Protection of Wages – Employer’s contractual right to amend pay structures

Thursday, February 18th, 2010

In a judgement delivered on 11 February 2010, the London Employment Appeal Tribunal (EAT) ruled that, in the case Bateman and Others v Asda Stores Ltd, the employer was entitled to change and impose new pay structures without the express consent of individual employees, based on a clearly expressed term in the staff handbook.

In August 2007, Asda Stores had sought to move some 18,000 employees from an earlier pay structure to a new structure which, in some cases, reduced their rates of pay.  Following extensive consultation, some 9,300 employees transferred voluntarily to the new regime and the remaining 8,700 employees were moved involuntarily.  About 700 employees brought claims in the Employment Tribunal on the basis that they had suffered unauthorised deductions from wages under the provisions of section 13 of the Employment Rights Act 1996.  Six test claimants had their case heard by an Employment Tribunal but the decision went against them.  They appealed to the EAT.

The “Colleague Handbook”, part of the employees’ contractual terms and conditions, contained the following statement:

“The Company reserves the right to review, revise, amend or replace the content of this handbook, and introduce new policies from time to time to reflect the changing needs of the business and to comply with new legislation.”

In its decision, the Employment Tribunal had stated:

[Asda] acted in this case in pursuance of a clear and unambiguous power to vary contractual terms. The Tribunal has considered carefully how the clause should be interpreted, in view of its wide-ranging effect, but it is entirely unambiguous. However unusual and broad this power was, and however unfettered, the Tribunal has no doubt that it permitted the respondent as a matter of contract to do what it did…. There is no contention that [Asda] acted capriciously, or arbitrarily, or in any way which breached mutual trust and confidence, in imposing [the new regime] in August 2007.”

The EAT agreed in full with the Employment Tribunal’s analysis of the situation and dismissed the appeal.

Further information:

Bateman & Ors v. Asda Stores Ltd

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