HR managers’ authority to bind employer

23 September 2014

A number of interesting cases have been decided this summer which bear on common day to day operational issues faced by HR managers and their employers.

In the Hershaw case a number of Sheffield City Council market patrol officers were offered a change to their pay rates following a pay and grading structure review. The employees accepted the pay terms but appealed their grading. The employer appointed an appeal body which, having heard the appeal, failed to communicate its decision to the appellant employees. The employees gathered on the grapevine that their appeal had been successful, but were not in fact formally notified. The employees therefore raised a grievance and the employer Council appointed an HR consultant to deal with it. The HR consultant promulgated her decision which reflected what she understood to be the appeal body’s decision that the employees should be placed at grade 5, up from grade 3. The HR manager made a mistake as the appeal body had intended to place the employees at grade 4. Subsequently, the employees brought claims for unlawful deduction of wages as they had only received the lower grade pay.

At first instance the Employment Judge found that the HR Consultant’s letter was not contractual and declined to award compensation. On appeal the Employment Appeal Tribunal overturned that decision and found that the HR Consultant’s letter had contractual effect notwithstanding the fact that it communicated a grievance procedure decision and contractual “offers” do not normally take that form. The employees had by their conduct accepted the offer in continuing to perform their duties at the higher grade 5. The HR Consultant did not express her view of what the pay and grade should be: she merely made a finding of what the appeal body had decided and communicated it to the employees. She had the authority of the employer Council to do that.

Comment: A question remains whether the HR Consultant’s mistake in interpreting the appeal body’s decision could have the result of vitiating the contractual effect of the grievance decision letter and, in fact, a new tribunal has been constituted to decided that point. Nevertheless, the lessons remain the same. HR Managers should consider carefully the nature and wording of any grievance decision letters they put their name to.

(Hershaw and ors v Sheffield City Council)

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