HR policies: contractual or non-contractual?
The recent case of Department for Transport v Sparks and others is a helpful reminder that just because a provision is contained in a policy, rather than the contract of employment itself, does not necessarily mean that it is non-contractual.
The Department for Transport wanted to implement a new attendance management procedure providing for disciplinary action after 21 days of absence in any 12-month period – an earlier trigger point than the existing procedure.
- The attendance management procedure was contained in a staff handbook.
- The part of the handbook with the provisions on ill-health stated that all of its terms which were apt for incorporation were to be incorporated into employees’ contracts of employment.
- The chapter on ill-health stated that it set out “your terms and conditions of employment relating to sick leave… and the management of poor attendance”.
The employees claimed that this meant the current absence management procedure was a contractual term which could not be changed without their agreement.
Both the High Court and the Court of Appeal agreed. The absence management procedure had been incorporated into the employees’ contracts and, therefore, could not be changed unilaterally.
The Courts found that the Department for Transport had intended the staff handbook to be contractual. Although many sections were meant for guidance only, and therefore were not apt for incorporation, the provisions in relation to absence management were sufficiently clear and precise to be incorporated. The language of the introduction to the provisions pointed towards contractual status.
- Whether a provision in a staff handbook is contractual will depend on the precise terms of the relevant documents.
- It is possible for a policy or handbook to be largely a matter of guidance and good practice but with specific provisions having contractual force.
If a policy or procedure is contractual, employees’ consent will be required to make any changes. This is something employers will usually want to avoid. To reduce the likelihood of this happening:
- Include a clear statement at the beginning of the policy or procedure that it is non-contractual;
- If the document is drafted specifically as management guidance – say so;
- If possible, replace words like ‘will’ and ‘must’ with ‘may’;
- Include a statement that the policy or procedure may be adjusted depending on the circumstances;
- Include a unilateral right to vary the policy itself.