Changing Employment Terms
As a general rule, a contract can only be amended if the contract allows for the change to be made or if the parties are in mutual agreement. Some changes will be beneficial for both parties and these types of amendment can usually be agreed. Promotions and salary increases are two examples of this. However, if a proposed change is likely to be to an employee’s detriment they will likely be less willing to consent. In this case the employer will need to explore other means of introducing the desired changes.
As a first step, consideration should be given to whether the change in question is to a term of an employee’s contract. This may sound straightforward. However, it is important to remember that contract terms will not always be written down. There may be unwritten implied terms for example those which become a part of a contract through ‘custom and practice’. If a change is to a non-contractual term (which could be in the form of a non-contractual policy or procedure) an employer will usually be free to enact changes at will.
An employer seeking to change a contractual term may be contractually permitted to do so. For example a ‘mobility clause’ may provide for changes to the location of a workplace to be made. However, contractual variation clauses of this kind will be interpreted narrowly. In practice, a mobility clause will rarely allow an employer to move a workplace from one part of the country to another.
If there is no right to vary the contract (or no right which permits the variation an employer wishes to make) an employer may consider making the change unilaterally by simply serving notice of the change it will be making. An employer acting in this way risks claims for breach of contract and, in certain cases, claims of constructive unfair dismissal.
A further alternative would be to dismiss affected employees and offer to re-engage them on the amended terms. This avenue is not without risk. Employees could seek to argue that their dismissals were unfair, in breach of contract and even that they are entitled to redundancy payments. Further, if more than 20 dismissals are proposed collective consultation obligations may be triggered and it could be necessary to notify the Secretary of State.
Changing the terms of employment can be a necessary step for businesses adapting to new economic conditions, evolving operational needs, or strategic shifts. However, such changes must be approached with care and in accordance with legal obligations to avoid disputes and ensure the continued engagement and loyalty of employees. Employers in the UK must navigate the complexities of employment law, including the necessity of securing employee agreement and the potential implications of unilateral changes to terms and conditions.
Legal Framework and Employee Agreement
The starting point for any change to employment terms is the existing employment contract, which sets out the agreed conditions between the employer and the employee. Any alteration to fundamental terms, such as salary, working hours, or job roles, typically requires the employee’s consent, as these changes represent a variation of the contract. Employers should first seek to negotiate and agree on these changes with the affected employees or their representatives, such as trade unions. This collaborative approach helps in reaching a mutual understanding and can prevent grievances or legal challenges.
Consultation and Communication
Consultation is a crucial element when changing employment terms, particularly in scenarios where a significant number of employees are affected. Employers are required to consult with employees in good faith, providing clear, transparent reasons for the proposed changes and how they will be implemented. During the consultation process, employers should listen to feedback, consider alternatives, and strive to accommodate reasonable concerns. This not only demonstrates respect for employee rights but also helps to foster a sense of inclusivity and cooperation.
Handling Unilateral Changes
In some cases, employers may need to implement changes unilaterally, especially if negotiations do not lead to an agreement. However, this approach carries legal risks and should be considered a last resort. Imposing changes without consent can lead to claims of constructive dismissal if employees feel that the alteration breaches their contract or significantly affects their working conditions. Employers should seek legal advice before proceeding with unilateral changes and ensure that they are fully prepared to justify the necessity of such measures.
Documentation and Record Keeping
Once changes are agreed upon or implemented, it is essential to document the new terms clearly and accurately. Employers should issue updated contracts or written statements of changes to each affected employee, ensuring that all parties are aware of the new conditions and any specific provisions. This documentation serves as an important record of the changes and can be crucial in resolving any future disputes or misunderstandings.
In conclusion, changing employment terms requires careful planning, clear communication, and a thorough understanding of legal obligations. By engaging in open dialogue with employees, providing adequate notice, and documenting changes properly, employers can manage this process effectively and minimise potential disruptions. Adhering to these best practices not only ensures legal compliance but also helps to maintain a positive relationship with employees, supporting the overall stability and success of the business.
