Bateman and others v Asda Stores Ltd EAT/0221/09

contracts of employment | variation of contract | unilateral variation

The Employment Appeal Tribunal (EAT) has held that an employer can reserve the right to vary employees' contracts unilaterally. Although varying a contractual term without notice or consultation can amount to a breach of the implied term of mutual trust and confidence, it was not asserted that there had been such a breach in this case and the employer's unilateral variation of a pay regime was therefore valid.

A number of the employer’s staff were employed on an old pay structure and the employer wished to bring their pay in line with its newer system. Some employees had their contracts of employment changed unilaterally, with the employer relying on a provision in its staff handbook that it could review, revise or amend the handbook to “reflect the changing needs of the business”. Ms Bateman and around 700 other employees whose contracts of employment were amended brought claims for unlawful deductions from wages.

The employment tribunal found that, while the employer would ordinarily be required to obtain the employees’ consent before making the variation, an employer may reserve the contractual power to vary the terms of a contract of employment without consent by reserving the right to do so unilaterally. This principle was established in Wandsworth London Borough Council v D'Silva and another [1998] IRLR 193 CA. The tribunal did say that there could be arguments that the employer acted so unreasonably or capriciously as to make the variation a breach of the implied trust and confidence between the employer and employee, but that this was not argued in the present case. Therefore, the employer was entitled to vary the contracts of employment unilaterally.

The EAT agreed. The words in the staff handbook were "clear and unambiguous" and allowed the employer to introduce new policies without the prior consent of employees. The EAT did not accept the argument that most of the employees were not well-educated or even literate or numerate and could not conceivably have intended or expected that the effect of their terms of employment would be to give their employer unilateral discretion to reduce their pay, change their hours of work or cut holidays. In addition, the EAT noted that the argument that the variation amounted to a breach of the term of trust and confidence had not been raised in the employment tribunal and so it could not be considered during the appeal.

Case transcript of Bateman and others v Asda Stores Ltd (Microsoft Word format, 98K) (on the EAT website)

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