Unilateral changes

Bateman and ors v Asda Stores Ltd

Under contract law, employers cannot usually change the terms of a contract unilaterally. In Bateman and ors v Asda Stores Ltd, however, the Employment Appeal Tribunal (EAT) accepted that employers can reserve the right to vary employees' contracts unilaterally as long as the term is clear and they do not exercise the power in such an unreasonable way that they breach the term of mutual trust and confidence when doing so.

Basic facts

Asda wanted to move some members of staff onto a new, up to date pay structure. After an extensive consultation process, about 9,300 staff agreed to move onto the new structure voluntarily but about 8,700 refused.

Relying on an express term in the staff handbook, Asda imposed the new regime on these employees. This stated that the company reserved the right to “review, revise, amend or replace” what was in the handbook “to reflect the changing needs of the business”.

About 700 employees lodged claims for unlawful deduction of wages under section 13 of the Employment Rights Act 1996.

Tribunal decision

Relying on the 1998 case of Wandsworth London Borough Council v D'Silva, the employment tribunal said that although employers normally need consent to vary their employees’ contracts, they could reserve the right to unilaterally vary them as long as the language of the term was clear.

However, such a term did not give employers an unqualified right to introduce changes. And the term would be unenforceable if the employer had acted so unreasonably or arbitrarily that they ended up in breach of the implied term of mutual trust and confidence. For instance, if they introduced the change without any notice or warning.

In this case, the tribunal said Asda was able to vary the contracts unilaterally as it had given several months notice of the change, and its aim of having one pay structure fell within “the changing needs of the business”.

EAT decision

The EAT agreed with the tribunal. It said there was no argument that Asda had acted so unreasonably or arbitrarily as to breach the duty of mutual trust and confidence.

Furthermore, the provision in the handbook was clear and unambiguous, giving Asda the right to amend the handbook unilaterally. It rejected the argument that the employees, most of whom were “not well-educated or even literate or numerate” would not have understood that it meant the company could change their pay rates unilaterally. The claimants had not put any evidence to the tribunal in support of this argument and did not appeal on the ground that the tribunal should have made such a finding.

It also rejected the argument that, under the duty of mutual trust and confidence, Asda should have spelt out to the employees what the provisions in the handbook really meant, as “there was no issue in relation to the trust and confidence duty”.