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Handbook term allows asda to change contractual terms without consent

In Bateman and others v Asda Stores Ltd, the EAT upheld a tribunal decision that Asda was entitled to rely upon a statement in its employee handbook reserving the right to vary contractual terms in order to harmonise its pay structure, without the need to obtain the affected employees’ express consent. This decision is a useful one for employers who wish to make changes to their working practices to adapt to the ongoing economic problems in many sectors.

A small proportion of Asda’s store staff were employed on an old pay structure and Asda wanted to amend their contracts of employment to bring them into line with the new pay structure adopted by the majority of their staff. Asda tried to ensure that all staff would not suffer a reduction in pay by moving to the new pay structure. It consulted with 18,000 affected staff and approximately half of these voluntarily agreed to the change. The remainder refused, but Asda decided to impose the changes by relying on an express term in its staff handbook which reserved the right to “review, revise, amend or replace the content of the handbook, and introduce new policies … to reflect the changing needs of the business and to comply with new legislation”. Approximately 700 staff brought claims, alleging amongst other things that Asda had made unauthorised deductions from their wages. Six test cases came before the employment tribunal.

Certain sections of the handbook were expressly incorporated into employees’ contracts of employment. These included terms about hours of work and pay.

The employment tribunal said that introducing a new pay regime was a significant change affecting how much employees would be paid at particular times of the day and night. It concluded that pay is fundamental to the employment relationship and ordinarily an employer would need the express consent of those affected by the proposal before making the change. However, Asda had a contractual right to vary pay and working hours and this was “entirely unambiguous” and it was therefore entitled to rely on it to impose change. The employees appealed.

The EAT rejected the appeal and upheld the conclusions reached by the tribunal. The wording of the handbook was clear and stated that Asda was entitled to review and change the contracts of its employees without obtaining prior consent or consulting with the affected employees. That said, if Asda had not properly consulted, the employees may have argued that in imposing the change, Asda had damaged the relationship of mutual trust and confidence, entitling its employees to resign and claim constructive unfair dismissal.

In this case, Asda tried to ensure that the staff affected by the change would not take home less money than they had done under the old pay structure. If their staff had been financially penalised, it is likely that this decision would have been decided differently, particularly if the employees alleged that it had damaged trust and confidence. Therefore, whilst it is a useful decision and employers should re-visit their handbooks and contracts of employment, it is not a vehicle that can be used for wholesale changes to terms and conditions of employment.