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In Bateman and Ors v Asda Stores Ltd, the EAT has held that employers can reserve the right to vary employees' contracts unilaterally.
Following consultation with the staff, the majority of Asda’s staff moved onto a new pay regime. The remaining staff were then compulsorily moved onto the new scheme under a provision in the staff handbook that allowed Asda to ‘review, revise, amend or replace’ the handbook, parts of which were contractual and to introduce new policies ‘to reflect the changing needs of the business’.
Around 700 staff made claims against Asda for unlawful deductions of wages as a result of being moved to the new pay system.
The Tribunal, referring to the Court of Appeal’s Judgment in Wandsworth London Borough Council v D’Silva (1998 IRLR 193) found that whilst 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, employers need to be aware that such variations could amount to a breach of mutual trust and confidence, which may entitle the employee to resign and claim constructive dismissal. This could occur where the variation is unreasonable or where the employer has failed to give notice of, or consult on the changes.
In Bateman, the employees were not alleging that Asda had breached mutual trust and confidence, as they had given several months warning to the employees before imposing the changes.
Therefore, whilst on ordinary contractual principles, Asda would be required to get the employees' consent to the changes, this was not necessary as the handbook contained a clear and unambiguous power to vary terms in order to accommodate the business needs.
The Tribunal dismissed the employees' claims and they appealed to the EAT, who found that the Tribunal was entitled to find the power in the handbook was clear and it allowed Asda to amend the handbook without employee consent.
The EAT dismissed the appeal.
