It is common practice for an employer to set out what they intend to be contractual conditions within the deal of job as well as the low- contractual procedures and procedures inside the staff handbook.
The underlying reason behind that is to minimize the chance of a worker where technique or a policy has not been strictly honoured claiming violation of agreement. Additionally it gives more flexibility to improve their policies and procedures to businesses.
A recent case within the Judge of Appeal confirmed that, regardless of what ‘label’ an employer may apply to it, the courts can look at exactly what the supply is really about when determining whether it’s contractual or not.
The case concerned an enhanced redundancy payment set out inside the staff manual in a portion dealing with’ Rights and Employee Benefits’ that was headed ‘non-contractual’. The provision said:
Get Paid in Unemployment:
“Those employees with 2 or more years continuous support are entitled to obtain an advanced redundancy payment from the Company, that is paid tax free into a limit of £30,000. Details will be discussed during both personal and combined consultation.”
The Court of Appeal found that even though the wording did not specify how the transaction was to be determined, it did consult with an ‘entitlement’ and, as a result was capable of being a contractual provision.
In this case, the aforementioned clause was observed to become contractual along with the employee was eligible for an enhanced redundancy payment following his redundancy.
While this case evidently relied on the specific wording of the superior redundancy provision, the Judge of Appeal held that superior redundancy plans are a function of a worker’s remuneration package and, therefore, are ‘apt’ for incorporation into contracts of work.
What lessons can we understand?
First & most importantly, evaluate your manual and determine which parts you would like to be contractual (if any) and which parts you wish to be non-contractual. Next, add a word to each plan confirming whether you propose it to be contractual or non-contractual. It is advisable to preserve contractual and low-contractual guidelines in separate parts of the manual. This may not be the conclusion of the problem however it does show your goal.
The next level is to review the text found in the policies. If you intend an insurance plan to be non-contractual, avoid phrases for example ‘named’ and ‘entitlement.’