Latest in Employment Law>Articles>Golden Rules of the Employee Handbook: Creation, Status, Management and Amendment
Golden Rules of the Employee Handbook: Creation, Status, Management and Amendment
Published on: 31/01/2019
Issues Covered: Contracts of Employment
Article Authors The main content of this article was provided by the following authors.
Leeanne Armstrong
Leeanne Armstrong

The recruitment of a new employee will usually involve careful preparation and negotiation of appropriate contractual terms including salary, benefits, hours of work and holiday entitlement. The employee handbook is of equal importance but can often be overlooked.

Having appropriate policies and procedures in the workplace is essential to the day to day operation of a business and the employees who work there. As well as providing an opportunity for the company to introduce employees to its ethos and values, the handbook crucially sets out the standards that are expected from employees. It also explains the standards that employees should come to expect from the management team.

In this month's feature, we set out our employee handbook top tips covering creation, status, management and amendment.

Create an employee handbook

The employee handbook should provide a home for your organisation's policies and procedures. It should be clear, user-friendly and properly tailored to ensure it meets the needs and operating requirements of your business.

While there is no legal requirement to have an employee handbook, there is certain information that employers are legally obligated to provide to employees covering disciplinary and grievance procedures, information about sickness absence (including pay) and their pension.

There are also a number of other policies and procedures that are good practice to prepare and include in the employee handbook. These include policies covering family friendly matters, equal opportunities, social media/internet use and bullying and harassment. There may also be industry or business specific policies that it would be beneficial to have, such as those in relation to uniform, time keeping/clocking in procedures and driving.

In creating each individual policy and procedure, you should also be mindful of any specific legal requirements that must be adhered to such as compliance with the statutory three-step dispute resolution procedure within your disciplinary procedure.

In creating a new policy or procedure, you should also consider how it might interact with other existing policies or procedures within your handbook.

Consider status

The status of your employee handbook and the policies within it will have a bearing on your ability to adapt or make changes to the document going forward.

Whether you decide to make the entirety of the handbook contractual or just some elements of it, you should ensure that the document clearly sets out the position.

In terms of best practice for employers, it is preferable in general terms to make your handbook non-contractual so as to provide greater flexibility to make amendments without having to seek the consent of your employees to do so. It also limits the risk of breach of contract claims brought by employees who may allege a failure by their employer to adhere to policies.

The following sample text may therefore be useful for inclusion in your handbook or individual policies:

"This [Handbook][policy] is provided for your guidance and contains general information about the Company and how it operates. Your Employment Contract contains most of the terms and conditions that govern your employment with the Company. This [Handbook][policy], unless expressly stated otherwise, does not form part of your Employment Contract and the contents are not contractually binding on the Company or you."

This can be a complicated area and it is always worth bearing in mind that certain elements of a policy or procedure that is stated as being non-contractual may be incorporated into the contract anyway. This could be because it is expressly provided for in the contract of employment (for example, entitlement to enhanced sick pay) or due to implied incorporation, usually through custom and practice. You should also consider the extent to which the existence of collective agreements in your organisation will give contractual effect to certain policies or procedures, or elements of them.

Take practical steps to implement the handbook

Of equal importance to the existence of the employee handbook is the provision of information and training to employees on its contents. For most employees, their first introduction to the employee handbook will be during the induction process. There is no legal requirement to provide employees with copies of the employee handbook or indeed to have them sign for it but it may be something that forms part of the on-boarding process in your organisation.

As a minimum you should ensure that employees are aware of where they can obtain a copy of the handbook. A copy may be retained by the HR department or possibly in a staff area or employee noticeboard. It is also becoming increasingly common for employers to publicise electronic copies of their policies and procedures, usually via the employer's secure intranet page.

It is also good practice to prepare training and updates on the employer's policies and procedures as a means of clarifying roles, obligations and expectations. You should also ensure that line managers are trained on the terms of the policies and the procedures to be followed. It is becoming increasingly common for companies to provide training by way of e-learning platforms.

In the context of the employment relationship, where employers can be held vicariously liable for the acts of their employees in the course of employment, evidence of training and updates can be vital to the establishment of a successful statutory defence to claims. The statutory defence is a defence available to an employer if it can show that it took all reasonable steps to prevent the employee from doing the discriminatory act.

In the case of Caspersz v Ministry of Defence UKEAT/0599/05, the Employment Appeal Tribunal (EAT) held that the mere existence of a policy was not sufficient and it was necessary to be able to demonstrate that practical steps were taken to implement it. In a local case of Houston v Swissport GB Ltd & Colin Morrow [2017] NIIT 00093_16FET the Fair Employment Tribunal held, dismissing the claimant's complaints of discrimination, that the test to establish the statutory defence did not require "an unreasonable or artificial standard" from employers, and there was no requirement "to provide courses in employment law to a university standard" in order to meet this standard.

Follow your policies and procedures

The existence of up to date policies and procedures can provide supportive evidence of the steps taken by employers to manage situations such as disciplinary and grievance processes. However, the procedures will be of little import if they have not been properly followed.

As well as providing managers with training on how to implement and enforce the procedures in the handbook including any disciplinary procedures, it is important to ensure that those procedures are fit for purpose. For example, if your organisation takes a zero-tolerance approach to certain acts or behaviours, this should be adequately reflected in the disciplinary procedure.

In the case of Walters v Asda Stores Limited ET/2312748/08the tribunal held that the employee had been unfairly dismissed and drew on the employer's categorisation of social media misuse as misconduct rather than gross misconduct in its social media policy. This can be compared with the case of Crisp v Apple Retail (UK) Limited ET/1500258/11 where the dismissal was held to be fair, with the tribunal finding that the employer's policy had clearly categorised the making of derogatory comments on social media as gross misconduct.

Keep the employee handbook under review

Alongside legislative changes that may impact on your organisation's policies and procedures, you may need to adapt or amend policies to ensure they meet current business standards. The employee handbook should be treated as a living document that is periodically reviewed to ensure it is fit for purpose.

However, before refreshing a policy or procedure, it will be important to establish whether it forms part of the contract of employment as this will dictate the flexibility you have to make changes. It may not always be immediately clear on first reading of the policy in question, whether in whole or in part, has or is capable of having contractual status. In those circumstances, it may be necessary to consider whether the policy is capable of incorporation into the employment contract. The question was considered in the case of Wandsworth LBC v D'Silva [1998] IRLR 193, where the Court of Appeal found that provisions relating to sickness absence were intended to be no more than guidance for supervisors and employees as to what they could expect to happen. The court ruled that it was flexible and informal by design such that it was inconsistent with the creation of contractual rights.

If the policy or procedure you are proposing to amend does form part of the contract of employment, there may be provisions in the handbook or individual policy that purport to permit changes. Such general flexibility provisions provide employers with a general right to make changes. However, reliance on clauses of this type should be approached with caution and courts and tribunals are unlikely to enforce such clauses even in very limited circumstances. This will be particularly so where the proposed changes are likely to have a detrimental impact.

In the case of Sparks v Department of Transport [2015] IRLR 641, the Court of Appeal considered the employer's ability to unilaterally vary the terms of absence management procedures, which were found to be part of the employment contract. Crucially, the policy in question had contained wording to the effect that in the absence of an agreement with employees to make changes, unilateral changes could only be made if they were not detrimental to the employee. Given that the changes proposed effectively brought forward trigger points for the initiation of disciplinary procedures, the Court of Appeal found that those changes were indeed detrimental and the employer did not, therefore, have the ability to unilaterally vary those terms.

Conversely in the case of Bateman v Asda Stores Limited [2010] IRLR 370, the EAT held that the employer was not required to seek the consent of its employees to introduce a new pay structure based on a provision in the employee handbook that reserved the employer's right to amend the content of the handbook. The handbook, which formed part of the contract of employment, included a variation clause that permitted the employer to amend contractual terms unilaterally, as long as it did not do so in an unreasonable or arbitrary manner.

In general terms, it is advisable to commence a period of consultation with employees with a view to obtaining their agreement before implementing changes to contractual terms. Careful consideration should be given to how you approach these discussions and consideration should be given to the rationale for making the changes, the likely impact of making the changes and how you propose to implement them. Where it is likely to have a detrimental impact, it can be useful to consider if there is another incentive that could be offered in order to offset the negative impact of the changes.

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Disclaimer The information in this article is provided as part of Legal Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article. This article is correct at 31/01/2019