High Court finds that employer is not entitled to unilaterally vary terms of Staff Handbook

High Court finds that employer is not entitled to unilaterally vary terms of Staff Handbook

The High Court has considered the case of Sparks and another v Department for Transport after the Department for Transport unilaterally changed the terms of its staff handbook in relation to formal employee absence management procedure.

The Department for Transport (DfT) provided a standard Departmental Staff Handbook (Handbook) to its staff which included a provision setting out the DfT policy on absence management. The Handbook set out a specific number of days required before an informal absence management process was triggered (the exact number of days ranged between 8 and 21 days depending on the DfT agency).

The absence management section was located in ‘Part A’ of the Handbook, which was stated to be incorporated into employees’ terms and conditions and contained more contractual provisions in contrast to ‘Part B’, which contained more general guidance.

The Handbook also contained a variation provision which, although not entirely clear, provided that the DfT must follow a consultation procedure before varying the terms of employees’ contracts. Should this prove to be unsuccessful, the variation provision stated that the DfT may then unilaterally impose changes, but only if they were not detrimental to employees.

In July 2012, following an unsuccessful consultation procedure, the DfT informed the employee trade unions that it was planning to unilaterally introduce a standardised absence management procedure across all its agencies. The first trigger point under the new procedure was either five days absence or three occurrences of absence within a rolling 12 month period. This was then escalated to a formal procedure after the second trigger point and could ultimately lead to dismissal.

The claimants, all employees of the DfT, sought declaratory relief from the High Court that the terms of their contracts remained as if the change had not occurred, that the new procedure did not vary such terms and was not contractually binding, that the DfT had therefore committed an anticipatory breach of contract and that should the DfT apply the new procedure, it would constitute a breach of contract.

The High Court granted the claimant’s declarations and held that the terms of the absence management policy were incorporated into the terms and conditions of employee contracts. The DfT was therefore not entitled to unilaterally amend them.

The Court considered whether the absence management policy was capable of being a contractual term in light of the fact that much of the content in Part A of the Handbook, despite being clearly labelled as contractual, was in fact guidance and too imprecise to be incorporated. However the Court deemed that the absence management policy itself was sufficiently clear, precise and read as a contractual term.

The Court also held that the changes proposed were detrimental to employees rather than beneficial as the DfT argued. Although the DfT claimed it was beneficial to address absence management concerns earlier rather than later, it was clear that previously employees would not be subject to formal sanctions until more absences had been taken, which was beneficial to them.

Employers have greater flexibility to vary handbooks and policies (or parts of them) which are expressed to be non-contractual.  It is therefore common for employers to opt for handbooks that are completely non-contractual.  Employers should consider carefully the implications of indicating that a policy is contractual and evaluate the structure of their handbooks to ensure that it is clear which parts, if any, of the handbook form part of an employee’s terms and conditions.

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