Employers rights to change a Contract without consent

By | April 1, 2010

Employers rights to change a Contract without consent

Generally, parties to an agreement can only vary the agreement’s terms by mutual consent. However, the case of Bateman & Ors -v- Asda Stores Limited has changed all that (potentially).

In Bateman, Asda wished to overhaul its payment structure so that all employees were paid under one regime. In order to do this, Asda relied on a term in the staff handbook which “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 staff handbook was contractually incorporated into the employees’ contracts of employment).

There was an extensive consultation process and some 9,330 employees agreed to transfer to the new regime voluntarily. About 8,700 employees’ contracts transferred involuntarily.

Claims were brought by employees against Asda in the Employment Tribunal claiming unauthorised deductions from wages contrary to s.13 of the Employment Rights Act 1996, breach of contract and in some cases unfair dismissal.

The Tribunal found that, despite the general rule, employers can reserve the right to vary contractual terms without consent, even if the employee suffers loss as a result.

This was subject to:

  • The employer not acting “so unreasonably or so arbitrarily or capriciously as to amount to a breach of the implied trust and confidence”;

*       There being reasonable notice or warning and consultation;

*       There being terminology used in the relevant document which provides a clear and unambiguous power to vary contractual terms; and

*       Those words would reasonably have been understood by the parties against “the relevant background” – this was not tested in Bateman.

What does this mean in practice?

It is possible for employers to reserve the right to vary contractual terms without consent.

But employers should take note…numerous points were not explored within this case as they were not pleaded or properly evidenced. The Tribunal noted there might be exceptions, and therefore, future cases will fall on their specific facts. If you wish to incorporate such terms into your contracts of employment you should seek specific legal advice.

Employers should also be aware that if you incorporate your staff handbook into your contracts of employment, you may face costly breach of contract claims if any policies within those handbooks are not followed correctly.

Employees should…read your contract and staff handbook very carefully to ensure you are comfortable with the terms. If you are in any doubt you should seek specific legal advice.

John Clarke

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