In Department for Transport v Sparks, the Court of Appeal has provided further useful guidance on whether staff handbook provisions (in this instance relating to absence management) had been incorporated into employees’ contracts.

Facts

The Department for Transport is responsible for a number of government agencies, including the Driving and Vehicle Licensing Agency and the Highways Agency. These agencies all have a Departmental Staff Handbook based on a standard format across the whole of the DfT.

The provisions for attendance management for both of these agencies were fundamentally the same, but there was a variation in the number of days of absence required before a formal absence procedure could be triggered (ranging from 8 to 21 days).

Unfortunately for the DfT, the handbook stated that all its terms that were ‘apt for incorporation’ were to be incorporated into employees’ contracts of employment. In addition, Part A of the Handbook (which included the absence management provisions) was expressly stated to be incorporated into employees’ contracts.

It was also stated in the handbook that the DfT could make unilateral changes (i.e. changes without employees’ consent) only if they were not detrimental to employees.

In July 2012, following drawn-out and unsuccessful negotiations, the DfT informed the trade unions for DfT staff that it would be imposing a new standardised attendance management procedure across all its agencies. Under the new procedure, a process would be triggered after five days or three occasions of absence within a rolling 12 month period.

Seven employees (under the guidance of the union) applied to the High Court for declaratory relief (i.e. a decision on the contractual status of the existing Handbook terms).

The High Court’s decision (perhaps unsurprisingly) was that the absence management terms were contractual and the DfT’s appeal was roundly dismissed by the Court of Appeal. 

In doing so, the Court of Appeal gave a useful summary of the factors to be considered:

• The importance of the provision to the overall bargain between employee and employer is highly relevant.
• The key question is whether the provision is ‘apt for incorporation’ and the starting point is the language of the employment documents as a whole.
• Whether a provision in a staff handbook has been incorporated into individual employment contracts will always turn upon the precise terms of the particular documents in each case.
• Where a document is expressly incorporated by general words it is still necessary to consider whether any particular part of that document is apt to be a term of the contract. If not, the correct construction of the contract may be that it is not a term of the contract.
• The level of detail prescribed by the provision and the certainty of what the provision requires are also important. Vague terms and general guidance are much less likely to be contractual than terms that have a clear impact and effect (as was the case here).

Comment

The case is a useful summary of the current law and the relevant authorities at Court of Appeal level. Our firm advice is that employers are better served by setting out all contractual terms in a contract of employment and using a completely non-contractual staff handbook for workplace rules, procedures, and policies which can be easily varied in line with operational requirements.