Is your handbook contractual?

12 May, 2016
by: Cripps Pemberton Greenish

Red employee handbookMost employers include their contractual terms in a contract of employment and have a separate non-contractual handbook. The clear advantage of doing so is that it allows employers to make unilateral changes to the handbook, giving them greater flexibility and freedom to adapt policies to the changing needs’ of their business.

In the case of Department for Transport v Sparks the Court of Appeal found that an absence policy in a handbook was contractual. The absence policy provided that formal action would not be taken against employees until they had reached the trigger point of 21 days’ absence in a particular year. For fairly obvious reasons, the Department of Transport wanted to reduce the trigger point period. They sought to do this unilaterally as a change to the handbook. A number of employees complained that this unilateral change was not effective. The Court of Appeal agreed with them.

When deciding whether a particular policy or term is contractual the courts will consider whether it is ‘apt for incorporation.’ In essence, this requires an assessment of whether the wording looks contractual as opposed to aspirational or merely guidance.

These types of cases depend very much on the particular facts, but this is a reminder to employers that including a policy in a handbook rather than in the contract will not of itself ensure that the policy is non-contractual.

Employers should consider:

  • reviewing the language used in policies;
  • including a clear statement that the handbook or policy is non-contractual;
  • including a statement that the policy may be amended from time to time; and
  • including written confirmation that the employer has the right to unilaterally vary the policy.