Department for Transport v Sparks and others [2016] EWCA Civ 360

Why care?

Contractual terms in an employment contract or staff handbook may only be amended in accordance with the terms specified or with the agreement of the parties. Some terms may be incorporated into the employment contract from other sources, such as oral agreements or staff handbooks. To decide whether a proposed change will be a variation of an employment contract it is necessary to identify whether the term to be varied is a contractual term.

In the event of a dispute as to the interpretation of a term in a staff handbook the parties may apply to the court for a declaration. In this case, the Court of Appeal considered whether the High Court’s decision that provisions in a staff handbook relating to absence management had been incorporated into employees’ contracts was correct.

The case

Seven claimants were employed by separate agencies for which the Department for Transport (DfT) was responsible. The Departmental Staff Handbook (handbook), applicable to all of the employees, allowed each of the agencies to adopt local terms and conditions regarding leave, attendance and discipline. Part A of the handbook included the absence management provisions. These were fundamentally the same but there was a variation between the agencies in the number of days of absence required before a formal absence procedure could be triggered (between eight and 21 days), when a line manager would discuss an attendance record with the individual and could ultimately lead to warnings and dismissal (at Annex A). It was intended by the employer and the trade unions that Part A was incorporated into staff contracts where it was apt to do so. Part B contained guidance and was not to be incorporated. In the event of inconsistency between Parts A and B, Part A would prevail.

The DfT wanted to vary the absence management provisions so that a process would be triggered after five days or three occasions of absence within a rolling 12 month period. The DfT was required to undertake consultation before it could make any changes to employees’ contracts. If agreement was not reached through consultation, the DfT could make unilateral changes only if they were not detrimental to the employees. In July 2012, following unsuccessful negotiations, the DfT informed the claimants’ trade unions that it would be imposing a new standardised attendance management procedure across all its agencies. The employees considered these changes potentially detrimental as they would face the possibility of formal sanctions at an earlier stage. They applied to the High Court for declaratory relief.

The High Court held that the attendance management provisions contained in Part A of the handbook were sufficiently clear and precise to be incorporated into the employees’ contracts, and that the DfT was not entitled to change them unilaterally. The DfT appealed. The issue was whether the provision was a legally enforceable contractual term or a mere note of guidance and good practice of no legal force. The Court of Appeal dismissed the appeal. It noted that:

  • whether or not a provision in a staff handbook is incorporated or not will always turn upon the precise terms of the particular documents in a case. In this case the words introducing the handbook into the employer/employee relationship pointed to a “distinct flavour of contractual incorporation”;
  • it is always necessary to ask whether any particular part of that document is apt to be a term of the contract. Although sickness management procedures are often largely matters of guidance and good practice, that did not prevent a particular provision such as in this handbook to be incorporated into the contractual terms.

As the Court of Appeal held that the provision was designed to confer a right on employees over and above the good practice guidance in the policy section of the handbook there was no reason to depart from the findings of the High Court judge.

What to take away

This decision does turn on the particular facts but it is helpful to have a Court of Appeal decision which sets out the key elements when considering whether documents are apt for incorporation. Employers should ensure that staff handbooks clearly set out which provision are contractual or non-contractual and to consider the potentially flexibility that a non-contractual handbook provides in terms of the ease of varying its terms.

Find more articles in May’s edition of Law at Work