Clear and unambiguous

Employers can reserve the right to amend the terms and conditions of employees’ contracts, but according to the decision of the Employment Appeal Tribunal (EAT) in Norman and Douglas v National Audit Office (NAO), the right has to be established in a way that is clear and unambiguous.

Thompsons were instructed by the claimants’ union, PCS, to act on behalf of its members.

Basic facts

Prior to starting their employment at the NAO, the claimants received an offer letter which stated, in clause two, that their terms and conditions were “subject to amendment”. The HR manual, which contained details of those terms, was incorporated into their contracts. The manual also contained a section entitled “Settlement of disputes” which stated that the NAO would make every effort to reach agreement before implementing any changes whilst negotiations were taking place unless management considered the changes to be essential to the operation of the NAO.

Following a review of their terms and conditions in 2012, the NAO entered negotiations with the PCS. However, it then decided to impose a number of new terms, including a reduction in paid sick leave and privilege leave to which the union and individual employees had not agreed. Ms Norman and another colleague submitted a test tribunal claim asking for statements of main terms and conditions.

Tribunal decision

Holding that the issue was whether or not the NAO was entitled to vary the terms and conditions by virtue of clause 2 of the appointment letters, the tribunal found that the NAO was entitled to unilaterally make the changes.

Although this right was subject to the implied term of mutual trust and confidence, this had not been breached as the NAO had engaged in numerous meetings with the PCS as part of negotiations to agree the changes. It was only once it was clear that an agreement was not possible that the NAO notified employees that the changes would be imposed.

EAT decision

The EAT disagreed with the tribunal, holding that the meaning of clause 2 came nowhere near the standard needed to “reserve the right to amend unilaterally”. Instead the clause simply pointed to the fact that the terms could be amended and that employees would be notified of any amendments. There was nothing to indicate whether the employer had the right to vary the contracts without the consent of the individual employee or the trade union as a result of negotiation.

It also held that the chapter dealing with the settlement of disputes in the manual was not incorporated into the contracts of the employees as it was not a particular of a condition of service. Even if it was incorporated, however, the NAO had made clear that it took the decision to impose the variations because of its frustration with the union, not because it was essential to the operation of the NAO and there was no contractual right to vary in those circumstances.