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19 July 2012
Employment Appeal Tribunal (EAT)
Slade DBE J, Mr C Edwards and Mr P Gammon MBE
The subjective intentions of parties to a contract and the negotiations leading up to an agreement are irrelevant in interpreting the agreement if its wording is clear.
The Claimants' contracts of employment provided that, on 1 April 2009, they would receive a pay increase of either 2.5% or the increase negotiated by the National Joint Council plus 1%. The employers awarded an increase of the NJC agreed increase plus 1%, which was less than 2.5%. The Claimants argued that the intentions of the parties, as demonstrated in the negotiations before the agreement, were that the employers would pay the higher of 2.5% and the NJC rate plus 1%. The EAT held that subjective intentions of the parties and the negotiations before the agreement were irrelevant. The meaning of the agreement was clear. The employer was given two options and was entitled to choose whichever of those options it wanted.
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