers by Sheffield City Council. They raised a grievance following a review of the Council's pay and grading structure. An HR consultant, who had authority to communicate the grievance outcome but not to make any decision about terms of pay, wrote to the Claimants informing them of the Council's decision to place them on a higher grade with matching higher pay. The Council, however, did not increase their pay and alleged that the letter was a mistake. The Claimants brought proceedings in respect of the higher pay. The EAT held that the letter constituted a contract which was binding on the Council because, viewed objectively, it had been intended to set out the Council's decision in relation to the higher pay, and had been sent by someone held out by the Council as having authority to do so. The Claimants had accepted these new terms of pay simply by continuing to work as they had done previously; they had not been required to do anything else. However, the question of whether this contract was void because the Claimants knew, or ought to have known, that the letter was a mistake was crucial to the final determination of the case and was remitted to a fresh Employment Tribunal.
This case serves as a useful reminder to employers to be very careful when communicating with employees, in particular about pay; they would be well advised to train their managers in this regard to avoid unintentionally creating contractual ties.