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Changing Employment Terms

Changing terms and conditions requires careful planning. If poorly handled an employer could face claims for breach of contract and constructive or unfair dismissal.

Employers will, from time to time, need to bring about workplace change. Changes which benefit the employer will not always find favour with employees and in the absence of an employee’s express agreement, may be hard to bring about.

During the employment relationship an employer or employee may want to make a change to the agreed terms of employment.

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.

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