Unilateral changes to terms and conditions
The Employment Appeal Tribunal (EAT) has confirmed that employers can make unilateral changes to contracts of employment if they have clearly reserved the right to do so in the contract of employment, the change is reasonable and is implemented after full consultation.
The case of Bateman v Asda Stores Ltd (UKEAT/0221/09/ZT) concerned a clause in Asda’s staff handbook that permitted changes to be made to terms and conditions of employment ("the variation clause"). Asda wished to amend the contracts of a number of employees so that their pay structure would be brought in line with the vast majority of store staff. Asda sought to ensure that no employees suffered a reduction in pay however at least one employee claimed that she had suffered a loss. Following extensive consultation just over half the affected employees agreed to the change. Asda then relied on the variation clause to impose the change on the remaining employees. The employees lodged Employment Tribunal claims.
The Employment Tribunal held that the variation clause permitted Asda to impose such a change even if this resulted in financial loss to the employees.
The employees appealed to the EAT, but it upheld the tribunal's decision re-iterating that Asda had reserved the contractual right to make the change unilaterally.
The decision does not however give employers free rein to use blanket unilateral variation clauses to change material terms of employees contracts. If an employer makes a change which is unreasonable, capricious or arbitrary and/or implements the change without proper consultation then it is likely to be a breach of the implied duty of mutual trust and confidence. The employees would be entitled to resign and claim constructive dismissal and breach of contract. Asda had a very strong business reason for making the change and had consulted fully with all employees over a number of months.
Employers who wish to rely on a variation clause risk breaching the implied duty of trust and confidence entitling employees to resign and claim constructive dismissal. It is therefore recommended that employers who are considering making changes to terms and conditions seek legal advice.
For more information, please contact:
Michael McLaughlin or Paul Brown (0141 228 8000)
The information contained in this article is given for general information only and does not constitute legal advice on any specific matter.