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Employment Law

Legal guidance - compliance - software

16 FEB 2015

Can an employer unilaterally change terms of employment policies?

Can an employer unilaterally change terms of employment policies?
Colin Godfrey
Associate, Veale Wasbrough Vizards

This was the question in the recent High Court decision in Sparks & Another v Department for Transport. Whilst very fact-specific, the conclusion in this case was 'no'.

This case involved seven Claimants each employed by a different agency for which the Department for Transport (DfT) was responsible. Each agency had a departmental staff handbook including provisions in respect of attendance management. The handbook stated that it was the intention that all terms that applied to an employee and were apt for incorporation, were to be incorporated into the employees' contracts of employment.

The handbook also stated that provisions were capable of being varied by the DfT but that any variation must be consulted upon and could only be implemented unilaterally if the changes were not detrimental to employees.

Following unsuccessful negotiations, the DfT imposed changes to the absence management procedure in 2012, implementing a new 'standardised attendance management procedure' across all of the agencies. The new procedure introduced earlier trigger points at which the absence management procedure would kick in.

The Claimants applied to the High Court for a declaration in relation to the terms of their employment so far as it related to the new policy.

The High Court first considered whether the attendance management provisions were terms of the claimants' contracts of employment. In this respect, the High Court confirmed that in considering the contractual force of such a provision, the key question was what the contractual intention of the parties was. It was a question of looking at the content and character of the provision to determine whether it was apt to be a term of the individual contract of employment.

Specifically in relation to absence management, the High Court also said that it was relevant to consider whether the provision confers a right on the employee not to have an action invoked without the triggering event having happened. Considering these two tests, the High Court was satisfied that the trigger points in the absence management provisions were incorporated into the Claimants' contracts of employment.

The question then considered was whether the DfT could nonetheless unilaterally vary those provisions. The High Court emphasised that a right to unilaterally vary a contractual term required very clear language expressly reserving that right. The High Court said that it was clear from the handbook that unilateral changes required prior consultation and that changes were not to the employees' detriment.

The High Court finally considered whether the changes were to the employees' detriment and concluded that there were material differences between the old and new absence management processes. The imposition of earlier trigger points was something which any reasonable worker would take the view was to his/her detriment. The High Court therefore granted an appropriate declaration, including that the new procedures were not an effective variation of the employees' terms and were therefore not binding on them.

Best practice

This case is useful in highlighting the process of analysis that a court or tribunal will follow in assessing the contractual effect of employment policies. Whilst carefully drafted policies and procedures will often ensure that the parameters are clear, any employer considering changing the terms of its policies should look carefully at whether those policies may be contractual and if so what process should be followed.

The case is also a good reminder that, whilst there are strict limits, a clear express reservation of a unilateral right to vary can be of assistance in effecting change.
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