Employer Entitled to Choose Between Pay Increase Options

An employer which agreed two options for a pay increase with a union was entitled to award the lower of the two. 

In Anderson v London Fire & Emergency Planning Authority, the employer agreed a three year pay deal with the union and the terms were recorded in a collective agreement.  For 2009, the deal was that pay would be increased by 2.5% or by the National Joint Council (NJC) pay settlement for Local Government staff. 

When the employer awarded the NJC increase, the employees brought an unlawful deductions claim arguing that the intention of the clause had been to guarantee them a minimum 2.5% increase. 

The EAT held that the existence of choice did not render the agreement invalid if the options were clear.  In this case, each option was clear and it was clear that it was for the employer to choose between the two options.

The employees argued that the words “whichever is the greater” should be implied but the EAT refused to add these words. The language of the provision was not ambiguous and these words had been included in other provisions in the agreement, which suggested that the parties had not intended these words to be included here.  

The employer had therefore complied with its contractual obligations and the employees’ unlawful deductions claim failed. 

Where a contract gives a choice between two options, it is best to make it clear which party can choose between the two options.  Although the employer in this case was successful, it could have saved itself a lot of time and legal costs if it had been made clear in the collective agreement that it could choose which level of pay increase to award.