In Bateman and Ors v Asda Stores Ltd the EAT held that Asda could rely on a broad contractual provision contained in the company handbook, to vary unilaterally their employees' contracts to introduce a new pay structure.
Asda wanted to have all store staff on the same pay and work structure. After extensive consultation, over half of the staff moved voluntarily onto the new pay regime. Relying on a term in the staff handbook, which allowed them to amend the handbook and introduce new polices to 'reflect the changing needs of the business', the remaining staff where transferred to the new pay structure without their agreement. These employees claimed at the ET that they had suffered unlawful deduction of wages.
The general rule is that a contract may only be varied with the agreement of all the parties or in accordance with the terms of the contract. In employment contracts a variation can result in a breach of the implied duty of mutual trust and confidence between the employer and employee, which would entitle the employee to claim constructive dismissal. A breach of mutual trust and confidence can occur where the variation is implemented unreasonably or where the employer has failed to give notice or consult on the change. Significantly in this case the employees conceded before the ET that Asda had not breached the duty of mutual trust and confidence and therefore this point could not be considered on appeal at the EAT.
Best Practice
Although this decision is useful for employers wishing to vary terms and conditions of employment, we recommend that it is treated with caution and not seen as a green light to make unilateral changes without consultation and agreement of the staff. It is likely that the outcome of this case would have been different had the employees run different legal arguments at the ET. The EAT were unable to consider new legal arguments introduced on appeal and were required to make their decision based upon the case presented to the ET. Varying terms and conditions of employment is a complex legal process which if done incorrectly can result in multiple claims from staff. We therefore recommend that you take legal advice before starting the process.
For advice on how to vary terms and conditions, please contact Gareth Edwards on 0117 314 5220.
This publication is for guidance only. Reliance should not be placed upon it and nor should action be taken, without obtaining advice in respect of the specific circumstances applicable. We will be pleased to provide such advice or assistance.
