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Can the employer change terms of employment when the contract says it can?

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As ever, the answer is not as straightforward as it may seem. When recruiting, an employer often fails to pay sufficient regard to how terms and conditions may need to evolve over the period of employment. Flexibility clauses, when they are included, are sometimes loosely drafted and too general. Yet retaining the right to alter terms to meet changing needs may be key to the business.

In Bateman v Asda UKEAT/0221/09 the EAT allowed an employer to rely on a clause in the employee handbook which reserved the right to ‘review, revise, amend or replace’ any of the terms in the handbook, including terms relating to pay, and provided that this flexibility clause and the pay terms were incorporated into employment contracts. Employers have relied on this decision to include general clauses of this nature to push through changes.

However, recent decisions have highlighted the need for flexibility clauses to be more precise and unambiguous. In Norman and others v National Audit Office UKEAT/0276/14 the EAT ruled that a provision that contract terms were ‘subject to amendment’ was not clear and unambiguous: the words did no more than state the fact of amendment. In Hart v St Mary’s School Ltd UKEAT/0305/14 the EAT held that a clause stating that ‘the fractional part […] may be subject to variation depending on the requirements of the School Timetable’ did not permit a substantial unilateral variation. Finally, in Sparks and others v Department for transport [2015] EWHC 181 the High Court refused to allow the Department for Transport to harmonise absence management policy terms since these terms were contained in the part of the Handbook where it was stated that terms which were apt for incorporation would be incorporated into contracts of employment. The absence policy terms were precise, apt for incorporation and the DfT’s attempt to vary them was therefore unlawful.