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Creating wriggle room in staff handbooks, policies and procedures

A recent Court of Appeal case, British Transport v Sparks, demonstrated the importance of drafting handbooks and employment policies carefully to avoid creating a contractual obligation inadvertently that is binding on the company. The case highlights that if the wording of a policy, or even one section of it, looks like a contractual obligation then there is a risk that this is how it will be viewed by a court or tribunal.

If employers get this wrong, an employee could have a claim against them for failing to comply with the terms of the policy or procedure. This could come in various forms, ranging from constructive dismissal to whistleblowing claims, or a financial claim for not carrying out a procedure in accordance with the specified terms.

A policy that is contractual also hinders an employer’s ability to update it, as this would require a formal consultation process in order to avoid claims for breach of contract or constructive dismissal.

So employers should always state that policies are non-contractual. Although this could be over-ruled by a tribunal or court, it is always helpful to set this out at the beginning of any policy or procedure. If a policy or procedure is referred to in an employment contract, (for example, a disciplinary or absence policy) employers should ensure that the employment contract also states that these policies are non-contractual.

The golden rule when drafting policies is to soften the wording to allow for wriggle room. Where possible employers should qualify the word ‘will’ with ‘normally’. For example, it would be preferable to say “a disciplinary hearing will normally be heard within [xx] days” rather than “a disciplinary hearing will be heard”.

Employers should also avoid imposing too high an obligation on the company or its line managers. They should banish the word ‘must’ in the context of what the company or line managers will do and avoid phrases such as “the company will make every reasonable effort”. Often this kind of wording can be deleted in its entirety. Likewise committing to strict time limits could give a disgruntled employee – or more often his or her lawyer – an easy target, especially in the light of the Sparks case.

An area which often causes confusion is whether new recruits are subject to the company’s usual disciplinary, performance or sickness policies during their probationary period. One approach is to state in the employment contract that these policies do not apply during this time, and it is sensible to repeat this in the policy itself and remove any wording to the effect that “this applies to all employees” so there can be no confusion. This will prevent an employee from arguing, for example, that he or she should have been given a series of warnings before dismissal but cannot be seen as an open door to discarding a fair dismissal procedure, or not maintaining a paper trail to justify the dismissal. Some employers have a separate probationary policy but care needs to be taken that this does not itself bind the employer to a set number of steps before a dismissal notice can be issued.

Another area where employers can inadvertently find themselves in trouble is in detailed guidance to managers on conducting disciplinary, performance or absence procedures. While these documents are specifically designed to help managers and are not usually given to employees, if an employee brings a claim they will form part of the tribunal evidence, so the same principles regarding flexibility and moderating any obligations on the employer apply.

It was the sickness absence policy that was in dispute in the Sparks case, particularly whether the employer could take disciplinary action over an employee’s intermittent sickness absence before the 21-day trigger point had been reached. It is often the case that employment contracts or policies specify the number of days that an employee will be entitled to enhanced sick pay, but the case highlights that employers should avoid setting prescriptive rules around when disciplinary action will be taken for sickness absence.

Added: 26-05-2016

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