gap personnel franchises ltd v robinson, eat -------------------------------------------- whether variation was affirmed a tribunal erre

GAP Personnel Franchises Ltd v Robinson, EAT
--------------------------------------------
Whether variation was affirmed
A tribunal erred in concluding that an employer made unlawful
deductions from wages when it reduced an employee’s contractual
mileage allowance. The tribunal failed to consider the essential
question of whether the employee, in continuing to work without
protest, affirmed the employer’s unilateral variation of contract.
facts
-----
In January 2006 R commenced employment with GAP Ltd as Franchise
Operations Manager. Clause 18 of his contract of employment stated
that he was to be provided with a company car, in respect of which
fuel expenses could be claimed at 25p per mile. By virtue of clause
31, GAP Ltd reserved ‘the right to make reasonable changes to any of
[his] terms and conditions of employment’, to take effect upon written
notification.
At the end of February, R presented his first month’s expenses form.
At that point, GAP Ltd informed him that company policy was to
reimburse employees at 25p per mile for those using their own cars,
but at only 15p per mile for those using company cars. Thus, it would
reimburse him at the lower rate. R subsequently submitted expenses
forms claiming 15p per mile until he left GAP Ltd’s employment, in
July 2006. In October of that year, R raised a grievance under the
modified statutory grievance procedure contained in the Employment Act
2002, complaining that he had not been paid the fuel expenses to which
he had been contractually entitled. Thereafter, he brought tribunal
claims for breach of contract and unlawful deductions from wages.
The tribunal upheld both claims, finding that R had been contractually
entitled to a fuel allowance of 25p per mile. GAP Ltd would have been
entitled to reimburse him at the lower rate of 15p per mile only if
the parties had agreed to vary clause 18 of R’s contract. In the
tribunal’s view, no such consensual variation had occurred. First, the
necessary consideration to create a legally binding variation of
contract was absent; and secondly, R had not affirmed the variation –
he had been presented with a fait accompli by GAP Ltd, and had no
choice but to accept that he could not enforce his contractual terms.
On this basis, the tribunal awarded R £2,049 as unpaid expenses, and
applied a 10 per cent uplift under S.31 of the 2002 Act owing to the
company’s failure to complete the statutory grievance procedure. GAP
Ltd appealed to the EAT.
decision
--------
The EAT was in no doubt that it was an express term of R’s contract
that he should receive a mileage allowance of 25p per mile. Moreover,
in the absence of written notification, the term had not been varied
under clause 31. It thus followed that the company’s refusal to pay
the first month’s expenses claim at the full rate represented a breach
of contract and unlawful deduction from wages.
Thereafter, GAP Ltd’s insistence on paying the lower rate of 15p per
mile constituted a unilateral variation of R’s contract. This being
so, a key question was whether R affirmed the varied contract by
continuing in employment, without protest, for another six months, and
submitting expenses claims at the lower rate throughout this period.
The mere fact that the unilateral variation was a fait accompli did
not necessarily prevent affirmation occurring. Nor was the absence of
a written statement of variation fatal to the employer’s case. If R
had affirmed the contractual variation, the tribunal would have been
required to ascertain the actual date of his having done so, after
which R was only entitled to the lower rate.
With this in mind, the EAT held that the tribunal had failed properly
to consider the question of whether R had affirmed the contractual
variation. Crucially, it had made no finding as to whether R continued
to work under protest once GAP Ltd had said that it would not be
paying the higher rate; and nor had it determined – if R had not done
so – the point at which he could be said to have affirmed the contract
by acquiescence. The tribunal had stated, however, that if this had
been a constructive dismissal case it might well have concluded that
R, in apparently acquiescing for six months, had lost the right to
resign in response to GAP Ltd’s breach of contract. Given this, the
EAT continued, it seemed likely that the tribunal, properly directing
itself in law, would have concluded that R affirmed the contractual
variation at some point before the end of his employment with GAP Ltd
in July 2006.
The EAT also made it clear that the matter of consideration did not –
contrary to the tribunal’s finding – assist the employer in this case.
As a general rule, consideration for a contractual variation is
provided by the employer continuing to employ the employee, and the
employee continuing in the employment. For these reasons, GAP Ltd’s
appeal was allowed in part, and the case was remitted to the same
tribunal. R remained entitled, however, to an extra 10p per mile for
his first month’s expenses claim, together with the 10 per cent uplift
with regard to GAP Ltd’s failure to follow the statutory grievance
procedure.
comment
-------
It appears harsh that an employee may be prevented from relying on a
contractual term that the employer had unilaterally varied within
weeks of his commencing employment. As this case reminds us, however,
it is the employee’s responsibility to voice an objection to the
change, and to ensure that the employer knows that, although the
employee continues to work, he or she is doing so under protest.
In the course of its judgment, the EAT stated that the law of
constructive dismissal provides some assistance in determining whether
there has been affirmation of a contractual variation. It is very
important, however, to distinguish between affirming the contract
following a fundamental breach and agreeing, by implication, to a
variation in terms. In a constructive dismissal case the question for
consideration is whether the employee has lost the right to treat the
contract as being at an end. Where the employee has affirmed the
contract following a fundamental breach, he or she may no longer be
entitled to treat him or herself as constructively dismissed but may
still have the right to claim damages for the breach which remains. On
the other hand, where the employee has affirmed a contractual
variation, the court presumes that the variation was in fact made with
agreement and there has been no breach of contract at all, with the
effect that the employee loses the right to claim damages.

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