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Staff Handbook incorporated with Contract of Employment – What’s the Risk?

Some employers make the choice of incorporating their staff handbook, as part of their employee’s employment contract. The employment contract is a signed document, which sets out the agreed terms set out between the employer and the employee – this cannot be changed without agreement by both parties. Whereas the staff handbook is a document which explains the employer’s policies and practices – this document can be changed without the employees’ consent.

Part or all of the staff handbook can form part of the contract of employment, if a policy is suitable to incorporate into it.

In a recent case of Department for Transport v Sparks and others, the Court of Appeal upheld a decision that the High Court made, that provisions included in a staff handbook regarding managing staff absence that was incorporated into the contracts, couldn’t be changed unilaterally. This means that the changes that the employer made, couldn’t be imposed on their employees, without their prior consent.

In the case, it was seen that S and others had different agencies they used for Department for Transport and each agency then had their own staff handbook. The Department for Transport then wanted to make changes to the absence management policy, due to it being different in each of the handbooks. The handbook was split into two sections, the first section stated that the policies were incorporated into the employment contract. The second section includes procedures and guidance, were not part of the contract.

The handbook was unclear, that when the contents of it is changed, the employment contracts potentially could change too. It did explain that they would consult with the employees before making any changes, but even if the parities didn’t agree on the changes, they would be imposed anyway and vary the contract terms – but, only if the changes were not detrimental.

In 2012, the Department for Transport informed their trade unions that they would be implementing a new absence management policy – this was after failed consultations. S and others then took this to the High Court for a declaration preventing the Department for Transfer from doing so.

The Department for Transport argued that the changes were not detrimental and they were aiming to ensure employees absence was supportively managed. The High Court accepted that the changes were done in good mind, but argued that workers would see the new provisions were to their detriment.

Overall the High Court held that the change in absence management policy were going to be incorporated into employees contracts and it was going to introduce a lower trigger point for sanctions, which made it detrimental to employees.

This decision was appealed but the Court of Appeal dismissed their appeal.

So, what does this mean to you?

If incorporating the staff handbook into the employment contract, it must be clear which parts of the handbook form part of the contract and subsequently, vary their contract terms. The easiest thing to do? Clearly state that the staff handbook will not form part of the contract of employment.

If you want to know more, contact us on 01909 512 120 or email phillipa@loftusstowe.com

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Femi Ogunshakin Managing Director
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