Partner Article

Full time and part time hours

With Watson Burton LLP Law Firm

Employer obliged to continue paying full time salary despite employee working part time hours.

The Claimant, Mrs Keenan worked as a Complaints Officer for the Respondent. Her employment had been transferred from Global Home Loans in February 2006. Prior to the transfer, Mrs Keenan believed she was earning less than her colleagues in the same role. Also Mrs Keenan and her colleagues expected that substantial pay rises may be awarded as a result of the transfer. After the transfer, managers of the Respondent suggested that the transfer would be of a great benefit to employees (although nothing specifically was mentioned in relation to rates of pay). Accordingly, Mrs Keenan believed that the managers were indicating to her that she could expect to be better off financially.

Before the transfer Mrs Keenan’s salary was £9,500 per annum and subsequent to the transfer she received a written confirmation that her salary was £17,000 per annum.

Mrs Keenan subsequently applied to the Respondent for a staff loan, the application for which clearly stated her salary as £17,000. On consideration of this application she was granted the loan. Mrs Keenan was also granted a mortgage and bought a property. Subsequently she also decided that on the basis of her and her partner’s financial position they would have another child.

The error regarding her salary was finally discovered in December 2008 when a financial review was conducted and it emerged that the Respondent had mistakenly recorded that she worked 35 hours per week. The Respondent immediately cut Mrs Keenan’s pay once they realised that she had been paid a full time salary for part time hours. The Respondent also initially considered that she pay back the money which they had paid her in error, which was calculated at roughly £20,000.

Mrs Keenan stated that she would not be able to afford to pay her bills or her mortgage if this was the case. At the end of 2008, the Respondent’s HR department wrote to Mrs Keenan giving notice reducing her salary to £10,860 per annum. She raised a grievance regarding the pay decrease and the request for repayment.

Subsequent to her grievance meeting, the Respondent confirmed that she would not be required to repay any of the overpayments. However, her future salary would have to be reduced to reflect her part time position.

On considering the case, the tribunal relied on the facts that the Respondent had not only confirmed Mrs Keenan’s salary in writing, but had also taken it into consideration when granting a loan and a mortgage application. They had also previously reviewed her salary and provided an additional pay rise. The Respondent sought to rely on the contractual doctrine of “unilateral mistake” which provides that the contract term would be void if Mrs Keenan knew about the mistake or ought to have known. The tribunal believed that Mrs Keenan was unaware that she was being paid a salary which was incorrect and could not have been expected to know it was a mistake.

Accordingly, the Tribunal held that Mrs Keenan should continue to be paid at the higher rate, despite her part time hours.

Care should be taken when considering this judgment as the circumstances were unique and hence this case may not apply in different circumstances. However, the case serves as a reminder that extra care should be exercised by employers in reviewing and confirming employees’ post transfer terms and conditions.

If you have any questions about this article or any employment matters, please contact Jill Dalkin of Watson Burton LLP atjill.dalkin@watsonburton.com.

This was posted in Bdaily's Members' News section by Ruth Mitchell .