Changing Terms of Employment

Mon, 19 Jul 2010

In Bateman and others v Asda Stores Limited [2010] IRLR 370, Asda wished to ensure that their entire store staff were employed on the same pay and work structure .Therefore staff on the ‘old pay structure’ needed to have their pay terms changed to fall in line with the ‘new pay structure’ applicable to most of the staff. Some 9,330 employees agreed, but some did not. So when the new regime was imposed on them, claims were commenced by a number of employees, principally under Part II of the Employment Rights Act but also some claims for unfair dismissal. 
 
Six Claimants were selected for a test case. Whilst Asda had carried out extensive consultations with some of their employees, those who were not consulted, some 8,700 had their pay terms unilaterally changed. Asda justified its decision to impose its pay structure on staff, who had not been consulted or had not expressly agreed, by relying on provisions in its staff handbook, which formed part of the employment contract. This included under the heading , ‘Your Contract’, ‘ The Company reserves the right to review, revise, amend or replace the content of this handbook , and introduce new policies from time to time to reflect the changing needs of the business.’ 
 
The issues before the Tribunal can be summarised as follows: (i)Was the imposition of the new pay structure such as to require consent from the employees? (ii)If consent was required, did the Employees consent expressly or impliedly? (iii)Was there an unlawful deduction of wages? 
 
The Employees argued that the (i) imposition of a contractual term required consent, therefore the variation clause only applied to non contractual terms (ii) any variation to pay required consent because it was a fundamental term of the contract (iii) the variation clause did not extend to changing contractual terms, the fact Asda had entered into a consultation process with employees regarding the replacement of the old pay structure with a new pay structure, indicated that Asda viewed that the variation clause could not be relied upon to make a unilateral change to the contract of employment.
The EAT referred to the principles as established by Lord Woolf MR in Wandsworth London Borough Council v D’silva [1998] IRLR 193.........’the general position is that contracts of employment can only be varied by agreement. However, in the employment field an employer or for that matter an employee can reserve the ability to change a particular aspect of the contract unilaterally by notifying the other party as part of the contract that this is the situation’. 
 
The EAT decided that the Staff handbook and therefore the variation term was incorporated in the contract of employment (this was not raised as an issue before the Tribunal) and therefore Asda was entitled to unilaterally vary a contract term and so upheld the Tribunal’s finding that “However unusual and broad this power was, and however unfettered, the Tribunal had no doubt that it permitted the respondent as a matter of contract to do what it did”.
 
This is an unusual case: unilateral changes to pay structure is not normally permissible. Such fundamental terms of the contract can only be varied by consultation with the employees unless there is term of the contract, (which can be incorporated into the staff handbook) that permits the Employer to make unilateral changes. Even then the imposition of such changes may amount to a breach in trust and confidence. Advice should be taken before relying on this decision. 
 
“Reasonable responses” does not apply to constructive dismissal
 
In Buckland v Bournemouth University Higher Education Corp [2010] IRLR 445, Buckland, the Claimant,was a Professor at the Defendant University. He had failed 14 of the 16 students who had undertaken resits. A second examiner agreed with his marks. Another Professor took upon himself to remark the papers and in some cases the marks changed significantly. Since the papers were remarked without consent of the Board examiners, they were then remarked again. The remarking, resulting in some candidates being elevated in their marks . As a result of protests by the Claimant an inquiry was set up. The report vindicated the Claimant and criticised the department for not being concerned with failure rates. The Claimant considered that the other Professors had got away with it and considered himself as constructively dismissed.
 
The tribunal found that the University (in repudiatory breach) had done something calculated to destroy the relationship of trust and confidence which is implicit in all contracts of employment: it had procured and accepted the re-marking of the resit papers – an unequivocal affront to his integrity as to which his "sense of grievance … was fully justified" The Tribunal asked themselves whether the inquiry cured the breach. They decided that it had not. The report did not afford the "the kind of exoneration and therefore reinstatement that the claimant was, in the circumstances, entitled to".
 
The Court of Appeal upheld the ET’s decision and made the following rulings on the issue before it:
 
(1) In determining whether or not the employer is in fundamental breach of the implied term of trust and confidence, the test is objective. Earlier authority which suggested that the “reasonable responses” test applied to the manner in which an employer operates a grievance procedure were incorrect (although the reasonableness of the employer’s actions may be relevant in determining whether there was a breach of trust and confidence). 
 
(2) It was common ground that no decided case holds that a repudiatory breach, once complete (that is, not a merely anticipatory breach), is capable of being remedied so as to preclude acceptance. A completed breach can not be cured. To allow unilateral rectification of a breach would be stop the Innocent party from accepting the breach and could cause uncertainty and unfairness in employer/ employee relationships. Therefore, the inquiry did not cure the breach caused by the remarking of the papers.
 
(3) It is open to the employer to show that a constructive dismissal was for a potentially fair reason. Whilst the University could have argued that the remarking was necessary on the grounds of capability. It had not raised this as a ‘reason’ for its breach. In fact the outcome of the internal inquiry indicated otherwise. 
 
(4) If the employer does show a potential fair reason, then it will then be for the Employment Tribunal to decide whether dismissal for that reason, both substantively and procedurally, within the band of reasonable responses, was fair. The Tribunal did find that the Claimant was dismissed but did not go on to find unfair dismissal. The University had not provided reasonable justification in the present case. 
 
Note
This decision does not affect the need for workers to act promptly when deciding whether to resign after a fundamental breach of contract has been made by an employer. If a employee carries on working for too long the right to resign will be lost through affirmation (although the Court indicates that affirmation should not be readily inferred).

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