Thu 05 May 2016

Is your staff absence policy contractual

A recent case highlights the risk of policy documents creating binding obligations on employers.

In the case of Department of Transport v Sparks the Court of Appeal considered whether an absence management policy contained in a staff handbook had contractual effect. If the policy had contractual effect then managers were restricted from taking disciplinary action until the absence trigger points set down in the policy had been exceeded.  A declaration had previously been made in the High Court that a provision stating:-


"Where in any 12 month period you have taken a number of short term absences as sick leave which together exceed 21 working days, your line manager will discuss you attendance record with you.  Only if you have exceeded these "trigger points" and, consequently, your line manager acknowledges that there is a problem with your attendance will he or she take the matter forward in accordance with the procedures set out in Annex A - maintaining satisfactory standards of attendance". 


The Department of Transport appealed against that decision.  The Court of Appeal stated that the issue of whether a provision in a staff handbook is incorporated into individual employment contracts or not will always turn on the precise terms of the particular documents in each case.


The Department of Transports appeal was a six pronged approach.  They argued that:-


    • Attendance management procedures are inherently unsuitable for incorporation into contracts;
    • The clause being considered was not prescriptive;
    • There was a second provision with the trigger point of 21 days absence in 12 months which was expressly provided as being only "guidance and procedures" and it did not make sense that one provision should have contractual force and the other should not;
    • The clause in question was found among a number of provisions where were not apt for incorporation;
    • The disciplinary procedure referred to in "Annex A" referred to in the clause were couched in the language of procedural guidance rather than contract entitlement; and
    • Holding the clause as having contractual effect had undesirable consequences in practice.


The Court of Appeal did not accept any of these arguments, finding that the clause did have contractual effect.  The Court agreed with the submissions made on behalf of the claimants that there was no inconsistency in sickness management procedures being largely matters of guidance and good practice, but with specific provisions within them having contractual force.  In this particular case the judges found that the wording introducing the Handbook pointed to a "distinct flavour of contractual incorporation".  The Court also highlighted wording which referred to "your terms and conditions of employment relating to sick leave" and "to the management of poor attendance" finding that they indicated an intent to confer a right on employees over and above good practice guidance. 


This decision is similar to the case of  Keeley v Fosroc International Limited which found that certain terms of an enhanced redundancy policy had contractual effect.  Where policies such as absence management or disciplinary procedures are contractual it is important that employers follow them even for employees with less than 2 years' service.  Although such an employee would not be able to claim unfair dismissal a failure to follow a contractual provision could give rise to a breach of contract claim in either the Employment Tribunal or the civil courts.  Although rare, it could also result in an employee being able to obtain an interdict or injunction preventing an employer from terminating their employment without following the necessary procedures, something that could be used to delay a termination date until, for example, after a valuable bonus became payable. 

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