02-06-2010
Employers given room for manouvre
A recent Employment Appeal Tribunal (EAT) case involving ASDA has provided, on the face of it, a potential softening of the approach to varying terms and conditions.
Here, it was decided that ASDA was entitled to introduce a new pay regime without the consent of its employees, based on a provision within its staff handbook. The provision, which was incorporated into the employees’ contracts, reserved the right for the employer to vary contractual terms in the handbook, unilaterally, to reflect the changing needs of the business.
Essentially, ASDA wanted to put its employees on a more up-to-date pay regime which would have a significant effect on how much they would be paid for work at particular times, as well as removing certain benefits. Ordinarily, this would need consent.
As a result, 700 members of staff brought claims for unlawful deductions, breach of contract and, in some cases, unfair dismissal. The tribunal ruled that the wording of the contract allowed for the new regime to be introduced without consent.
Employers should note that this does not extend as far as allowing changes to be made to employees’ contracts of employment without their consent or consultation. In addition, the company would not have been successful if the court had found it had acted unreasonably or arbitrarily in making the change.
Our advice is to include an appropriate clause in contracts of employment and handbooks and always have a solid business rationale for what you are intending to do. Ultimately, seek advice as to whether or not a proposed change is likely to be reasonable and keep an eye on whether or not this decision gets overruled in future litigation.
Here, it was decided that ASDA was entitled to introduce a new pay regime without the consent of its employees, based on a provision within its staff handbook. The provision, which was incorporated into the employees’ contracts, reserved the right for the employer to vary contractual terms in the handbook, unilaterally, to reflect the changing needs of the business.
Essentially, ASDA wanted to put its employees on a more up-to-date pay regime which would have a significant effect on how much they would be paid for work at particular times, as well as removing certain benefits. Ordinarily, this would need consent.
As a result, 700 members of staff brought claims for unlawful deductions, breach of contract and, in some cases, unfair dismissal. The tribunal ruled that the wording of the contract allowed for the new regime to be introduced without consent.
Employers should note that this does not extend as far as allowing changes to be made to employees’ contracts of employment without their consent or consultation. In addition, the company would not have been successful if the court had found it had acted unreasonably or arbitrarily in making the change.
Our advice is to include an appropriate clause in contracts of employment and handbooks and always have a solid business rationale for what you are intending to do. Ultimately, seek advice as to whether or not a proposed change is likely to be reasonable and keep an eye on whether or not this decision gets overruled in future litigation.
