I was forwarded this and thought it was worth cut and pasting as it is. It refers to a tribunal in which 700 ASDA staff had their pay cut unilaterally without their consent and it was ruled that this was perfectly legal as there was 'we can do what we like' clause in their contracts;
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Employer may reserve right to vary employees' contracts unilaterally
In Bateman and Ors v Asda Stores Ltd the EAT has held that employers reserve the right to vary employees' contracts unilaterally. While varying a contractual term without notice or consultation might amount to a breach of the implied term of mutual trust and confidence, no such breach had been asserted in this case and so the employer's unilateral variation of a pay regime was valid.
After extensive consultation, most of Asda's staff voluntarily moved onto a proposed new pay regime. The remaining staff were then transferred involuntarily to the new regime under a provision in the staff handbook allowing Asda to 'review, revise, amend or replace' the contents of the handbook, some sections of which were contractual, and introduce new polices to 'reflect the changing needs of the business'. B and around 700 others claimed, among other things, that they had suffered unauthorised deductions from wages in breach of S.13 of the Employment Rights Act 1996 as a result of being involuntarily transferred to the new pay regime.
The tribunal, referring to the Court of Appeal's judgment in Wandsworth London Borough Council v D'Silva 1998 IRLR 193, found that although, as a general rule, a variation of contract requires the consent of both parties, employers can reserve the right to vary contractual terms unilaterally, even if an employee suffers financial loss as a result. However, such a provision should be closely scrutinised to judge whether it enables the employer to make the change.
The tribunal noted that there may be exceptions where the employer's variation breaches the mutual term of trust and confidence. This could occur where the variation is unreasonable, arbitrary or capricious, or where the employer has failed to give notice of, or consult on, the change.
In the present case, it was not contended that Asda had breached the mutual term of trust and confidence as it had given several months warning to employees before transferring them. Thus, although on ordinary contractual principles Asda would have been required to obtain employees' consent to make fundamental changes to the employment relationship, this was not necessary where the handbook contained a clear and unambiguous power to vary contractual terms to reflect the changing needs of the business.
As Asda's desire to have only one pay structure fell within 'the changing needs of the business', it was entitled to vary the contracts unilaterally. The tribunal therefore dismissed the employees' claims. The claimants appealed on several grounds.
The EAT held that the tribunal was entitled to find that the power in the handbook was clear and unambiguous. It clearly allowed Asda to both amend the handbook and introduce new policies without employee consent. As there was no ambiguity in the wording of the power there was no need to invoke the 'contra proferentum' rule, by which the term would have to be interpreted in the claimants' favour. The EAT rejected the argument that the employees, most of whom were 'not well educated or even literate', could not have conceivably intended or expected that the effect of their contracts would be that Asda could reduce pay, holiday or hours without consent or notice. No evidence had been put before the tribunal to support this submission and there was no appeal on the ground that the tribunal should have made such a finding.
Similarly, the EAT rejected an argument that Asda's failure to make the effect of the power clear to its staff was a breach of the mutual term of trust and confidence. The issue could not be raised before the EAT as the claimants had expressly conceded before the tribunal that there was no issue in relation to the duty of trust and confidence. The EAT therefore dismissed the appeal.The case will be reported in a future edition of IDS Employment Law Brief.
Source: EAT 11/2/10