Changing contractual terms such as pay, working hours and the place of work is fraught with challenges
Andrew Wilson, Head of our Employment Law Team, explains the difficulties employers face and steps to be taken when changing employment terms and conditions.
“Employees will never resist a pay increase, more holidays or a company car, but when it comes to times of economic austerity then employees are less likely to give up their contractual rights. So, here are some options any employer contemplating a cost reduction exercise may consider:
Step 1: In any event Employers are strongly advised to engage in consultation with the employee with a view to introduce their objectives. In consulting with the employee, the employer needs to set out the change in terms and to give them reasonable time to consider the proposition. Ordinarily, the consultation period will be at least 30 days, but longer if more than 20 employees are affected. Implementing changes in a mutual manner still requires the employee to accept these changes formally by having a binding Variation to Contract in place.
If the employee refuses to accept these changes then they are entitled to carry on working under their continuing contractual terms. But the employer may then consider the following options.
Step 2: Apply the proposed changes without the consent of the employee and gauge their reactions. They may resign, or express their disagreement and continue to work. If they assert their disdain without a great deal of delay, then the employee maintains a position where they could claim constructive dismissal and a breach of contract (dependant on them qualifying to make such a claim).
Step 3: The employer terminates the Contract of Employment and then immediately re-engages the employee, but on the new terms. The consequence of ending the employment in this manner can give rise to tribunal claims with strong prospects. This route tends to be considered only when there is a fundamental difference of opinion between the employer and employee, in relation to the terms being imposed.
Varying a Contract of Employment may well be necessary to protect long term business interests, and to do this, employees need to be informed and consulted with. When done well, mutual agreement can often be reached, but when done poorly then disputes and court claims often follow.”
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