We look at the case of Sparks and others v Department for Transport  EWHC 181 (QB), in which seven claimants who worked for separate agencies of the Department for Transport successfully applied to the High Court for a declaration that their employer had breached their contracts of employment by unilaterally imposing a change to the attendance management provisions of the contractual staff handbook.
This case concerned seven employees, all of whom worked for separate agencies for which the Department for Transport (the DfT) was responsible. This included the Driving Standards Agency, the Driving and Vehicle Licensing Agency, the Highways Agency and the Vehicle and Operators Services Agency.
Each agency had a department staff handbook, which was based on a standard form that was in operation across the whole of the DfT. The terms of the handbooks were largely the same, however, there were a number of key differences relating to the attendance management processes operated by each of the individual agencies. In July 2012, following unsuccessful negotiations with the trade unions, the DfT sought to introduce a new standardised attendance management policy. The claimants applied to the High Court for a declaration in relation to their terms of employment.
The relevant contracts of employment included clause 1.1, which stated "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 department staff handbook which contains terms and conditions and procedures and guidance applying specifically to you as a Crown employee (there are variations between different bargaining units [agencies] - see annex A)". Clause 1.2 also stated that the staff handbook "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". The clause went on to explain that the departmental staff handbook was in two parts; part A was said to contain "terms and conditions" and the wording above - relating to those parts of it which were apt for incorporation being incorporated into the relevant contracts of employment - was repeated. Part B was said to contain "procedures and guidance relevant to your employment relationship with the Crown". It was stated that these procedures and guidance may be "relevant to the operation of your contractual terms and conditions" but it was made clear that in the event of inconsistency, part A would prevail.
In law, a contract can only be amended in accordance with its terms or with the agreement of all parties. Changes to non-contractual policies and procedures do not require agreement of all parties but, as a matter of good practice, employers are advised to inform employees of any such changes. The same applies where the change is authorised within the contract itself.
In order to determine whether or not a proposed change will amount to a contractual variation, the question of whether the provisions that are being changed amount to contractual terms needs to be answered. As well as express terms of applicable employment contracts, employment relationships are governed by other terms including implied terms and those that may be incorporated into the contract of employment from other sources, such as staff handbooks or collective agreements. A term set out in a collective agreement or staff handbook can only be found to have been incorporated into the contract of employment if it is "apt for incorporation" and if it is clear that it was the intention of the parties that the particular term be incorporated (ie did the parties intend that the particular provision should have contractual force?). Provisions of a staff handbook or collective agreement that are aspirational in nature and merely set out guidance are unlikely to be apt for incorporation. In order to be apt for incorporation, the relevant provision needs to be sufficiently clear and certain.
High Court decision
The High Court held that the relevant terms were incorporated into the claimants' contracts of employment and the DfT's efforts to vary them unilaterally should therefore not be permitted. The High Court held that, on a proper construction of the employment contract, the relevant terms provided that any proposals to change the relevant employee's terms and conditions should have been the subject of consultation with a view to reaching agreement. If no agreement could be reached the Court held that "unilateral changes could then have been made, but only if they were not detrimental to the employee".
The Court then turned to consider whether the changes in question were detrimental to the employees. The specific issue related to the trigger points set out within the various absence procedures and the DfT's efforts to harmonise them. The trigger points varied in the various handbooks from 21 days down to eight days. Under the old procedures, certain employees could have up to 21 days' absence before any formal procedure was invoked. Under the new rules, the same procedure would be implemented after only five days' absence.
On behalf of the DfT it was submitted that the changes introduced were not detrimental. The DfT tried to argue that they were beneficial and that they enabled both management and employees "to deal at the earliest opportunities with any issues arising from sickness absence and to attempt to address such issues so as to enable the employee to provide effective service". It was also suggested that the aim was to ensure that an employee's absence was "supportively managed" so as to enable a return to work at the earliest possible opportunity. The Court accepted that the "reason for the changes may be well motivated on some principles" but ultimately it decided that "there are material differences between the two sets of processes and any reasonable worker would take the view that the new provisions were to his or her detriment". The Court was also persuaded by the suggestion that employees were less willing to take absences when they really did need to be absent, in an effort not to trigger the absence management procedure: an example was given of an employee attending work after being knocked unconscious, in order to avoid the formal procedure being invoked.
The Court therefore granted the declaration sought by the claimants.
This case provides some useful guidance, both in respect of what types of terms may be apt for incorporation and the approach the courts will take to the question of so-called contractual handbooks or policies.
It is interesting that some of the disputed terms in this case were held not to be apt for incorporation, for example the clause requiring an employee who was absent due to sickness to inform his line manager of that absence by 10am. Whilst this is on the face of it a clear and specific provision, the Court held that it was not apt for contractual incorporation as it gave rise to a circumstance whereby an employee could be in breach of his employment contract even if he rang in just after 10am. The same approach was taken to the terms requiring the provision of self-certification or medical certificates within set periods of time. Similarly, provisions requiring line managers to keep confidential any information about illness or medical conditions of staff and to immediately forward any sickness certificates to Human Resources were held to be inapt for incorporation.
The key learning points from this case are:
- where staff handbooks or parts of them are declared to be contractual, efforts should be made to properly identify which parts are contractual and which are not
- if changes are proposed to contractual elements of a handbook, a proper consultation process must be followed
As a matter of best practice, our advice would always be that staff handbooks should be described as non-contractual as they can then be varied without giving rise to legal action.