Failure to award pay increase was unlawful deduction from wages
An Employment Tribunal has held in the case of Bent and others v Central Manchester University Hospitals NHS Foundation Trust that unlawful deductions had been made from the wages of NHS employees following the introduction of a local pay policy which deferred pay progression for workers with particular levels of sickness absence.
The Claimants had nationally agreed terms and conditions, which were set out in the Agenda for Change ("AfC"). These terms were expressly incorporated into their contracts of employment, and provided for automatic annual pay increments. The only caveat to this automatic pay increase was that performance had to be satisfactory and the employees had to demonstrate the requisite knowledge and skills appropriate for their pay band. The aim of AfC was to provide a comprehensive and highly prescriptive pay system for the NHS, in part to avoid the risk of equal pay challenges.
In response to budgetary constraints, the NHS Trust implemented a freeze on incremental pay increases where a worker had triggered its absence management procedure by having a certain number of days off due to illness. The Trust justified this decision by arguing that the incremental progression contained within the AfC was not an automatic right but was conditional on satisfactory performance. The AfC does not specifically define what is meant by ‘performance’ or ‘satisfactory’ and the Trust’s view was that this omission allowed local employers to determine what satisfactory performance was in response to the conditions prevailing locally. The Trust argued that high levels of sickness absence would affect an individual to such an extent so as to automatically inhibit satisfactory performance.
The Claimants argued that the AfC did not contain provisions that allowed any form of deferment other than in exceptional circumstances where significant weaknesses in performance had been identified, discussed and documented. The Trust’s policy did not provide any assessment of the staff members’ skills and competency where sickness absence had triggered the managing absence procedure. This undermined the aim of the AfC to achieve a nationally consistent system of pay progression which was centralised, highly prescriptive and fair.
The Tribunal held that the Claimants had been subject to a variation of the terms and conditions of their employment to which they had not consented and, through the imposition of which, they had been subject to a series of unlawful deductions from their pay. The Tribunal agreed with the Claimants’ interpretation of the AfC terms, namely that the AfC did not provide scope at local level for NHS Trusts to decide how to interpret satisfactory performance. The failure to pay the Claimants the annual increments therefore amounted to an unlawful deduction from their wages.
Impact for employers
- This case acts as a useful reminder that contractual pay increments, whilst rare, have the same force as any other contractual provision and cannot be varied without employees’ consent.