February 9, 2021
Can I Change an Employee’s Terms And Conditions?
This is a common issue that arises with employers. It may be that an employer wants to implement a new working practice or wants to make their employees’ contracts of employment consistent with the rest of the workforce. The most common types of change usually focus on hours of work, pay or employee benefits.
As a basic starting point, a contract of employment is a legally binding document. As an employer, if you are trying to amend this then it will generally take both sides to agree. In some cases, it may be possible to reach an agreement with an employee. For instance, It may be that the change is beneficial for the employee or does not really make much difference to their workplace conditions.
What practical steps should I take as an employer?
The first step would usually involve setting out the business case for the change and communicating this to the employees. Having a solid business case has a number of advantages for the employer. By explaining the decision for the change, the employee is much more likely to accept any proposed amendment. It may get to the point where an employee raises a grievance or tribunal claim against you. In these circumstances, the employer will be in a much better position to defend their position if they have set out their business case at an early stage.
Employers are also encouraged to consult with employees as much as possible. On a practical level, this helps to ensure that employees feel engaged in the process. It may also result in both sides agreeing on an alternative and therefore avoiding costly litigation. Even if an agreement or compromise is not reached, an employer will able to justify its positive where effective consultation has taken place throughout the process.
What if the employee does not agree to the change?
Obviously, this type of situation is more likely to result in legal issues. Broadly, the employer will have two options in these circumstances.
Firstly, it can look to enforce the change without consent on a unilateral basis. On the face of it, this would represent a breach of contract. However, where that change is minor in nature, it may be the case that the employee has not suffered a direct financial loss. This means that imposing the contractual change is generally not as risky from the employer’s perspective. An example of a minor change may involve changing the employer’s holiday year or amending the pay date. Of course, it is still best practice to seek agreement from an employee before implementing a change. An employer should also seek to consult the employees about any proposals, even where the change appears minor.
The second option for the employer involves dismissing the employee and re-engaging them under new terms of employment. In doing so, the employer would still be obliged to provide the employee with notice under the terms of their existing contract. The employee would then be given the option of signing the new proposed contract. If the employee accepts the terms then they would be taken to be employed under the new contract. If the employee rejects the terms then they would be dismissed from their employment. The employer’s grounds for dismissal would then be given as ‘some other substantive reason’ (commonly referred to as SOSR). We should point out that taking this approach is not risk-free. By following an effective process however an employer can at least reduce the risk of any claims being brought against their organisation.
What type of penalties could I incur?
The most obvious type of claim you could face would be a breach of contract claim. An employee could recover any financial loss they have suffered. It would also be open for the employer to ask to be re-engaged under their previous terms of employment, being the terms in place before any contractual change was made.
In addition to this, if an employer proposes to dismiss and re-engage an employee then the employee could issue an unfair dismissal claim. This could take the form of a constructive dismissal claim where the employee resigns before the contract claim comes into effect (i.e. the employee alleges there has been an anticipatory breach). Alternatively, the employee could refuse to sign up to the new terms and claim they have been unfairly dismissed under their current contract.
By setting out its business case and allowing for effective consultation, employers can reduce the risk of successful claims being brought against them.
If you have any queries in relation to this article, then please contact a member of our team on 0161 826 0341.
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