In the recent case of Department for Transport v Sparks and others (2016) the crux of the matter was whether specific terms in a staff handbook (relating to absence management and the ‘trigger point’ at which disciplinary procedures would be invoked) were contractual or non contractual.
The Department for Transport (DfT) had, after failing to reach agreement with employees, imposed a new absence management procedure, under which the first ‘trigger point’ would be 5 days or three occasions of absence within a rolling 12 month period. The employees argued that the existing provisions were contractual, and so the DfT could not impose the new terms without their agreement.
The handbook was divided into two parts, A and B. Whilst Part A expressly stated that all parts which apply to the employee and which are “apt for incorporation” will be incorporated into their contract of employment, Part B was stated to contain procedure and guidance. The existing absence management provisions were contained in Part A.
The handbook also stated that the DfT had to consult with employees before making changes to contractual terms and, if agreement could not be reached, it could only make unilateral changes if they were not detrimental to the employees. The DfT imposed the changes to the absence management procedure without the employees’ agreement and several of the employees applied to the High Court for a declaration of their rights.
The High Court held that the existing trigger point provisions were “apt for incorporation”, even though many of the surrounding provisions were not. The new provisions, which were detrimental to the employees, were not effective in varying the contract and were not therefore contractually binding on them. If the new provisions were applied to any of the employees then this would be a breach of contract.
The DfT appealed to the Court of Appeal. The Court of Appeal looked at the specific wording in the handbook and upheld the findings of the High Court. The Court of Appeal found that is was possible for a sickness management procedure consisting largely of guidance and good practice to contain specific provisions which have contractual force.
Whether terms are in fact incorporated into the contract of employment will always be very fact specific. It is an important issue for employers to consider because of the risks of imposing detrimental changes to contractual terms without employees’ agreement.
The Court of Appeal also commented how unsatisfactory it was that the handbook only existed in electronic form and previous relevant provisions had been ‘lost for all time’. It would be prudent to keep records of any changes or prior versions of procedures in the event of a dispute.
Why does it matter?
If the terms have contractual force, then the employer will need the employees’ consent to make changes, unless there contract makes specific provision for such changes (and even if it does, that is no guarantee that employers can rely on such clauses). Whilst there is unlikely to be an issue if the changes are beneficial to the employees, it will be potentially more difficult where the changes are detrimental. Click here for our previous article Q&A – Changing terms of employment which discusses the options available to employers needing to make changes to contractual terms.
We can help draft and review contracts of employment, service agreements, policies and staff handbooks to ensure that you have clear documentation which protects your organisation and reduces the risk of dispute. If you are changing terms and conditions and/or employee benefits, we can guide you through what can be a complex process.
If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).