Changing Terms and Conditions of Employment

David Reid
24th Feb 2010

To change employees’ terms and conditions of employment you require their consent.

Employment contract

Generally speaking, to change employees’ terms and conditions of employment you require their consent. This can be obtained either at the time the change in terms and conditions is proposed, or by the contract itself authorising the change.

This general principle has, however, been somewhat extended by the Employment Appeal Tribunal (EAT) in the case of Bateman v Asda Stores.

In this case, Asda wished to ensure that their entire store staff were employed on the same pay and work structure, meaning that those who were working under their old regime had to transfer to their new regime.

The staff handbook provided that Asda:

“reserved the right to review, revise, amend or replace the contents of this handbook, and introduce new policies from time to time reflecting the changing needs of the business … .”

The handbook also contained details of pay and other conditions of employment.

The Employment Tribunal held that this permitted Asda to impose their new pay regime on employees without obtaining their further consent.

Asda’s employees appealed to the EAT, arguing that Asda could not rely on the conditions in the staff handbook to justify imposing the new regime and that, instead, they required the consent of all affected employees. They also argued that Asda’s duty to maintain trust and confidence required them to have explained what the provisions contained in their contract meant.

The EAT dismissed the employees’ appeal and held that the Asda staff handbook permitted the company to make the changes to the pay and working regimes without obtaining the further consent of employees.

In relation to Asda’s duty to maintain the trust and confidence of its employees, the EAT held that this argument was not open to the employees because they had expressly conceded that there was no issue in this respect before the Employment Tribunal.

Practical Guidance

This would appear, on the face of it, to provide employers with a potentially wide-ranging right to make changes to employees’ terms and conditions of employment. This may not, however, always be quite as straightforward in practice.

This case was decided on very specific circumstances. Asda had sought to ensure that no employee suffered a reduction in his or her pay, as a result of their decision to amend their contracts to incorporate the new regime. In addition, there was also an extensive consultation process concerning Asda’s wish for its store staff to adopt the new regime.

There was no contention that Asda had acted capriciously, or arbitrarily, or in any way which breached its duty of trust and confidence towards its employees.

In other circumstances, where an employer did not act as reasonably, and it was held that this had led to a breach of trust and confidence, it seems likely that a different decision would be reached.

In addition, there was a dispute before the Employment Tribunal as to whether the employees were entitled to contend that the variation clause in the handbook had ever been incorporated into their contracts, with the result that Asda could not rely on it. This argument, however, had not been pled in the employees’ claim form and it was concluded that it was too late and not in the interests of justice, for the employees to be allowed to raise that point as a new argument. Again, if this argument had been raised, a different outcome may have been arrived at.

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