Employers may look to change employees’ terms and conditions of employment for several reasons including:
- Reduce pay or benefits;
- Change employees’ responsibilities;
- Change to working hours or days;
- Change to an employee’s place of work.
Employers should consider carefully why they wish to change terms and conditions as the process can be problematic.
When can changes be made:
- Some contracts of employment have a flexibility clause that will allow for reasonable changes to be made to the contracts;
- Employees agree to the change;
- Employee representatives agree to the change.
Depending on the situation, employers can force a contractual change on employees however, this should be done as a last resort.
The timing of the process needs to be considered, depending on how urgent the business requires the changes to be made. Employers cannot expect the process to be done in a short timescale unless the changes are straightforward.
If the changes are to pay, employers need to consider the knock-on effects of contractual changes looking at the risks of discrimination or equal pay legislation. Changing an employee’s working hours or shift patterns could result in indirect sex discrimination if those changes make it more difficult for employees with childcare responsibilities to attend work as mainly this will affect female employees.
The history of the employee’s contract needs to be considered as if employees have transferred under TUPE to the employer then some special protections and rules on their terms and conditions may apply.
Employers need to think about
- Why the change is needed;
- What they want to achieve by making the change.
When contracts allow changes
If there is a flexibility clause in the contract’s employers need to check the wording to see:
- What they can change;
- If any notice is required to make a change;
- If there is a process to follow to make the change.
It is best practice for employers to talk to employees before any changes are made or implemented. Talking to employees at the start can help implement changes that can work for both the employer and employee.
When no clause is in the contract
If there is not a flexibility clause that covers a proposed change then an agreement would need to be reached between the employer and the employee.
Before any changes to contracts are made employers need to consult with employees or employee representatives and trade unions about the proposed changes.
The consultation needs to be a two-way process where ideas and proposals are shared between all parties and worked together on.
- Explain the reasons for the change;
- Encourage employees to talk about concerns and offer suggestions for alternative ideas;
- Listen to the employees concerns and consider all ideas put forward;
- Do their best to resolve any employee concerns.
- Consider the proposed changes and reasons for the change;
- Share views, concerns and offer any alternative suggestions;
- Try all options to reach an agreement on the changes.
Agreeing the changes
Changes relating to things that legally must be in an employee’s written terms and conditions must be confirmed to employees in writing within a month of the changes taking effect.
This included changes relating to:
- Job Title or descriptions
- Job location
- Working hours
- Holiday entitlements
- Changes to collective agreements with a trade union
When changes are not agreed
If an employer and employee do not agree on a change after consultation and all options have been explored and listened to, if there is no flexibility clause in the contract of employment, then an employer may decide to dismiss and rehire the employee under a new contract of employment.
This option should only be done as a last resort and only after meaningful consultation.
Before this is done employers need to consider the following:
- If everything has been done to obtain an agreement;
- If the changes are necessary;
- Risks to employee engagement and morale;
- Risk of legal action.
When dismissing an employee and rehiring them, employers should ensure they:
- Follow a fair dismissal procedure;
- Give the employee the legal notice required;
- Offer the employee the right to appeal the dismissal.
No changes should be made until the employee has been fairly dismissed and rehired under new terms and conditions.
Employees who have been dismissed and rehired will keep their continuous service if the contract starts immediately.
If an employee(s) feel that they have been unfairly dismissed from their original contract they may be able to make a claim to the employment tribunal, to do this they would usually need to have been employed with the company for 2 years or more.
An employer can face legal action if the change or dismissal and rehire is done to 20 or more employees at a time, if the employer does not hold collective consultation with a recognised trade union or employee representatives.
Employers can be fined up to 90 days’ pay per affected employee if they do not follow the correct procedure and a fair process.
Employers could be in breach of contract if they:
- Force a change without the agreement of the employee or having a flexibility clause in the contract of employment
- Dismiss and rehire employees without the required notice
Any breach of contract can lead to legal action.
Forcing changes without discussion or agreement can also lead to:
- Disengagement in the workplace and lower performance levels;
- Employees working under protest.
Employees can make a claim against their employer when a breach of contract has occurred for the following:
- Damages at civil court;
- Unlawful deduction of wages at a tribunal if the breach involved pay;
- Constructive dismissal, if they have at least 2 years’ service and the employee felt forced to leave their job.
It is always advisable and best to speak to legal experts when making any changes to employee’s contracts of employment.
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