Could the National Audit Office change the contract of its employees without their consent, because their contract said that it was “subject to amendment”?

No they could not, said the EAT in the case of Norman v. The National Audit Office.

Background

Contractual changes usually need to be agreed by both parties.

In a case in 2009, Asda, however, successfully relied on a clause in their employment contract giving them the right to amend it (they wanted to harmonise pay structures). This case has generally been taken to be very limited to its circumstances, because there was extensive consultation in this case, and only 1 in 6 employees were financially worse off after the changes.

Notwithstanding the Asda case, it remains case law that any unilateral changes to employment contracts must be set out in clear and unambiguous terms.

In the present case, the NAO wanted to reduce additional leave from 2½ to 2 days, and reduce the amount of paid sick leave on offer by about 20%.

NAO’s employees and their union objected to this, and, when the change was imposed on them, brought a Tribunal claim.

The Employment Appeal Tribunal supported the employees and found that the phrase “subject to amendment” came ‘nowhere near’ the standard of being clear and unambiguous.

The NAO were therefore not able to make the contractual changes they wished to.

Implications

Employers are increasingly tempted to include a right to make changes unilaterally in their employment contracts, in part because the new TUPE Regulations say that these rights will survive with business transfers and make changes possible where they weren’t before.

However, courts will be very slow to acknowledge any right of unilateral variation, and here the EAT used the ‘clear and unambiguous’ test to stymie the NAO’s effort. Expect other methods to be deployed in future cases.

Employers will consequently usually reserve flexibility clauses for reasonable, minor or administrative changes.

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