Changing terms and conditions of employment
We understand how important it is for you to keep your employees and your workplace happy. So if you’re making changes to the terms or conditions of an employee’s contract you’ll want to get it right.
It’s not unusual for contract terms to change and the majority won’t cause a problem, but sometimes an employee might not like the changes you’re making. But, don’t worry we can advise you on how to make the change legally binding, with as little disruption as possible.
As a business, with us offering you support and guidance, there are initial steps to take if you’re considering making a change to a contract.
The first of these is to decide if the planned changes involve making amends to the contract itself, or whether the change falls into existing terms. We can talk you through express, implied and incorporated terms, and those terms, such as benefits that are stated to be non-contractual, that won’t be part of the contract.
You’ll also need to consider, if there’s a contractual right to vary the term, which can mean you don’t have to amend the contract because:
- The existing terms are broad enough to cover the proposal
- There is a specific right to vary the contract in this way
- The contract gives the business a general power to vary its terms
You’ll need to be very clear on this, as any ambiguity will go against the business, if someone makes a claim. Plus general flexibility clauses can probably only be used to make minor administrative changes, that are not detrimental to the employee.
How to implement a binding change in terms
If after considering the above you still need to make an amends to a contract, we can talk you through the options available and help to make the process as smooth as possible. The most important thing will is to have a consultation process, to allow open discussion about the terms of employment.
1. Express agreement
The employee may agree to the proposals orally or in writing (although an oral agreement is vulnerable to challenge at a later date) and we would recommend any consent is confirmed in writing.
For this to be binding, the employee must receive some form of benefit in return. In many cases, the employee’s continued employment is enough.
2. Unilaterally imposing the change and relying on the employee’s implied agreement
This is more likely work if there’s an immediate practical effect on the employee (for example, a pay cut) and they continue without objecting. But never assume that silence indicates implied agreement, especially if there’s no immediate impact on the employee. If the business imposes the change it will be a breach of contract. The employee can:
- Comply with the new terms but work “under protest” and claim for breach of contract or unlawful deductions from wages (if this is the case). If the change is substantial, the business may be deemed to have dismissed the employee, so they could bring a claim for unfair dismissal
- Resign and bring a claim for constructive dismissal
- Refuse to work under the new terms (for example, where there is a change in duties or hours)
3. Dismissing and offering re-engagement on new terms
This approach avoids some of the risks described above. However, as a result, the employee may be able to claim either:
- Wrongful dismissal, unless the business gives the appropriate period of notice (or makes a payment in lieu of notice)
- Unfair dismissal, unless the business can establish a potentially fair reason for dismissal and show that it acted reasonably in deciding to dismiss the employee for failure to agree to the change.
If, with our help, you’ve done everything you can to make changes that are fair and considered and an employee still refuses to agree this will usually lead to “some other substantial reason” for dismissal, provided there’s a sound business reason for the change.
Contact our Employment specialists
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The EAT (Employment Appeal Tribunal) emphasised that it’s fact specific when it comes to assessing an employee’s alleged unfavourable treatment and the causes in relation to their treatment.