The EAT’s decision in Hershaw and Others v Sheffield City Council serves as warning to be careful when dealing with grievances in three respects: being clear about the actual outcome, the method of communicating the decision and being sure about the status of the person conveying the information.

A group of employees lodged a grievance after their pay had been varied following a grading/pay review. The grievance was investigated by a HR consultant (HRC), who had no authority to make decisions about pay, but had been authorised to communicate the outcome. The HRC informed the employees by letter that the appeal panel had regraded them to Grade 5, whereas they had previously been placed on Grade 3. They worked on expecting this would be honoured, but their pay did not change. The employer contended that the letter was mistaken, and reconvened the appeal panel to determine what it had actually decided, which was a lesser increase to Grade 4.

A tribunal rejected the employees’ unlawful deduction from wages claim on the basis that the HRC’s letter was not of a contractual nature since it was written in response to a grievance and she had no actual nor ostensible authority to make decisions as to pay and grading. The Employment Judge (EJ) thought he did not need to determine whether there had been a mutual mistake, such as to destroy or impair the legal validity of any apparent contract.

The EAT allowed the employees’ appeal. The EJ had erred. In context, the letter was a response to a complaint by the employees that they had not been told what the decision was as to their revised pay grade. It was written by someone who was authorised to tell them what had been decided, even if she was not authorised to decide questions of pay herself. Viewed objectively, the communication was intended to set out the pay offer and came from someone held out by the employer as authorised to make that communication. The issue of a ‘mistake’, however, was critical, as it could negate the contractual effect the letter may have had, and this would be remitted to a fresh Tribunal.

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