Can an employer make a change to a policy without their employees agreement?
In a recent case in the High Court the question of whether an employer can make changes to a staff handbook without their employees consent to the changes was decided.
The employer in this case was the Department for Transport and there were seven employees from different agencies within the Department for Transport (‘DfT’) who brought the claim.
Each of the DfT agencies had a Staff Handbook which followed the same standard format across each of the agencies. The policy which caused the problem with the employees in this case was the attendance management procedure.
Within the Handbooks it stated that, where appropriate the terms of the Handbook were contractual, i.e. they formed a part of each employment contract. The Handbook was divided into two parts with the first part, Part A, containing the relevant contractual terms and Part B being the guidance, which was not incorporated in the employees’ contracts.
The attendance management procedure was in Part A of the Handbook.
In July 2012 the DfT notified the employees’ Trade Unions that they would be changing the attendance management procedure across all agencies and making it into a standard procedure. The changes proposed meant that the attendance management procedure would be triggered after less absences than previously. This could then lead to dismissal of an employee much sooner than under the original procedure.
In accordance with the Staff Handbook the DfT could make contractual changes with the consent of employees and would have to go through a consultation procedure. If the consultation did not result in consent from employees the DfT could only enforce the change if it was not detrimental to the employees.
The employees applied to the High Court for a declaration on four key points:
- The terms of their contracts were as set out before the change.
- The new procedures did not vary the original terms, and are not contractually binding.
- The DfT committed an anticipatory breach of contract in imposing the new procedures.
- If the DfT applied the new procedures in any individual case, they would commit a breach of contract.
According to Common Law, a contract can only be amended with the agreement of all parties or in accordance with its terms.
There are two circumstances in which changes can be made:
- Where the change does not actually affect the contract of employment.
- Where the contract of employment authorises the change which the employer wants to make.
The High Court decided that the attendance management procedure in the Handbook was incorporated in the employees’ contracts of employment and was therefore contractual. According to the other terms of the contract the DfT could not impose the change without the employees consent.
Accordingly the High Court granted the declarations in the terms applied for by the employees.
Points to Note
What is interesting to note from this case is the DfT’s primary argument about whether they could make the change without consent was that they did not consider the changes to be detrimental to the employees. They argued that the change in procedure enabled management and employee to address any sickness absence issues at an early stage and it was designed to assist employees in returning to work.
The High Court disagreed with their argument and pointed to the fact that under the previous procedure employees would not face any formal sanctions until they had taken, for example, 21 days absence. Under the new system, this would change to only five days.
This case serves as a reminder of the inflexibility of making your policies and procedures contractual. It is not advisable to make your Staff Handbook contractual and you can do this by ensuring that it states in your Handbook that it is not contractual and can be amended without consent in the future.
If your Handbook is contractual and you want to make changes it is important that you seek advice before doing so.