Asda’s Employment Contract Changes: Fair or Foolish?

It may have come to your attention that the British supermarket chain, Asda, (owned by US retail giant Walmart) has been in heavy circulation within the news recently. Now, this isn’t to do with the salmonella outbreak affecting mass supplies of humous, of which Asda was affected but it more so relates to the supermarket chain’s 140,000 strong work force.

Asda recently announced mandatory changes that were set to be implemented in the Summer regarding their employee’s contracts of employment. This implemented change was first introduced in 2017 whereby workers were offered an optional salary increase in exchange for forfeiting several rights, done by means of voluntarily signing up to Asda’s new and amended employment contracts. However, these changes have since been made compulsory and were implemented this Summer.

The contract change itself increases hourly wages to £9, whilst placing staff on flexible contracts. However, this increase comes at a cost as the contractual changes are set to strip employees of several perks, including their service benefits, paid tea breaks and having Bank Holidays off, as well as being made to work across different departments. Asda have been criticised for putting their employees in such a position, especially with the run up to Christmas, meaning employees are simply in a position where they cannot afford to lose their jobs, effectively forcing them to comply.

It’s reported the majority of Asda’s employees have since accepted this proposed change, yet 1,000 employees are still being held to this ‘unfair’ ultimatum. Employees were given the option to agree to sign up to a new contract before the 2nd of November otherwise they would be subject to leaving the business at the end of their notice period, or in other words, would lose their job. However, in a surprising turn staff were given an extended deadline of 7 days pushing the new extension date to Sunday the 10th of November.

You might be asking, is this a legally viable option for Asda to pursue?

This answer unfortunately isn’t clear cut I’m afraid.

An employee’s contract of employment may lawfully be subject to change (variation) by their respective employer if a variation clause is present in their contract of employment (or another agreed document), or if an employee or an employee’s representatives (trade union) collectively agree to this change. However, forcefully imposing a change upon employees should be deemed as a last resort by any employers as it is one that may open the impending floodgates to legal action, namely unfair dismissal and unlawful deduction of wages.

As a result, the 1,000 staff who are potentially subject to dismissal (despite pleas from the GMB trade union to further delay proceedings) may be eligible to bring an unfair dismissal claim against Asda, subject to certain factors including whether Asda followed a fair and correct procedure throughout proceedings and if they held a genuine right to impose such changes to the business. It must also be noted Asda is set to introduce a variation and flexibility clause within the new proposed contracts, meaning future variations would be easier to do.

Tips for employers:

1. If you are considering including a specific term into a contract of employment which would allow for unilateral variation, the term needs to be very carefully drafted. Asda has stated in defence to the uproar from staff, that they are merely adapting to changes already imposed by their competitors, in hopes of securing their current and future successes.
2. If you do have a variation clause agreed within your employee’s contracts you must act cautiously and do so with reasonable care. This means consulting and looking to see if there are any alternatives. Also giving plenty of notice regarding any proposed changes is essential.
3. Even if the term is accepted by your staff (albeit reluctantly), you may risk losing team morale as you are essentially forcing staff to agree to a variation which they may disagree with and one which impacts on them adversely. Ultimately you may get what you want, but this is almost certain to have a domino effect on your staff and overall morale. Think about the long term impact and balance this with the need to make the changes as well as the impact on wellbeing and mental health.

CASE STUDY

An area of interest is the case of Bateman v Asda Stores in 2010, which entitled Asda to rely on a variation clause in its staff handbook which imposed a new pay structure on certain employees even so without their consent. This clause (“reserves the right to review, revise, amend or replace the contents of this handbook, and introduce new policies from time to time reflecting the needs of the business”) was upheld on several counts.

Firstly, it was deemed ‘clear’ and ‘unequivocal’ and was considered ‘wide enough’ to cover proposed changes – the wording of such clauses is exceptionally important.

Secondly, the proposed change was imposed with notice to respective employees. If no notice, warning or consultation is considered you are at a risk of enabling employees to resign and claim unfair constructive dismissal. Finally, Asda were held not to have breached the trust and confidence with its employees as they were deemed to have acted ‘reasonably’ in imposing the changes. Holding no good business reason to implement these changes may categorise an employer as acting unreasonably.

If you are unsure of any specific terms or how you may impose variation within a contract of employment, we can review this for you.

We offer support for both employers and employees in an array of employment issues. Please Contact Us for a free consultation.

Written by Uthman El-Dharrat

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