Although the ideal situation when changing terms and conditions of employment is for an employee to agree to the change, employers often seek to change terms unilaterally without the employee’s consent. The first question an employer should ask when approaching this issue, is whether the terms they are seeking to change form part of the contract of employment. In addition to express terms, contracts of employment may also include terms from other sources which are incorporated into the contract, such as collective agreements and staff handbooks; for a term to be incorporated it must have been the intention of the parties that this would be the case and “apt for incorporation” as a contractual term.

In the recent case of Department for Transport v Sparks & ors the Court of Appeal held that terms contained in a staff handbook relating to absence triggers, had been incorporated into the contract of employment and therefore an attempt by the employer to unilaterally change the terms was a breach.

Background

The original High Court case was brought by seven claimants all of whom were employed by different agencies under the umbrella of the Department of Transport. Each agency had a different staff handbook and whilst the terms were broadly the same, the number of days absence which triggered the formal absence procedure varied from eight to 21 days in any 12 month period. Following unsuccessful negotiations the Department of Transport sought to unilaterally introduce a new standardised policy with a trigger point of five days; the claimants sought a declaration that the employer’s actions were illegal and asked for the original terms to be reinstated.

The contract of employment contained three key relevant terms:

  1. “You are a Crown employee working within the Department for Transport (DfT). Your terms and conditions of employment include those set out in….. the DfT Departmental Staff Handbook which contains terms and conditions and procedures and guidance applying specifically to you as a Crown employee.
  2. The Departmental Staff Handbook, as applying to you, sets out many of your terms and conditions. It is the intention of the recognised trade unions……and of the Crown that all of the provisions of the Departmental Staff Handbook which apply to you and are apt for incorporation should be incorporated into your contract of employment.
  3. Your contract of employment cannot be changed detrimentally without your agreement. Consequently, the Department will not change any of your terms and conditions of contract without your consent or that of a recognised Trade Union.”

 Decision

The High Court granted a declaration and reinstated the employees’ original terms, which was upheld by the Court of Appeal, stating that:

  • The terms relating to the absence management procedure were sufficiently clear and precise to be incorporated into the employees’ contracts of employment.
  • In the absence of agreement, unilateral changes could be made, but only if they were not detrimental to the employee.
  • The change was detrimental as the absence trigger point had been reduced such that fewer absences could be taken before the formal process was triggered and potential sanctions could be imposed.
  • The employer’s argument that the changes were not detrimental as the reduced trigger point enabled sickness absence to be addressed at an early opportunity and facilitated a return to work, was rejected.

 Lessons learnt

This case is a useful reminder that any attempt by an employer to reserve the right to unilaterally change contractual terms will be examined in detail by the courts. To help maintain flexibility and to allow future policy and procedural changes to be made more easily, employers should consider making staff handbooks expressly non-contractual. Where only parts of a handbook are contractual these should be clearly identified to the employee and any change to these terms should only be made after a period of consultation.