In a recent case looking at staff handbooks, the High Court held that the Department for Transport ("DfT") was not entitled to unilaterally change the terms of its staff handbook, which the High Court found had been incorporated in part into its employees contracts of employment.
In general, contracts may only be varied by agreement of all parties and in accordance with the terms of that contract. However, an employer will not need to vary a contract when the change does not actually affect an employment contract or when the employment contract itself authorities such changes.
Sparks and others v Department for Transport
Seven Claimants were each employed by a different DfT agency, including the Driving and Vehicle Licensing Agency and the Highways Agency. The 'Departmental Staff Handbook' for each unit was divided into "Part A" and "Part B". Part A contained more contractual provisions, and was stated to be incorporated into employees' contracts. Part B was guidance based and was not to be incorporated. Attendance management provisions were contained in Part A, which the DfT sought to amend.
The DfT attempted to unilaterally change the code of practice in relation to trigger points for procedures following sickness absences. In the new procedure, after the "first trigger point" of five days or three occasions of absence within a rolling 12 month period, an informal review meeting should be held. The procedure then became formal after a "second trigger point" and could ultimately lead to dismissal.
In July 2012 the DfT informed the Claimants' trade unions that it would be imposing a standardised attendance management procedure across all its agencies. The Claimants stated that as the code formed part of their contractual terms and conditions of employment, the DfT was not entitled to make changes. They therefore applied to the High Court for declarations as follows:
1. The terms of their contracts were as set out before the change;
2. The new procedures did not vary the original terms, and are not contractually binding;
3. The DfT and/or the agencies committed an anticipatory breach of contract in imposing the new procedures; and
4. Absent any further material change in circumstances, if the DfT and/or the agencies apply the new procedures in any individual case, they will commit a breach of contract.
It was held by the High Court that the terms under Part A of the handbooks were incorporated into the employees' contracts and therefore the DfT was not entitled to unilaterally change them. The Court granted the requested declarations accordingly.
The Court found that the DfT intended for the whole of Part A to be contractual, however a review of this part of the handbook showed that most sections were intended as guidance and therefore could not be incorporated. However, the High Court found that the relevant provisions. The Court found that the absence management provisions were sufficiently clear and precise and that it read as though they were contractual provisions and, as such, the provisions were therefore appropriate for incorporation.
The DfT argued that the changes were beneficial to employees and were not detrimental as was argued by the Claimants. The DfT sought to rely on the fact that there was no evidence that any employee had actually suffered any detriment as a result of the new policy. The High Court did not agree with this argument and therefore held that the changes were detrimental, despite the fact that there had been no case of a specific employee suffering a detriment arising from the new provisions.
Advice for employers
Employers referring to terms in the staff handbook in employment contracts should clarify exactly which terms are intended to be contractual and which are not, to avoid any confusion on this point. Employers may consider having a completely non-contractual staff handbook, which will be much easier to vary.
It is also worth noting that you may need to review your policies to ensure that they are up to date with changes in the law. For example, they will need to be updated in line with the new rules on shared parental leave in birth and adoption cases, and time off for antenatal appointments.
Please do not hesitate to contact us if you need any advice relating to employment contracts, staff handbooks, policies and procedures.