Employee could not argue clearly written terms should be interpreted differently
In the case Equality and Human Rights Commission v Earle, the EAT had to decide whether a contractual term gave an employee the automatic right to a pay increase if her performance was satisfactory.
Facts
Earle was the successful applicant for a job which came with a salary range, within which there were a number of incremental steps from the lowest level (where she started) to the top. Clause 5.3 of the contract stated: “Progression through the salary range will be reviewed annually on or around 1 October in each year until the maximum of the range for your role has been reached. Any progression review will include an assessment of your performance during the preceding 12 months. There is no obligation on the EHRC to increase the level of your basic salary at a review. Any increase awarded in one year will not create any right or entitlement or set any precedent in relation to subsequent years.”
The contract also contained another term, clause 22, part of which read: “This contract supersedes any previous oral or written agreement between the EHRC and you in relation to the matters dealt with within it.”
Earle was disappointed with the starting salary she was offered of £43,680. She contacted an EHRC HR officer, who assured her that she would be granted progression through the incremental steps of her pay grade if her performance was satisfactory. On the basis of those assurances, Earle accepted the job. The employer was subject to severe financial constraints arising from a tightening of government funding, and did not award Earle (or anyone in her position) either pay progression or a progression review. She claimed this amounted to an unlawful deduction from wages.
Tribunal
An employment judge upheld Earle’s claim. The judge found it “obvious” that clause 5.3 provided her with an express mechanism and contractual right to receive a ‘starting salary’ and then a salary increment, triggered by the annual performance review, subject only to one condition, namely her satisfactory performance.
As to the assurances given by the HR officer, the employment judge thought they might constitute a separate contractual agreement, because the words spoken were in response to a specific concern raised by Earle about the modest starting salary. In order to encourage Earle to take the job, the HR officer had said that her salary would increase annually, subject to satisfactory performance and Earle had taken this to mean she would not be on the bottom of the scale for long. The employer appealed.
EAT
The Employment Appeal Tribunal upheld the EHRC’s appeal and set the employment judge’s decision aside. The EAT held that it was clear that the wording of clause 5.3 did not convey a right to incremental progression, subject only to satisfactory performance, as indicated by the HR officer. The words simply did not appear in the contract. Furthermore, there was no obligation on the employer to grant Earle salary progression. Therefore, the employment judge’s decision contradicted the clear meaning of the contract.
The EAT then considered the words used by the HR officer, which the tribunal judge thought constituted the formation of a subsidiary contract. The EAT noted that the employment judge did not deal with the impact of clause 22 of the written contract – this clause superseded any assurances given by the HR officer.
Comment
The practical lessons from this case are threefold:
- Recruiters and those involved in the job offer process should be careful about what they say when giving verbal assurances to successful job applicants about the terms and conditions of employment
- Contractual terms must be drafted in a clear and unambiguous way
- Contracts should contain an overarching clause stating that its terms supersede any previous oral or written agreements.
Makbool Javaid is a partner and head of employment law at Simons Muirhead and Burton
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