Although it is common for sickness absence procedures to be set out in a non-contractual policy, the Court of Appeal held in Department for Transport v Sparks and ors that there was no reason why sickness management procedures could not have contractual force, if that was “the proper effect of the documents as a whole”.
Seven employees from seven different “agencies” brought claims relating to a provision in a staff handbook about short-term sickness absence. Although the clause differed slightly for each agency, it was agreed that the issue as to whether it was incorporated into the claimants’ individual contracts could be decided by reference to one example.
The contracts stated that the claimants were employed by the Crown working within the Department for Transport (DfT)and that their terms and conditions included those set out in the DfT staff handbook. This stated that provisions which were apt for incorporation should be incorporated into the contract of employment.
Terms and conditions of employment relating to sick leave and management of poor attendance were set out in Part A which included Clause 10.1.18, which stated that “Where in any 12 month period, [an employee has] taken a number of short-term absences as sick leave which together exceed 21 working days your line manager will discuss your attendance record with you”. Where absence exceeded the trigger points the disciplinary procedure would be applied.
In July 2012, the DfT introduced a new policy of attendance management which triggered the formal procedures earlier. The claimants sought a declaration in the High Court that the existing sick leave provisions were incorporated into their contracts and could not be unilaterally varied without their agreement.
High Court decision
The High Court agreed that clause 10.1.18 was incorporated into the claimants’ contracts and that the the Department was not entitled to unilaterally vary the contractual terms relating to attendance management. As such the new policy introduced in July 2012 had not varied the existing contractual terms of the claimants’ employment contracts.
The DfT appealed on the basis that clause 10.1.18 did not have contractual force and was unsuitable for incorporating into the contract of employment. It argued that the disciplinary procedure was written in a way which amounted to guidance rather than contractual entitlement. Likewise, the trigger points.
Decision of Court of Appeal
The Court of Appeal, however, disagreed, holding that there was no reason why sickness management procedures, consisting largely of guidance, could not contain specific provisions which have contractual force, if that was “the proper effect of the documents as a whole”. In this case, the introductory wording in Part A of the handbook which expressly stated that “it set out the terms and conditions relating to sick leave” pointed to a “distinct flavour of contractual incorporation”.
The Court distinguished this case from the earlier case of Wandsworth LBC v D’Silva where the code on staff sickness provided a framework for discussion and was not the language of contractual incorporation. The documents in this case were not drafted in the same way as in Wandsworth and were clearly more than good practice guidance.
It therefore dismissed the appeal.
This case is an important reminder to employers that terms which set out the rights of employees and which are apt for incorporation into the contract of employment cannot be varied without the agreement of the employee.