All Change

Employment law is always fast paced, but 2013 is proving to be an action packed year even for normal standards. There are to be improvements to the National Minimum Wage legislation, changes to the TUPE regulations, compromise agreements are to be replaced by "Settlement Agreements", we will shortly have new Tribunal rules and fees, whistleblowing legislation is to be changed, and flexible working for all and shared parental leave are on the horizon.

The recent Queen’s Speech suggested further changes including tougher penalties for employers who employ workers who do not have the right to work in the UK.

It is easy to become dismayed at the apparent burden on employers that changes cause, but all too often as practitioners we see employers who have already placed unnecessary burdens on themselves because their contracts and handbooks have not been prepared properly or at all, or are overly detailed. A recent case serves as a salutary reminder that employers still need to get these basics right.

In a claim brought against TRW Systems Limited the Employment Appeal Tribunal scrutinised TRW’s staff handbook to try to establish whether an enhanced redundancy package had become a contractual right. A group of employees sought to rely on enhanced redundancy terms contained in a policy to which the handbook referred, even though their terms and conditions did not. The critical issue was whether the enhanced terms had been "incorporated" into their contracts.

The enhanced terms had been operated three times between 2001 and 2009, but on other occasions redundancy payments had not been enhanced. The Tribunal found that the redundancy policy was not enforceable on the basis that the policy was not a contractual term, and nor was it incorporated by way of custom and practice. The Employment Appeal Tribunal disagreed however and stated that Tribunals should scrutinise with care arguments by employers that payments, once promised and communicated, were actually only matters of policy and discretion. They decided that the handbook was capable of being a "source of contractual obligation" and remitted the matter back to the Employment Tribunal to re-determine the case.

This is a useful reminder that what is lurking in an old policy or handbook can come back to bite. It is timely to review contracts and handbooks given the forthcoming changes, but in doing so we always recommend that those documents are prepared properly, are concise and appropriate for your business and regularly reviewed. Often, less is more.

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.