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LCJ of England
Tomlinson and Underhill LJJ
Regularly giving pay rises based on the RPI and informing
employees that they were entitled to such rises gives employees a contractual
right since that is what the parties reasonably understood the entitlement to
be as a result of the conduct and communications from the employer.
The claimants’ contracts of employment provided that rates of
pay would be reviewed annually by the company in consultation with staff
representatives. They had originally been employed by ITS. ITS had always
awarded cost of living pay rises. CSC took over the business and continued to
give cost of living pay rises to the former ITS employees but not to other
employees. In 2008 and 2010, CSC agreed with the recognized union pay rises for
all employees, including the ex-ITS employees, of less than RPI, overlooking
the fact that the union was not recognized in respect of the ex-ITS employees.
Those employees brought a grievance in 2010 claiming they should have received
a pay rise based on the RPI. When this was refused, they sued in the employment
tribunal for unlawful deductions from wages.
The tribunal, upheld by the
Court of Appeal, concluded that the understanding of all the parties was that
the ex-ITS employees were entitled to pay rises based on the RPI.