Facts
In this case, the two claimants worked for the Council carrying out emergency repairs to roads and property. After they had been appointed, they were asked to extend their working day by 15 minutes in the morning and 15 minutes in the evening, for which they were paid a premium rate. No guarantee was given that overtime would continue, since the Council wanted to see if the arrangement worked, although it did in fact continue for over a year.
Over a year later the claimants’ terms were harmonised. They felt they were worse off than before and brought an unlawful deduction from wages claims. As part of this, the tribunal had to decide if they had a contractual right to 2.5 hours of overtime a week.
The tribunal decided that whilst there was initially no contractual right to overtime, after a year there was. This decision was based on the ‘officious bystander’ test: if an officious bystander had suggested that there should be a express contractual provision relating to this overtime, the parties would have had no difficulty in agreeing it. The Council appealed.
Can this test be used to vary a contractual term?
On appeal, the EAT disagreed. Looking at past case law, it found that the ‘officious bystander’ test could only be used to imply terms into the original contract. It could not be used to imply a term which varied a contract. In addition, the fact that overtime had been worked for over a year was not enough on its own to justify implying a term into a new contract, let alone to lead to the conclusion that a term had been varied. A term can only be implied by custom and practice if it can be shown that the employer had continued with a practice because it had a sense that it was legally obliged to do so.
So how can existing contracts be varied?
An existing contract can be varied after it has been entered into either expressly (verbally or in writing) or by implied agreement. The latter occurs where the employer proposes a change and the employee accepts the change by continuing to work without objecting. In this particular case, neither had happened.
Practical implications
This case is a useful antidote to the argument often run that simply because something has happened often, it must have become a contractual term. It will be particularly difficult for an employee to show that an existing contractual term has been varied when there has been no express agreement or proposal to make a change to the contract.