Staff handbook provisions incorporated into contracts

Decision: In Department of Transport v Sparks, the Court of Appeal upheld the High Court's finding that a provision relating to absence management outlined in a staff handbook had been incorporated into contracts of employment. The High Court had decided therefore that a new policy on this issue could not be brought in without consulting with the employees.

The Department for Transport ("DfT") wished to standardise the absence management policies across a number of its agencies. Following unsuccessful consultation with trade unions, the DfT announced that a stricter, standardised attendance management procedure would be unilaterally introduced across all agencies. The policy in question was included within "Part A" of the employer's handbook, the terms of which were expressly stated to be incorporated as contractual terms, where apt to do so. Some employees were unhappy with the new procedure, as the trigger points which could lead to formal absence management were going to allow the new procedure to start with a lower number of absences. They therefore sought a declaration on the terms of their contracts as they argued that the trigger point provision had been incorporated into their contracts. Accordingly, they claimed, any amendment was a contractual change and could not be made unilaterally.

For terms to be incorporated into contracts from other material such as handbooks, the terms must be "apt for incorporation". Guidance provisions or provisions that are aspirational in nature are unlikely to be "apt for incorporation". The provision needs to be sufficiently clear and certain. In this case the provision which contained the trigger point (number of absences) which could lead to the formal absence management was found to be apt for incorporation. The Court found there was no inconsistency in the fact that sickness management procedures could be largely for guidance and made up of good practice(which would not be apt for incorporation) but that there could also be specific provisions, such as the trigger point, which were of a different nature and so were apt for incorporation.

Impact: The Court of Appeal acknowledged that whether a provision has been incorporated into a contract will always depend on its precise terms. So the key learning point from this case is that if you have a precise term in a more general section, the precise term may be contractual. On looking at whether provisions are "apt for incorporation" the Courts will consider the language of the employment contracts and supporting documents as a whole and the

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Episode 94 The test for whether adverse treatment is "arising" from disability. Whether an employee could prevent an employer using material given to it by a third party. Whether a belief that the public sector is wasting money could be a philosophical belief. Episode 93 Review of whistleblowing, whether an employer could change a sickness absence policy unilaterally, and settling claims which neither party knows about at the time of settlement.

UK Employment Law: for HR and in-house lawyers

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intention of the parties. Therefore employers should think carefully about what employment terms and/or policies should be designated as contractual. Certainly, in this case, the employer's position would have been much clearer if it had stated that the provision was not intended to be contractual in the handbook. So it is primarily a case, for employers, of ensuring that since they have control of the documentation, and are responsible for drafting the provisions, that they consider clearly ahead of time whether the provisions are intended to be contractual . It is important to bear in mind that if the employer does not make it clear, a court can find some parts are contractual and some parts are not.

Department for Transport v Sparks and others

What do employers need to know about the new general data protection regulation?

There is a significant change to data protection law in the UK on the horizon. The new General Data Protection Regulation ("GDPR") was adopted by the EU Parliament in April 2016. It came into force this month, though will not apply to member states until 25 May 2018. Many of the principles in the new legislation are much the same as those in the current Data Protection Act. Therefore, if employers are complying properly with the current law, they have a strong starting point to build from. However there are important new elements, and some things will need to be done differently. The new law will enhance the rights of data subjects and place more obligations on organisations to be accountable for their use of personal data.

Data protection is always an important issue in the employment arena given how much personal data employers tend to hold and process in respect of employees. This may explain why the GDPR, despite the aim of giving more uniformity to data protection laws across all EU jurisdictions, gives power to member states to legislate domestically in a few areas, one of which is employment. It is not yet clear to what extent states will take advantage of this power. So the new data protection landscape is not entirely clear for employers.

What is certain is that the rules in the GDPR are underpinned by a tough penalty regime. The maximum penalty for non-compliance is EUR20 million or 4% of an undertaking's worldwide turnover. This compares with the current maximum penalty in the UK of 500,000. Such figures are likely to move data protection issues up the agenda for Boards. We understand the Information Commissioner's Office ("ICO") does not plan to change its current pragmatic and proportionate approach to penalties so we are unlikely to see penalties anywhere near those maximum ranges in the UK. However, the situation will be more complicated where a business operates in more than one member state as the lead regulator, under the GDPR, will be in the state in which its main establishment is based. This means an issue could arise in the UK, but the lead regulator dealing with it could be based in a different state and take a more aggressive approach than the ICO has done previously.

Impact: Forward planning and careful preparation will be key to ensure compliance with the new legislation. For now employers should wait for further guidance from the ICO before taking any significant steps to prepare for the new legislation. However, a good starting point is to ensure that you have your house in order now and are complying fully with the current data protection law. The ICO has also published its first GDPR product which sets out 12 steps potential steps companies can start thinking about. (https:// dpreformdotorgdotuk.files.wordpress.com/2016/03/preparing-for-the-gdpr12-steps.pdf ).

We will continue to keep you updated as the position becomes clearer for employers as we get closer to the GDPR coming into force in 2018, subject to the results of the upcoming EU referendum.

Do non-competes stifle british business?

The UK has a long and strong history in the field of innovation, being ranked second in the Global Innovation Index last year. With increasing levels of competition, the Government is looking at ways to progress in the future, appreciating that innovation is key to society. Business Secretary Sajid Javid has announced plans to look into employment rules restricting British entrepreneurship. He has voiced his desire to see more enterprising start-ups and greater productivity in the UK marketplace, by ensuring the Government takes action to break down any barriers that are curbing innovation and entrepreneurship.

One such barrier that has been cited is that of non-compete clauses in employment contracts, which can prevent an individual from competing against their former employer for up to 24 months in extreme circumstances. One view is that entrepreneurial individuals need to be able to move between employment and self-employment with ease and start-ups need to be able to hire the best and brightest talent, but non-competes hinder this. Clauses such as these are only enforceable if they are no more than is necessary to protect a legitimate interest, but even if they are not legally enforceable they could act as a deterrent and prevent individuals from moving round the marketplace.

A call for evidence, as part of the large consultation "National Innovation Plan" has been launched, asking a wide range of businesses across the UK, individuals, employers and researchers, to give their view on whether the practice of imposing non-competes is a barrier to innovation and prevents start-up businesses from prospering. It will be interesting to see what this survey reveals, and whether the Government decides to take any action, which could impact the long-standing practice of including non-competes in employment contracts. Our informal view would be that the courts are quick to protect employees> interests and so it would be surprising if there was a groundswell of informed opinion indicating these were subject to widespread abuse. It is noticeable that compared with many European jurisdictions, in the UK there is no obligation on an employer to make any payment for the period of the non-competition covenant. This could be a potential option that the Government has in mind. Obviously a balance needs to be obtained between protecting the employer's business, its value often being the staff themsleves, but also the employee's personal interests and freedom to move between roles and businesses and pursue their career or business aspirations. Some employers may be reluctant to provide sensitive commercial information or significant autonomy to employees if they can leave and compete freely. In that context one can see that a long notice period may operate similarly to a non-compete covenant but so far as we know there are no plans to regulate the maximum length of notice periods.

The consultation closed on 30 May 2016 and the results will contribute towards development of the National Innovation Plan which is expected to be published later this year.