Bateman and Other v Asda Stores Ltd

01/04/2010

By Nick Hobden, Partner and Head of Employment.

It is fairly common for contracts of employment to include a provision that suggests that the employer may vary the terms of that contract from time to time, as long as the employee is informed of the change.

We have frequently advised our clients that they should be cautious in seeking to rely upon such provisions in relation to anything other than very minor changes to their employees' contracts. However the recent case of Bateman and Others v Asda Stores Ltd might encourage us to believe that employers could be a little braver.

The case arose out of Asda's wish to introduce a new pay arrangement. The company consulted with its workforce, as a result of which most employees agreed to move over to the new terms and conditions. But, unsurprisingly, there was a hard core of employees who refused. Asda decided unilaterally to move these employees onto the new pay regime anyway, in spite of their refusal. In doing so, Asda relied upon a provision in their staff handbook that suggested that Asda was entitled to change the content of the staff handbook (even if its content was contractually binding) if the changing needs of the business required it. A fairly large number of employees brought claims against Asda, alleging that they had suffered an unlawful deduction from their wages

Lawyers for Asda argued that previous case law suggested that an employer could reserve to itself the right to change its contracts of employment, even if an employee suffered financial loss as a result. Asda conceded that such provisions would command close consideration to ensure that they were properly applied. It would also be necessary to weigh up whether the changes could be said to be unreasonable or introduced without notice or consultation. But if the employer acted reasonably in implementing the changes and the contract included a clear and unambiguous power to vary contractual terms, Asda submitted that this was lawful. Perhaps a little surprisingly, the Employment Tribunal accepted Asda's arguments and dismissed the employees' claims. The employees appealed to the Employment Appeal Tribunal, but that appeal was unsuccessful.

Whilst this case does not constitute a 'green light' for employers to rely upon these variation clauses when making any changes that they might wish, in the right circumstances, such provisions may assist employers who have exhausted attempts to agree the changes with their workforce and need to implement them for good business reasons. If you would like to discuss in more detail the issues that arise out of this case, please contact a member of the team.