Bateman & Ors v. Asda Stores Ltd

Factual and Procedural Background

Prior to August 2007, a small proportion of store staff at Company A were employed under a pay structure known as the "Standard Rate" (the old regime). Company A sought to amend the contracts of these employees to align their pay structure with the more current "Top Rate" system (the new regime) adopted by the majority of staff. Company A aimed to ensure no employee suffered a reduction in pay due to this change.

During an extensive consultation process, approximately 9,300 employees voluntarily transferred to the new regime, leaving around 8,700 employees whose contracts were changed involuntarily. Company A relied on provisions within its staff handbook (the Colleague Handbook) to justify unilaterally imposing the new regime on these employees.

About 700 claims were brought by employees in the Employment Tribunal alleging unauthorized deductions from wages under section 13 of the Employment Rights Act 1996, breach of contract, and in some cases unfair dismissal. Six test claimants contended they did not consent to the change; by the end of the hearing, only one claimed actual loss, while others sought declaratory relief.

The parties agreed that the Employment Tribunal should decide three issues: (1) whether the introduction of the new regime required the claimants' consent considering the nature of the change and the Colleague Handbook provisions; (2) if consent was required, whether it was given; and (3) if consent was not given, whether there was an unauthorized deduction from wages.

The Employment Tribunal concluded that the Colleague Handbook permitted Company A to introduce the new regime without the claimants' consent and consequently did not consider the remaining issues. The claimants appealed this finding.

Legal Issues Presented

1. Whether the introduction of the new pay regime required the consent of the claimants, considering the nature of the change and the provisions of the Colleague Handbook.
2. If consent was required, whether the claimants consented (expressly or impliedly) to the change.
3. If consent was not given, whether the total wages paid were less than properly payable, amounting to an unauthorized deduction.

Arguments of the Parties

Appellant's Arguments

• The power to vary contractual terms in the Colleague Handbook was limited to non-contractual policies and did not extend to pay terms.
• Any variation affecting pay required the employees' consent.
• Company A did not actually act in accordance with the variation clause.
• The absence of express reliance on the variation clause by Company A supported the interpretation that it did not permit unilateral changes to contractual pay terms.
• The Employment Tribunal failed to consider the relevant background of the employees, including their literacy and expectations, which was critical to interpreting the contract.
• Company A had a duty to maintain trust and confidence by clearly communicating the implications of the handbook provisions to employees.
• The Employment Tribunal erred in construing the Colleague Handbook provisions as clear and unambiguous, particularly the reserved power to amend the handbook content, which did not expressly include terms and conditions of employment.
• The contra proferentem rule should apply due to alleged ambiguity, construing terms against Company A.

Respondent's Arguments

• The Employment Tribunal correctly applied established principles of contract construction, interpreting the Colleague Handbook objectively.
• The variation clause in the handbook clearly and unambiguously conferred on Company A the right to amend contractual terms, including pay, to reflect the changing needs of the business.
• No evidence was presented to show that employees had expectations contrary to the objective meaning of the handbook provisions.
• The claimants had conceded before the Employment Tribunal that there was no breach of the implied duty of mutual trust and confidence.
• The contra proferentem rule was inapplicable because the relevant provisions were not ambiguous.
• If the claimants' appeal succeeded, Company A would pursue a cross-appeal on related issues.

Table of Precedents Cited

Court's Reasoning and Analysis

The court undertook a detailed analysis of the contractual framework governing the employment relationship between Company A and its employees, focusing on the Colleague Handbook provisions. It noted that the handbook formed part of the employees’ contracts and included a variation clause reserving the right to amend its contents and introduce new policies to reflect business needs.

The court emphasized the principle that contracts can only be varied by agreement unless there is a clear and unambiguous contractual power permitting unilateral variation. Applying established case law, particularly the Wandsworth London Borough Council decision, the court found that the variation clause in the handbook was sufficiently clear to authorize Company A to make the changes to pay structures without employee consent.

The court rejected the appellants’ arguments that the variation clause was limited to non-contractual policies or that it did not extend to pay terms, reasoning that the handbook explicitly identified pay provisions as contractual and subject to the variation clause. It further rejected the claimants’ attempt to rely on the employees’ purported background and expectations, noting the absence of evidence and that the contract was to be interpreted objectively.

Regarding the duty of mutual trust and confidence, the court accepted the claimants’ concession that Company A had not acted capriciously or arbitrarily and that there was adequate consultation and notice, thus no breach arose.

The court also considered and dismissed the application of the contra proferentem rule, holding that the relevant provisions were not ambiguous and thus the rule was inapplicable.

In sum, the court upheld the Employment Tribunal’s conclusion that Company A was contractually entitled to impose the new pay regime unilaterally under the terms of the Colleague Handbook.

Holding and Implications

The appeal is DISMISSED and the cross-appeal does not arise.

The direct effect of this decision is that Company A was entitled under the terms of the Colleague Handbook to unilaterally vary the pay structure of its employees without obtaining their express consent. No breach of contract or unauthorized deduction from wages was found in relation to the introduction of the new regime. The decision does not establish new legal precedent but affirms the application of established principles regarding unilateral variation clauses in employment contracts and the interpretation of staff handbooks as contractual documents.