Bateman v Asda Stores
FACTS Asda employed some store staff on a standard rate pay structure (the “old regime”) and some on a top rate pay structure (the “new regime”). The supermarket chain wished to amend the contracts of the employees on the old regime to put them on the new regime. There was an extensive consultation period and Asda sought to ensure that no employees suffered a reduction in pay.
More than 9,000 employees transferred voluntarily to the new regime. Asda imposed the change on around 8,700 employees. Around 700 claims were brought by Asda store staff claiming unauthorised deductions from wages, breach of contract and unfair dismissal.
This case related to six test claimants, one who claimed she had suffered a loss due to the introduction of the new regime, and five seeking a declaration.
Asda sought to rely on a provision in its staff handbook (the variation clause) which stated “The company reserves the right to review, revise, amend or replace the content of this handbook, and introduce new policies from time to time.”
DECISION The employment tribunal held that the variation clause had been incorporated in employees’ contracts of employment. The tribunal held that the introduction of the new regime was a significant change, that pay was fundamental to the employment relationship and that on ordinary principles Asda was required to obtain consent to the changes.
But the tribunal accepted employers may reserve the contractual right to vary terms or change important aspects of the job, irrespective of whether the employee consents. If the change or variation falls within the contractual power to vary, it will be effective.
The tribunal noted that there might be exceptions to this approach; for example, where the employer acted so unreasonably or capriciously as to amount to a breach of implied trust and confidence, or if changes were introduced without warning or consultation. However, the tribunal held that no such exceptions applied here.
On appeal to the Employment Appeals Tribunal (EAT), the EAT upheld the tribunal’s decision and held that the staff handbook permitted Asda to make the changes to the pay and work regimes without the consent of the employees.
The wording in the handbook was wide enough to permit Asda to change matters set out in it. The EAT did not allow the claimants to contend there had been a breach of trust and confidence, as this had been conceded at the tribunal.
IMPLICATIONS This decision appearsto give a very wide discretion to employers to make unilateral changes to contracts where there is a contractual variation clause.
In practice, the decision should be treated with caution. It does not give employers carte blanche to make any contractual changes they wish, provided they fall within the terms of a contractual variation clause.
There will still need to be consultation about proposed changes, and any change which involves employees suffering financial loss is likely to be at risk of being a breach of the implied term of trust and confidence. It is possible the tribunal might have found a breach of trust and confidence = if the case had been argued on that basis.
But it would be sensible for employers to seek to include widely drafted contractual variation clauses in contracts of employment, in order to provide themselves with the maximum flexibility to make changes.
Susan Fanning, employment partner, DLA Piper.