The court was asked whether consideration had been given for a change in the employees’ terms and conditions.
Held: Where improvements in employee contracts are announced by an employer in the context of pay negotiations, the employees’ continuing to work was consideration for the change.
Connell J said: ‘the plaintiffs assert that where an improvement in the employees’ terms and conditions is announced by the employer, the employee gives consideration by continuing to work on the basis of the improved terms and without seeking a larger or more significant improvement. Otherwise, say the plaintiffs, the result would be ludicrous because any employer who announced a pay increase in the context of a pay claim which is then paid by the employer and accepted by the employee could thereafter withdraw the pay increase at will and without being liable to a damages claim for the difference on the basis that there was no consideration for the increased payment.
The consideration is, they say: (a) the employee continuing to work; and (b) not continuing with his pay claim, so that the employer avoids industrial action and benefits from the continued services of a known employee . .
The situation is similar with an increase in the severance payments made to those who lose their employment due to redundancy, for a redundancy payment is part of the remuneration package. The employee continues to work for the employer, thereby abandoning any argument that the increase should have been even greater and removing a potential area of dispute between employer and employee. The employer has both secured a benefit and avoided a detriment (see Williams v Roffey Bros and Nicholls (Contractors) Ltd [1991] 1 QB 1).
The case of Price v Rhondda Urban Council [1923] 2 Ch 372 is plainly distinguishable from the instant case, since in Price there was no negotiation between the employer and the employee as to whether married women should be employed or not, so that there was no extra value to the employer in women teachers continuing in their employment.
Further, in the instant case, if in each individual contract of employment there were incorporated the provisions of relevant collective agreements agreed from time to time, as well as general instructions and notices, the contention that each improvement in the employees’ terms requires fresh consideration fails to give proper recognition to the value to be attributed by the employer to the continuation of the same workforce in his employ and/or to the possibility of making adjustments from time to time to the detail of the contracts of employment without having to issue new contracts whenever adjustments are put into effect.’
Judges:
Connell J
Citations:
[1993] IRLR 383
Jurisdiction:
England and Wales
Cited by:
Cited – Parties Named In Schedule A v Dresdner Kleinwort Ltd and Another QBD 28-May-2010
The defendant merchant banks resisted two group claims for annual bonuses for 2008 made by the employee claimants. They now sought summary judgment against the claims. The employer had declared a guaranteed minimum bonus pool available to make the . .
Lists of cited by and citing cases may be incomplete.
Employment, Contract
Updated: 18 May 2022; Ref: scu.416728