Nottingham City Council is facing a large bill for back pay after the Court of Appeal ruled a freeze on salary increases for hundreds of staff was unlawful.
Yesterday the court ruled the council’s decision in 2011 was a breach of contract as staff were entitled to incremental wage increases as they gained more experience.
It is believed Nottingham is the only council to have introduced a freeze of this kind and about 600 staff were affected.
The council can still appeal against the ruling, which was handed down yesterday, at the Supreme Court and it has indicated it will do so.
Any final liability would include back pay and pension contributions which the council said would be significant “at a time when our budget is under huge pressure”.
Nottingham staff first took the case to an employment tribunal in 2015 but it was dismissed.
Supported by Unison, staff successfully challenged the decision at an employment appeal tribunal. However, the council then challenged the judgement and the case went to the court of appeal.
Unison general secretary Dave Prentis said: “While there’s much sympathy for cash-strapped councils struggling to provide services for local communities, while the government is slashing their funding, Nottingham shouldn’t have been making its employees pay the price.
“Now staff can look forward to receiving all the cash they are owed.”
Thompsons law firm’s employment rights solicitor Claire Horne, who represented the staff, said the case is “a significant win for those employees who were at the receiving end of austerity measures for a number of years”.
A city council spokesman said: “We are extremely disappointed with the Court of Appeal’s decision in relation to the historical freeze on incremental pay rises in connection with the council’s former employment contracts. This could result in a major additional cost at a time when our budget is under huge pressure as a result of government cuts.
“The freeze on incremental pay rises was introduced in 2011 as part of the £232m of savings the council had to make, with its main government grant cut by two-thirds. The decision to freeze these pay rises was taken to avoid cuts to jobs and services wherever possible and has saved the equivalent of around 1,000 full time jobs.
“Had it not been introduced, further significant cuts to services and job losses would have been unavoidable.
“We will review the detail of the decision to assess the full financial implications for the council. As these could be significant, we are planning to lodge a further appeal.”