This post has been contributed by Professor Roger Halson, Module Convenor for Contract law.
Recently in Leeds, where ASDA has its headquarters, thousands of its workers took part in a demonstration to protest against what they saw as the ‘imposition’ of a new contract on thousands of workers. Under the terms of this new contract employees are required to work on Bank Holidays and take unpaid breaks in exchange for a small increase in pay to £9 per hour. Examining the facts and context of this dispute can teach us something about the law of contract we study in this module.
A question is sometimes asked whether we have a ‘law of contract’ or a ‘law of contracts’? Is there a single set of general principles or are different types of contract e.g. employment contracts, leases, sales of goods each governed by distinct principles? The answer to both questions is yes! We do have a set of general contractual principles and it is these that we study in the Contract Law module. However it is also the case that specific contracts are also governed by principles or procedures that apply only to that context and this is well illustrated by the ASDA dispute’.
The ASDA workers’ protests concerned their contract of employment. Employment law, though usually studied as a separate legal subject, builds upon the general principles of contract law from which it grew. The current position is that the formation and to some extent the modification of an employment contract is regulated by the general principles of contract. If the employee brings an action for a serious breach of this contract this is called an action for wrongful dismissal. However statute law has imposed supplementary duties upon employers. The Employment Rights Act 1996 requires employees to be given a fair reason before dismissal and to follow certain procedures. Failure to do this will entitle the employee to bring a statutory action before an employment tribunal; this called an action for unfair dismissal and must be brought within 3 months of dismissal.
While the workers’ frustration with these changes is understandable employers are able to make such changes in the following ways.
- Most professionally drafted employment contracts contain a ‘variation clause’ allowing adjustment to meet business needs.
- In the absence of a variation clause an employer should consult with staff about the proposed change. Failure to do so may amount to a breach of contract by the employer.
- However if consultation takes place the company could dismiss the employees and offer re-engagement on the new terms.
In reality it seems that a well advised employer can effectively ‘force’ a contractual modification upon its employees. It will have been this reality that ‘persuaded’ 120 thousand out of 123 thousand ASDA employees to ‘accept’ the change to their contracts.