Background/facts

After consultation (which was thorough and extensive) most of Asda’s staff voluntarily moved to a new pay regime. There were however some who did not want to transfer over and Asda chose to transfer them involuntarily to the new regime in any event under a provision in the staff handbook which allowed Asda to “review, revise, amend or replace” the contents of the handbook, some sections of which were contractual and introduce new policies “to reflect the changing needs of the business”.

The result was around 700 Claimants bringing claims against Asda arguing they suffered unauthorised deductions from wages in breach of section 13 of the Employment Rights Act 1996 by being involuntarily transferred to the new pay regime.

The Tribunal referred to earlier Court of Appeal case law and found that although generally a variation of contract requires the mutual consent of the parties it is permissible for employers to reserve a right to vary contractual terms unilaterally (i.e. without the agreement of the employees) even if an employee suffers financial loss as a result.

Comment

The above case is positive for employers, but should be treated with caution. Although reconfirming that such blanket clauses can work for employers on the facts of this case, the variation here was reasonable and there was thorough consultation and notice of the proposed change. It will be all too easy for an employer relying carelessly on this case to believe they can simply change terms arbitrarily with such a provision in the handbook and that is certainly not the case. Asda had clearly not breached mutual trust and confidence in the way they handled the proposed change and they had given several months of warning to employees and consultation before transferring them.

It confirms however that a clear and unambiguous express written power to vary contractual terms is useful for employers, if used with care.