Variation OF THE Employment Contract PDF

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JAVED, OLIVIA G. (STUDENT)

VARIATION OF THE EMPLOYMENT CONTRACT How can the terms of employment be altered? 

Contract may give the employer a right to unilateral variation –

Can an ER use express terms to reserve a right of unilateral variation? Wandsworth LBC v D’Silva [1998] IRLR 193 (CA) – Council’s Code of Practice on Staff Sickness stated that procedures were to apply after 10 day absence. Council then changed the provisions to 5 days, and redefined “long term sickness” as 6, not 12, months. it was upheld that the ERs contention that a sickness absence policy (in a code of practice) remained non-contractual and so within the ER’s power to change. Lord Woolf said that although a party could reserve a right of unilateral variation, it would take clear language to do it, and a court should avoid constructing a power to unilaterally vary significant EE rights which could produce unreasonable results. Code was intended to lay down good practice for managers but was not an enforceable contractual term.

Bateman v ASDA Stores Ltd (UKEAT/0221/09) – ASDA introduced new and unusual terms into its contract, with the handbook stating: The Company reserves the right to review, revise, amend or replace the content of this handbook, and introduce new policies from time to time to reflect the changing needs of the business and to comply with new legislation. A copy of the handbook is displayed on the colleague communication board in your store and on Pipeline, and replacement copies are available from your People Manager.

EAT held the power to amend was incorporated into individual contracts, and this enabled Asda to make changes to pay through the introduction of new policies. Where a clause is included in the contract/handbook clearly giving the power to unilaterally vary, it will stand, even if broadly worded

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Managerial discretion to order changes – Dryden v Greater Glasgow Health Board [1992] IRLR 469 (EAT). Contracts are essentially static whereas work and methods may vary – employer may wish to effect changes which are not envisaged by the contract

Cresswell v Board of the Inland Revenue [1984] ICR 508 – a change to new computer system was not outside EEs job description, so they had to adapt, provided ER imposed the change reasonably, i.e. offering training

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Agreement of the employee. If the employer makes a unilateral change, it will be questioned whether the employee has impliedly assented or should have objected. Jones v Associated Tunnelling [1981] IRLR 477 (change of immediate practical importance v little immediate importance): a failure to object (failure) to a change of term of immediate practical importance may be treated as consent , but not if the term is not of immediate significance.

JAVED, OLIVIA G. (STUDENT)

See also Solectron Scotland Ltd v Roper [2004] IRLR 4 – Elias P – where employees go along with variations to the contractual terms without protest, it may be possible to infer that they have, by conduct, accepted the changes. But sometimes, the alleged variation does not require the employee to respond at all – in such a case, if the employee does nothing, his conduct is consistent with the original contact continuing – accordingly, he cannot be taken to have accepted the variation by conduct. Here, the change in wage would have been evident to the EE very quickly, and they need to protest against it. Acquiescence at the time may not necessarily lead the court to infer consent later on. Worker could continue to work, but say they reserve their right to protest against the changes proposed, and this may be enough.

Abrahall v Nottingham City Council [2018] EWCA Civ 796 – One group of EEs affected by changes proposed by NCC  NCC was trying to bring in a pay freeze (with good intentions of removing inequalities in pay, and a response to the rise in cases of unequal pay in the public sector), the result being that the group of claimants were denied the incremental pay rises they would have been contractually awarded. CA allowed Claimants the arrears of pay equivalent to what they would have earned if pay progression had operated in each year that it was frozen. Underhill LJ – inferences can only be drawn from unequivocal evidence; protest or objection may negate an inference of consent; delay by EE may not necessarily imply consent. 

Dismissal of all employees followed by re-engaging them on new terms – this is reviewed in more detail in topic 5

Subjective common law implied terms

Where no terms are expressed regarding certain elements of an employment relationship, courts may look at implied terms. This is subjective, as the likely intention of parties at the time of contracting is looked at.

Business efficacy and officious bystander tests for implied terms (subjective): Necessary to give business efficacy to the transaction? – The Moorcock (1889) 14 PD 64 Officious bystander test (so obvious that it goes without saying) – Shirlaw v Southern Foundries (1926) Limited [1939] 2 KB 206 (CA). Both tests have a standard of reasonable behaviour – in addition to subjective tests, the courts objectively imply where ‘reasonable in all the circumstances’. This is the result of modifications. Courtaulds v Sibson [1988] ICR 451: the court does not have to be satisfied that the parties would have agreed to the term before contracting (if asked to). The court just needs to be

JAVED, OLIVIA G. (STUDENT)

satisfied that the term is one that would probably be agreed on if the parties were reasonable. (Slade LJ). Fundamental breach of contract for ER to (without reasonable and proper cause) conduct itself in manner likely to destroy or seriously damage relationship of confidence and trust between the parties See also Mears v Safecar Security Ltd [1982] 2 All ER 865 Imposed terms (Implied common law terms) Imposed by the law into most/all employment contracts, simply because the relation of employment exists – does not refer to the intentions of the parties. Some common law terms such as ‘default rules’ are often called overriding terms (Malik v BCCI SA) – not implied terms but are ‘Employers implied duties’ Sterling Engineering v Patchett [1955] AC 534 – ‘implied term’ can denote a term inherent in the contract’s nature, which the law will always apply unless the parties agree to vary or exclude it (Lord Reid p547). Would be reasonable to read it into the contract even where parties have remained silent. Overriding terms Mutual trust and confidence (‘respect’) (additionally see below) Douglas Brodie – promotes the dignity and respect of employees….relationship is likely to be strengthened. Modern employment law has stressed the implied duties of mutual respect A good example is that of an unrestricted mobility clause. Can ER insist on literal wording and require the EE to move his/her place of work far away immediately? Or can EE claim that the insistence, although technically within ER’s power, breaches terms of trust and respect? Orthodox law sides with ER, but where there is no express mobility clause and a court would need to imply one, it may be easier to attach implied conditions such as reasonable notice. In United Bank Ltd v Akhtar [1989] IRLR 507, there was an express clause allowing ER to move EE to any other UK branch. Despite this, EAT held EE could claim constructive dismissal when ER ordered him to move from Leeds to Birmingham with only six days’ notice and refused to grant more time. EAT also held that Ers conduct in exercising this right was a fundamental breach of the implied term of trust and respect – it was “proper” to imply an overriding obligation of trust and respect. Clause authorising relocation must be exercised in a way consistent with ongoing relationship of trust and confidence. White v Reflecting Roadstuds Ltd [1991] ICR 733 – at first it appears to resile from Akhtar. EE resigned after being transferred to a lower paid job, which was allowed under the contract, could not claim constructive dismissal. Was too much to accept the argument that such a contractual right must always be exercised reasonably. Wood P said Akhtar does not establish this sweeping principle, but he did acknowledge that there was a problem with ERs unconscionable action and said if the argument was based on the implied term of trust and respect, it would have been much stronger. Woods v W M Car Services (Peterborough) Ltd [1981] ICR 666 (EAT) – Not necessary to show that ER intended to repudiate the contract, in order to constitute a breach of the implied term. Tribunal looks at ERs conduct as a whole and determine whether the EE cannot reasonably and sensibly be expected to put up with it

JAVED, OLIVIA G. (STUDENT)

Malik v BCCI SA [1997] ICR 606 (HL) – HL approved implied term of trust and respect (Lord Steyn): 1. Was there reasonable and proper cause for ERs conduct? 2. If not, was it calculated, or likely, to destroy or seriously damage trust and confidence? Implied duties of the employer (only need to know the ones which are detailed, this list is just for reference) 

To pay wages

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To provide work

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To exercise care: health and safety of EEs*; to provide competent and safe fellow employees – Wilsons & Clyde Coal Co Ltd v English [1938] AC 57 (safe and adequate plant and equipment, safe premises/place of work, competent and safe fellow employees, safe system of work); pay attention to complaints from an EE that a particular appliance, method etc is unsafe, and act reasonably in dealing with it (if not, EE may be justified in walking out and claiming to have been constructively dismissed; indemnify EE against expenses necessarily incurred in the course of his/her employment. This duty does not extend to taking care of the EEs belongings (unless tortious claim)

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To deal promptly and properly with grievances (ACAS Code of Practice No 1)

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Informing and/or advising the employees

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Confidentiality

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To mitigate stress at work

Walker v Northumberland County Council [1995] IRLR 35 (QBD): social worker succeeded in claiming damages for common law negligence by employers, based on two debilitating nervous breakdowns suffered due to increasing workload, and failure to provide help which had been promised. Employer could not use as a defence the fact that the increased workload was caused by externally imposed financial cutbacks. No protective legislation in place; was fairly commonplace for ERs to demand more of fewer employees and justify it because of economic efficiency.

Leading case is CA decision in Sutherland v Hatton [2002] IRLR 272 (CA). Hale LJ set out the following principles: 

Was the injury foreseeable to the employer? [mental disorder will be inherently more difficult to foresee than physical injury, ER will normally be entitled to assume the EE can withstand normal pressures of work]

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Employer can take what the employee says at face value. For example, denying difficulty in coping does not require further inquiry

JAVED, OLIVIA G. (STUDENT)

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Employer is only breaching duty if he fails to take reasonably-expected steps. This takes situational details into account i.e. the size and resources of the firm

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Must prove causation – was the injury caused by employer breach of duty, rather than the stress (etc) itself?

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Will depend on whether the demands on that particular EE were excessive (can rely on history of sickness and/or complaints)

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Employer who offers confidential counselling service is unlikely to be found in breach of duty

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Where the only way of avoiding the ‘danger’ would be to dismiss/demote EE, ER is not in breach of DOC when allowing a willing EE to continue working

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Where the stress was only caused partly by the work, EE must only pay for its share and court must apportion the blame

Barber v Somerset CC [2004] ICR 457 tried to appeal it Stokes v Guest Keen and Nettlefold QBD 1968 – ER liable for psychological stress if conduct not ‘reasonable and prudent…giving positive thought for safety…in light of what he knows or ought to know’ Sutherland appeared to be a balanced and desirable settlement (following Walker, which caused concern for many ERs). But there are two potential threats to this judgment: 1. Disability discrimination law If the stress-induced injury constitutes a disability, then different rules apply. It is no longer a Q of whether the ER could have foreseen the injury, but what steps were taken post-injury by way of ‘reasonable adjustments’ 2. Majrowski v Guy’s and St Thomas’ NHS Trust [2006] IRLR 695 – C sued for damages for stress-related injury relating to alleged bullying and harassment by a line manager. As it was not over a long period and little complaint was made, he would have failed for lack of foreseeability under Sutherland, and he had brought the action too late (four years). However, he sued under the Protection from Harassment Act 1997, which had a six year time bar, with the possibility of damages for ‘anxiety’ caused by harassment. Although the Act is clearly made to protect victims of stalking¸ it does not define ‘harassment’ so the claimant could not be expressly prohibited from using it. Trial judge rejected the claim, but the CA reversed it. There was a strong dissent in that the act was applicable at all. HL held unanimously that the Act applied to facts such as these. This Act is clearly then an avenue where the claimant suffers occupational stress as a result of harassment at work. C can sue employer under vicarious liability (strict – does not require foreseeability of fault by ER). Awards are given for anxiety (etc) which breaks the need for mental injury in Sutherland Sunderland CC v Conn [2008] IRLR 324 – CA showed more wary approach – instances of bad temper by supervisor fell far short of ‘harassment’ threshold: threshold may vary according to type of employment, and must be serious enough to be criminal under primary

JAVED, OLIVIA G. (STUDENT)

provisions of Act. ‘quasi-criminal’ test can still be used by the courts – Dowson v CC of Northumbria Police [2010] EWHC 2612

*Duty to exercise care for EEs health and safety This is especially concerned with the employee’s health and safety e.g. Hudson v Ridge Manufacturing [1957] 2 QB 348 an employer duty to provide competent and safe fellow employees; BA v Austin [1978] IRLR 332 a duty to pay attention to employee complaints Johnstone v Bloomsbury HA [1991] ICR 269 – C’s contract stated a standard working week of 40 hours, but a further 48 hours on call, which was regularly required – up to 100 hours per week. He argued this was detrimental to his health and was a breach of Ers duty to take reasonable care for his health and safety. Judges were divided: Leggett LJ (dissent): relying on a clear express power could not make ER in breach of an implied term – doctor had signed contract and must abide by its terms Browne-Wilkinson VC: the extra 48 hours were an ‘optional right’ for the Ers, not an absolute right, but that it was improper to read into the contract a term that Ers had to have regard for health and safety, when it was simply an exercise of discretion to call for further hours Stuart-Smith LJ: although the contract gave the power to require work up to 88 hours, it must be exercised subject to other contractual terms, in particular those related to health and safety. Duty of obedience ER may give, and EE should obey a lawful order  obedience, or cooperation? 

“lawful order” usually means one which is reasonable within the context of the employment (so will depend on the terms of individual contract; s1 ERA requirements of written terms

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ER cannot give orders outside of the proper scope of employment i.e. of a personal nature (on EEs out-of-work activities, hair length etc)

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ER cannot order EE to change his/her contract; not lawful to require them to go ‘above and beyond’ contract i.e. by working above stated hours, working in different premises 

Employees must obey lawful orders when reasonably within the ambit of the employment – Courtaulds

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Refusal to obey proper orders is discussed in topic 5 – dismissal

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Employer may not order the employee to do something illegal. If so, EE is entitled to refuse the order and cannot be fairly dismissed as a result – Morrish v Henlys [1973] 2 All ER 137

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Employer may not order the employee into danger – Ottoman Bank v Chakarian [1930] AC 277 (PC) – but there must be an immediate and personal danger

Duty to treat the EE with respect (implied term of trust and confidence)

JAVED, OLIVIA G. (STUDENT)

Malik v BCCI SA – HL finally approved implied term of trust and confidence – EEs claimed for stigma damages, saying their future job prospects were materially damaged because of the bank’s fraudulent conduct during their employment. Lord Steyn: ‘a sound development’  has been widely applied. Is perhaps a useful means of ensuring ERs do not use their superior bargaining position to unfairly/improperly exploit employees. Uncertainty from Malik decision was seen in Johnson v UNISYS Ltd [2001] ICR 480 which aimed to prevent the recovery of wide, general damages for stigma loss on dismissal. Was viewed to be a highly undesirable development which should be stopped. Stigma damages limited to breaches of contract during employment (ie Malik confined to its own facts). Held that the term of trust and respect is aimed at ensuring that the contract can continue in a reasonable and proper manner and so is not applicable at the dismissal stage, where questions of continuance no longer arise. However, should this be used to exclude the whole termination process? EEs usually want to rely on the ERs conduct immediately pretermination as a justification, in constructive dismissal cases. Issue was considered in Eastwood v Magnox Plc [2004] ICR 1064 which concerned appalling behaviour by ER but culminated in dismissal. HL adopted the narrow interpretation, in applying the so-called Johnson exclusion zone at the moment of dismissal: the damage had already been done and EE could sue. Lord Nicholls: If before dismissal…an EE has acquired a cause of action at law, for breach of contract or otherwise, that cause…remains unimpaired by his subsequent unfair dismissal and the statutory rights flowing therefrom… exists independently of the dismissal. Important in constructive dismissal – Western Excavating (ECC) Ltd v Sharp [1978] 1 All ER 713: Unreasonable behaviour by the employer, where there is a term of mutual respect, can be held to break the implied term, repudiate the contract, and constructively dismiss the employee.

What is the scope of this exclusion? – Gogay v Hertfordshire County Council [2000] IRLR 703 (CA) – suspension based on unsubstantiated allegation of a breached term – wouldn’t it have been better just to dismiss?

On breach of an express term, see Edwards v Chesterfield Royal Hospital NHS Foundation Trust [2012] ICR 201 – a surgeon alleged harsh treatment leading up to his dismissal, which had been effected by the wrong disciplinary procedure – breach of contract. The end result was, in practice, the ending of his future career prospects. He did not claim for a (capped) unfair dismissal action, but for damages arising from the breach of the contractual term on discipline. Although Edwards claimed breach of an express term, there is no reason why the same conclusion would not be drawn for an implied term (of trust and respect). CA upheld the claim (surprisingly) but SC reversed it and restored orthodoxy. Johnson principle was upheld, and its application to disciplinary procedures must be headed under...