In Department for Transport v Sparks and others [2016], the Court of Appeal has upheld the High Court's finding that a provision relating to absence management set out in a staff handbook, had been incorporated into employees' contracts of employment.
This case serves as a reminder to employers to give careful consideration as to whether or not they wish for staff handbooks or other written policies to be contractual.
Background
The Department for Transport was responsible for seven agencies, each with a staff handbook which was based on a standard form. The DfT wanted to implement a new attendance management procedure. This new procedure contained provisions allowing for the formal absence management process to be triggered earlier than was currently the case.
The current procedure was contained in part of the staff handbook which expressly stated that any terms applying to an employee which were “apt for incorporation” would be incorporated into the employee’s contract of employment.
Affected employees claimed that the current absence management procedure was part of their contracts of employment and could not be changed without their agreement. The employees argued that any such changes would amount to a unilateral variation of contract and they applied for declaratory relief.
Under established common law provisions, employment contracts may only be amended in accordance with their terms and conditions and/or with the parties’ agreement.
It is accepted that certain terms of such contracts may be incorporated from other sources, for example staff handbooks, insofar as the wording of the contract provides for incorporation and that the relevant term is apt for incorporation.
High Court Findings
The High Court had declared that the proposed new policy of attendance management was not effective to vary the contractual terms of the employment contracts and was therefore not contractually binding on employees.
The High Court concluded that DfT had clearly intended for the original attendance management procedure to be incorporated into individuals' contracts. Further, the terms were sufficiently clear and precise to be capable of being contractual terms and that the DfT was not entitled to change them unilaterally, in response to which the DfT appealed.
Court of Appeal Decision
The Court of Appeal dismissed the appeal.
The Court found that whether a provision in a staff handbook is incorporated into employment contracts will turn on the specific terms of the documents in each case. The primary question will be whether the relevant provision(s) are apt for incorporation, dependant on the language of the employment documents in their totality.
It was noted that the express intention of the parties will be relevant and will need to be considered alongside an assessment of whether terms are capable of amounting to contractual terms.
It was further noted that whilst provisions setting out guidance or aspirations will not usually be capable of amounting to contractual terms, it is perfectly possible for an absence management procedure consisting largely of guidance, to contain specific provisions which have contractual force if that is the effect of the documents as a whole.
Useful lesson
This case serves as a reminder to employers to give careful consideration as to whether or not they wish for staff handbooks or other written policies to be contractual. Where they are contractual, the employees' assent will be required where amendments are required, which in itself may limit the company’s flexibility to change procedures and processes in line with business needs as and when required.
Where such documents are not required to be contractual, employers should make this clear within the documents, further stating that they may be varied by the employer at any time.
