Sparks fly over changes to a contractual Staff Handbook

As well as express terms of employment contracts, employment relationships are governed by other terms which include implied terms, and terms that may be incorporated into the contract from other documents, such as staff handbooks or collective agreements.  A term in a staff handbook can only be found to have been incorporated into the contract itself if it is “apt for incorporation” and it is clear that the intention of the parties was that the particular term was to be incorporated. 

In July 2012, following unsuccessful negotiations with Trade Unions, the Department for Transport (DfT) sought to introduce a new attendance management policy in a staff handbook, casting out the old policy.  The absence management “trigger points” under the old policy meant that the employees could have up to 21 days’ absence before any formal capability or disciplinary procedures were invoked.  The new policy proposed by the DfT was – you guessed it – much less generous, and sought to introduce a formal procedure starting after only 5 days of absence.

The Claimants were understandably unhappy with the DfT’s proposal and they brought proceedings in the High Court hoping to demonstrate that the ‘old’ policy contained in their staff handbook was in fact a contractual entitlement, and formed part of their contracts of employment.  The Claimants argued, it could not be replaced at the whim of DfT.

The Claimants were successful in the High Court.  In reaching its decision, the High Court looked at Chapter 1 of the DfT Handbook which stated that it “sets out many of your terms and conditions” and “all of the provisions of the DfT Staff Handbook which apply to you which are apt for incorporation should be incorporated into your Contract of Employment”. The High Court held that DfT's efforts to vary the provisions of the handbook unilaterally were therefore not permitted.  The High Court found that the sections of the handbook relating to absence management were sufficiently clear and concise to be incorporated into the employees’ contracts of employment.

The DfT appealed to the Court of Appeal, and lost.  The Court of Appeal commented that it may be a generally desirable feature of industrial management to handle absence management processes through a non-contractual policy, but that did not prevent a particular provision under the DfT's Handbook being considered worthy of incorporation into the contractual terms.   

What does this mean for you or your business?

This case is a useful reminder that if an employer casually refers to a policy in a staff handbook as ‘contractual’, then it is likely to be considered a term of the employees contract and it cannot be changed without agreement or without some form of consultation.    In most cases it is advisable for employers to have a non-contractual staff handbook, making it much easier for employers to change their policies when they need to without employee consent.  With employment law changing like the weather, polices need changing often.

What do you need to be doing now?

Take this as a reminder to review your existing staff handbooks to see whether the document or any of the clauses in it have contractual effect.  Efforts should be made to clearly identify which (if any) parts of a staff handbook are, or should be contractual, and which are not.  

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