Contractual staff handbooks

Employers should give careful consideration to whether or not they want staff handbooks (and other similar documents such as policies) to be contractual.  If they are contractual, the employee’s consent will be required to make any changes to them.  If not intended to be contractual employers should make this clear and that it can be varied by the employer at any time.

An employee handbook or staff handbook is a written summary of policies, procedures and practices designed to answer employees questions and can include discrimination, harrassment in the workplace, family-friendly and performance. It can help avoid risk of different rules for different employees. For an employer it can be evidence they have acted fairly in a tribunal claim.

In the case of Department for Transport v Sparks and others, the Department of Transport (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 a 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 this meant the current absence management procedure was part of their contracts of employment and could not be changed without their agreement.

The High Court concluded that DfT had clearly intended for the attendance management procedure to be incorporated into individuals’ contracts.  Further, the terms were sufficiently clear and precise to be capable of being contractual terms.  The Court of Appeal upheld this decision.

In doing so, the Court of Appeal said that whether or not terms have been incorporated will always turn on the particular terms and documents in each case but that case law has provided helpful guidance in this area.  It said that the starting point is the language of the employment documents as a whole and that courts should not be “over-rigidly controlled” by what another court found on a different set of documents.  The express intention of the parties will be relevant but needs to be considered alongside an assessment of whether terms are capable of amounting to contractual terms.

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.  The Court of Appeal felt that, here, the wording of the handbook and the specific terms indicated that it was designed “to confer a right on employees over and above the good practice guidance…”

This case is a useful reminder to employers that they should give careful consideration to whether or not they want staff handbooks (and other similar documents such as policies) to be contractual.  If they are contractual, the employee’s consent will be required to make any changes to them.  Employers usually prefer to retain flexibility over company procedures to allow them to change processes in line with business needs as and when required.  Where this is the case, employers should make clear in these documents that they are not intended to be contractual and may be varied by the employer at any time.