The case of Department for Transport v. Sparks [2016] recently confirmed that provisions contained in a staff handbook or policy are capable of incorporation within contracts of employment.
The facts
The Department for Transport (DfT) operated a departmental staff handbook (Handbook) which applied to each of its agencies. The Handbook contained an attendance management procedure which was then fundamentally the same across each of the agencies.
The part of the Handbook which dealt with attendance management stated that all of its terms which were apt for incorporation were to be incorporated within the employee's contract of employment.
The provisions in the Handbook regarding varying terms and conditions were unclear but required the DfT to consult before making any changes to employees' contracts. If an agreement could not be reached, changes could only be made if they were not detrimental to the employees.
The issue
The DfT had conducted an unsuccessful negotiation with staff regarding the implementation of a new attendance management procedure that would apply equally to each agency. The purpose of the change was to reduce the number of days' absence allowed before a formal process would be commenced.
The High Court found that the provisions of the Handbook relating to attendance management were incorporated within the employees' contract of employment and that the DfT could not change them unilaterally. The DfT appealed.
The decision
The Court of Appeal agreed with the High Court and found that the absence management procedure had been incorporated into the employees' contracts. The Court of Appeal confirmed that the specific terms relating to absence management were designed to confer a right on the employees which went further than good practice guidance and they were "apt for incorporation". Therefore, in order to make any amendments to the policy, the DfT would require the employees' consent.
Employers will generally want to avoid a situation where they are unable to amend policies without employee consent. To make sure that this is the case, any policy or handbook should contain a clear statement that it is non-contractual. It is also good practice to reserve the right to make changes to the policy as and when the employer sees fit.
If you are looking to update outdated policies and procedures that may have become contractual, for example through custom and practice, we would strongly advise that you take advice before doing so to avoid encountering any problems similar to those seen in this case.
Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
