Incorporation of Terms: When Staff Handbook Absence Policy is Contractual

Thanks to Ed McFarlane of Deminos HR for preparing this case summary

Is an absence management policy in a Staff Handbook 'apt for incorporation' into employee contracts?

Yes, held the Court of Appeal, on the facts in Department for Transport v Sparks, dismissing the Department's appeal against a finding that an absence management policy had contractual effect.

The case arose from a dispute as to whether certain parts of the Department's staff handbook were incorporated into employees' contracts. The Claimants (7 in all) had obtained a declaration in the High Court that certain clauses in the Department's Staff Handbook had contractual effect. The appeal focused on a short-term absence management policy, which, if contractual, restricted managers' scope for taking disciplinary action until specific trigger points had been exceeded, 21 days of short-term absence in any 12-month period.

The Court reviewed the tests for the incorporation of handbook policies into employment contracts. Viewing the employment documents as a whole, the relevant introductory wording of the handbook pointed to a 'distinct flavour of contractual incorporation'. The fact that it might generally be a desirable feature of industrial management to handle absence matters through non-contractual policy would not prevent a particular provision from being 'apt for incorporation'. In contrast, a policy that was stated as forming a 'framework within which to approach such matters' would not be contractually binding.

Practitioners may wish to note that the Court stated that with the handbook existing only in electronic form, it was far from satisfactory that various versions of it had been irretrievably deleted on updating without retaining previous versions.