This is a crucial question for employers. Failure to get this right can create difficulties for an employer. The short answer is: not necessarily. There are some distinct drawbacks to making Employee Handbooks contractual. In many cases, an employer can choose for themselves.
The problem
Working life gives rise to a huge variety of situations. Most cannot be predicted easily. Detailed, inflexible, and overly specific policies can create problems. Such policies favour the desk-based (inevitably limited) foresight of the person who wrote the policy. The risk is that contractual policies and procedures, (enshrined in a contractual Employee Handbook) create unintended consequences.
The risk
In practice, the risk is that a failure to follow detail in a contractual handbook may lead to a breach of contract claim. For example, it is wise to have a procedure to cover bullying and harassment. Procedures such as this define the steps you, as an employer should take. But if you don’t take the exact steps, and if those steps are contractual, then you have a problem. An employee may claim that you have broken their contract. This means that they are claiming that you have dismissed them by your actions (or omissions). This is known as a constructive dismissal. Such dismissals are usually unfair dismissals. The likely result, in this situation, is an Employment Tribunal claim. That can be expensive to defend – and in the circumstances might not even be worth defending.
The public sector
Contractual Employee Handbooks are common in the public sector. HR Managers and employers in that sector should follow the advice of their lawyers. But contractual procedures can create the problems outlined. I recently heard a Chief Constable decry the use of HR policies for this very reason.
The private sector
However, private sector employers are able to avoid such problems. Employee Handbooks need not be contractual. You should reserve contractual matters for the contract of employment. By making clear that your Employee Handbook is not contractual it is much easier to deal with employment matters. You still need to be fair and reasonable but you are unlikely to break the employment contract.
Easier employee relations
An Employee Handbook sets out the basis of the relationship between your employees and you. It should form the base for mutual co-operation and understanding.
Inevitably your policies will be written in advance. But don’t include unnecessary detail and minimise any contractual aspects, if you include them at all. Make sure your procedures leave room to exercise care and skill. As an employer you need to follow procedures closely especially in disciplinary matters. But they should be a sensible guide. If they are too rigid you could get into trouble.
The statutory position
Despite the points made here, it should be remembered that Employee Handbooks will often contain matters of a statutory nature. For example if you include Maternity rights then these need to follow the relevant law. Statutory matters leave little room for manoeuvre. But the law cannot be ignored. It will always take priority over discretion and any personal feelings.
Further information
If you would like to discuss any contractual nature to your Employee Handbook please get in touch: malcolm@employersolutions.co.uk
Malcolm Martin FCIPD
Author Human Resource Practice