The Court of Appeal has held in Department for Transport v Maureen Sparks & Ors. [2016] EWCA Civ 360 that an absence management policy contained in a staff handbook had contractual effect. The decision upholds the High Court’s earlier ruling that certain terms contained in the staff handbook policy were incorporated into the employment contracts of the claimants, and therefore binding on the DfT. 

The appeal primarily focused on a short term absence provision prohibiting the escalation of disciplinary procedures until certain ‘trigger points’ had been reached. Only where an employee had taken short term absences exceeding 21 days in any 12 month period, could the disciplinary procedures in the handbook be initiated.

Tests for incorporation

The question is whether the provision in question is apt for incorporation into an employment contract. This requires assessment on a case by case basis of both the contractual intention of the parties and the suitability of the provision itself. 

In Sparks, the language in the employment contract referring to the staff handbook had a clear and distinct flavour of contractual incorporation. The employment contract expressly stated that specific provisions, including the short term absence provision outlined above, were to be treated as incorporated. The CoA considered that the wording in the handbook was consistent with contractual incorporation, conferring rights on the employee as opposed to merely setting out good practice. The wording in the handbook was akin to what one could expect to find in a formal contractual document.

Practical considerations

The ruling in Sparks is not surprising. It is a handy reminder for employers that:

  • When drafting an employment contract/staff handbook, it is important to clearly indicate which provisions of a staff handbook are intended to be contractually binding. Whilst not conclusive, what the employer says will be a key consideration of the courts in determining contractual effect.
  • When staff handbooks are updated, in whole or part, complete previous versions should be kept. The CoA considered it far from satisfactory that previous versions of the staff handbook in Sparkshad not been kept in complete form, with some annexes being lost altogether.
  • Where there is uncertainty, specialist advice should be sought. The DfT had, prior to the dispute, introduced ‘contractual highlighting’ in attempt to identify provisions in its staff handbook that had contractual effect. Such highlighting was subsequently removed. The CoA saw this as a sign of ‘internal confusion’ at the DfT. Employers should seek to minimise the risk of future uncertainty and adopt a consistent approach.