You’ve been offered a promotion. It means more power, success and cash. The problem is, your boss made the offer last night in a drunken conversation at the pub. And now, in the cold light of the office, they appear to have totally forgotten about it.
This sort of boozy deal-or-no-deal has been thrown into the spotlight this week, as the high court hears a case brought by banker Jeff Blue.
Blue claims that Sports Direct founder Mike Ashley agreed to pay him £15m if he could help double Sports Direct’s share price within three years.
However, Ashley has reportedly dismissed everything discussed in the pub as “banter”, denies the deal and refused to pay the money.
Obviously, the one thing that’s clear, is that this is an unusual and extreme case.
“For most managers a statement such as ‘I would pay you a million pounds if...’ would clearly not be intended as serious,” says Phil Allen, partner in the employment, pensions and immigration team at Weightmans LLP.
However, he says that managers do sometimes make more realistic assertions to employees. “And if that manager has authority to make the promise, that could make it contractually binding,” says Allen.
So if your boss has promised you a salary increase over a few glasses of bubbly what, if anything, can you do to make it happen?
The backdrop
“In English law, it is still the case that ‘your word is your bond’,” says Michael Burd, chair and partner at Lewis Silkin LLP. “So, strictly speaking, an oral contract is just as valid and binding as a written contract. However, the great problem with oral contracts is proving their terms if they are disputed.”
Inevitably, these cases become ‘he said, she said’ adds Burd, and then the courts have to decide.
Evidence
The courts will look at the surrounding evidence to see how both parties conducted themselves. This is to ascertain what it was that the parties intended, says Jeanette Wheeler, partner and head of employment at Birketts LLP.
Vague and uncertain terms (a casual comment about promotion but no terms set, for example) will not be enough to establish a contractually binding promise.
“It’s a bit like a declaration to love someone forever is not the same as making a marriage vow and the consequences are generally very different,” says Wheeler.
Context
The context is also a crucial factor. And scenarios like this have been considered previously in case law, for example in Judge v Crown Leisure, points out David Jones, employment solicitor at Myerson.
“In that case, an employee argued that their manager had promised a pay rise during a conversation at the Christmas party. The employment judge held that a conversation taking place in that environment undermined a genuine intention to create a legally binding contract on the part of the manager,” says Jones.
However, context depends on the workplace culture. If it so happens that business meetings are regularly held in the bar, then it may be considered that deals there are as legally binding as in the office.
“It is well established that events occurring outside the office in a social work context can be regarded as taking place ‘within the course of employment’,” says Wheeler.
She points to a case (Attrill & others v Dresdner Kleinwort Ltd and Commerzbank AG) where the employer made an oral announcement to a group of employees at a town hall meeting that it would create a minimum guaranteed bonus pool that would be set aside no matter what. It was found to be legally binding because of the context (and various factors such as how the announcement had been approved by the board, for example).
Drinking
“How intoxicated those having the conversation are may also be relevant in determining whether what was said is genuinely considered contractually binding,” says Allen.
He says it would hard for an employer to argue that the employee should have known the manager was drunk and therefore not making a legally binding promise. But proving it either way is hard, as there is often no evidence as to exactly how inebriated someone was.
Contracts
It may also come down to how organised an employer is when it comes to its procedures and contracts. For example, if employers have proper processes in place and employees have been made aware that any promotions/changes will be made in writing, then what’s said outside of the workplace (or said, full stop) is unlikely to be able to override that.
“Many employment contracts contain a provision that says that changes can only be made by written agreement between the parties. If you have that, then an oral ‘promise’ doesn’t count, says Burd.
What to do
So, while it may be difficult to bring a successful claim, one thing you can do is look for some clarity. And it’s best to do this quickly. There’s no point working for two years on a project – on a promise you’ll be given a bonus, say – only to find it was never a legally binding in the first place.
“Follow up the conversation with a subtly worded email to document what was said, or raise the point at your next one-to-one meeting with your manager and ensure the point is minuted,” says Wheeler. “Don’t wait until much later to find out that the ‘deal’ was no more than a gentleman’s agreement.”
Joanne O’Connell is editor of EmploymentSolicitor.com.
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