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7 May 2015 0 Comments
Posted in Employment, Opinion

Contract did not entitle employer to make unilateral changes

Author headshot image Posted by , Partner

In Norman and another v National Audit Office, the EAT has overturned an Employment Tribunal decision that a clause in an employment contract which stated that the terms and conditions were “subject to amendment” and that the changes had been notified to employees, was enough to give the employer the right to unilaterally vary the contract terms.

The letters of appointment clearly stated “detailed particulars of conditions of service are to be found in the relevant sections of the HR manual of the NAO. They are subject to amendment; any significant changes affecting staff in general will be notified by management circulars, policy circulars or by general orders, while changes affecting your particular terms and conditions will be notified separately to you”.

The Employment Tribunal clearly considered that this was sufficient to allow the employer to make unilateral changes – but the EAT did not. The EAT considered that the language was neither clear nor unambiguous and that this clause did not reserve the right to amend unilaterally. It further held that the use of the work “notified” did not have anything like the significance attributed to it by the Respondent. It did no more than point out that contractual clauses could be amended. If they were amended, and the changes were significant and of general effect these would be notified by methods such as circulars or orders. Changes to individual contracts which were of less significance would be communicated specifically. Therefore it held that the use of the verb “notified” only stated that the employer would tell employees about the changes and did not establish a right to make them unilaterally.

This is a case which flags up the importance of wording in a contract – one would have thought that this wording would have been fairly clear to establish a right to unilaterally vary – but it appears not.

This legal update is provided for general information purposes only and should not be applied to specific circumstances without prior consultation with us.

For further details on any of the issues covered in this update please contact Gemma Ospedale, Partner in Employment on 020 7583 2222.

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