Things employers need to remember when seeking to change staff contracts

You’ve only got to listen to the news at the moment to see a perfect
illustration of the issues which arise when an employer is trying to change
staff terms and conditions. I am thinking here of the battle being waged
between the Health Minister, Jeremy Hunt, and consultants in the NHS to see
how fraught these things can become.

However, it is not the case, as some employees might think, that employers
are prevented from making changes. Firstly, any employee is going to have an
implied duty to be broadly flexible and to, for example, take on board new
computer software or changes as the world around them alters. This can be a
useful concept to think about where an employee is reluctant to develop
their skills and take on board new ways of working.

Secondly, an employer may have very good reasons for needing to make
contractual changes, for example, the demands of their customers. This is
what Jeremy Hunt will be arguing in the case of the NHS consultants, but in
your case it may be you are being asked to manufacture to shorter timescales
or turn orders round more quickly.

You are probably aware that an employer cannot just unilaterally impose the
change it wants upon an employee. Well, it can, but if the employee doesn’t
accept the change and, for example, resigns or decides to ‘stand and sue’,
the employer will be in trouble. The employer may get away with it if the
employee doesn’t object quickly enough as they can be seen to have waived
the breach but it is a risky chance to take.

This is the reason why an employer is generally going to try and obtain the
employee’s written agreement to the changes, perhaps signing up to a new
contract. If possible you will want to introduce a new contract, for example
at the time of pay rises, or perhaps make some other kind of payment such as
a bonus or a one-off payment to, if you like, ‘buy’ the employee’s consent –
that is often the mechanism that employers will use when introducing things
like restrictive covenants where there were none previously.

An employer will also try and reach agreement through a process of
consultation in terms of explaining why they need to make the changes and
giving the employee a chance to ask questions, suggest variations to the
changes and look at alternatives. Technically, if you can’t reach agreement,
you may have to bring the existing contract to an end upon contractual
notice in order to avoid a wrongful dismissal claim and, instead, offer the
employee a new contract on the new terms – at law this can be seen as a
redundancy so where there are significant numbers of staff involved the
employer will have to make sure their consultation periods last for the
minimum required under Section 188 TULRCA 1992. Consultation is also a key
ingredient in being able to fend off unfair dismissal claims.

As there will be a ‘dismissal’ in law if you have to go down this route and
an employee would still be able to bring an unfair dismissal complaint, the
employer will want to not only show it has good reason for making a change,
but also that it followed a fair process in going about it. The factors
which are commonly taken into consideration in assessing the reasonableness
of an employer’s decision to dismiss where it has failed to obtain an
employee’s agreement to proposed changes are: your motives for introducing
the changes, the employee’s reasons for rejecting the changes, whether the
employees were given reasonable warning of the proposed changes, whether the
proposed changes and full effect of those changes have been sufficiently and
clearly explained to the employees, whether the employer has undertaken an
assessment of the impact of the changes on employees and whether it has
considered alternatives to any changes, whether the employer has attempted
to obtain the employees’ voluntary agreement to any of the changes and
whether a reasonable and genuine consultation process with the affected
employees has taken place. This will include listening to the reasons for
rejecting the changes, responding reasonably to objections and making
concessions where reasonable to do so, whether a majority of the employees
affected have accepted the changes and whether any recognised trade union or
other employee representative recommended or objected to the changes.

A dismissal following a failure to agree to a change in terms will almost
always be unfair where the employer has failed to follow any procedure and
consult with employees over those proposed changes, even where the business
is faced with financial problems which mean that time is of the essence –
for that reason you will often have to advise your colleagues that these
exercises need to be planned for well in advance.  Jeremy Hunt take note!

Where the employer has made changes they will need to provide the employee
with an up to date written statement of terms and conditions of employment
within 1 month of any changes being made. Failure to do that can result in
an award of 2-4 weeks pay if the employee brings another form of Tribunal
complaint and piggy-backs this one on it.

If you’d like more information on this, please email Anna