Changing Terms and Conditions of EmploymentElaine Goodwin
As an employer, have you ever found that (for the benefit of the business), there has been a need to change one or more of the contractual terms set out in the contracts of employment or other documentation relating to some or all of your workforce? Have you also struggled on without making those changes because you believe that it’s not possible to do so and that the business is stuck with the contractual terms currently in existence? In reality, the terms of contracts of employment are changed periodically without any issue and this is likely to be because those changes benefit the employee such as an increase in salary. How, then, do you deal with changes that are likely to be resisted by your employees?
It is possible to make changes to the contracts of employment for your employees where there is a good business need to do so. However, if you do wish to make changes and, for whatever reason, the employee is likely to object then it is always worthwhile taking legal advice before you take any steps that could land you in hot water. In the meantime, we provide below a very basic overview of the steps to take when you want to make changes to contractual terms that employees may resist.
As stated, contracts of employment may be amended by the employer, preferably with the agreement of the parties to that contract – the employer and employee. Where these changes are not for the benefit of, but are detrimental to, the employee, the employee is less likely to agree to the changes. The employer should ensure any agreement on the part of the employee is not seen to have been enforced by way of threats to the continuation of the employment (as it may not be enforceable, if so). However, where it is clear that there will be no agreement between the parties, it may well be that the employer has to enforce the terms and conditions by way of a dismissal and re-engagement process, which we will look at in more detail below.
If the contract of employment allows for the proposed changes to be made, then it may be possible to simply give notice of the changes rather than to seek to vary the contract.
It is also necessary to check your staff handbooks, policies and manuals as to whether any terms and conditions set out are deemed to be contractual terms.
You then need to assess whether the terms you are seeking to vary are indeed contractual terms. If they are contractual terms, do you have the right to vary or is there an amount of flexibility in the contract to entitle the employer to make changes? For example, the employee’s place of work may be stipulated in the contract but it may also state that the employer can ask the employee to work at an alternative place of work and this is commonly known as a mobility clause.
If there is likely to be resistance to any changes, particularly if there is a need to terminate the current contracts of employment and to offer a new contract to include the new terms and conditions, the employer is advised to prepare a business case showing the reasons for the proposed changes. It is always advisable to produce this business case early in the process for two main reasons – (1) to enable the overall exercise to be held more efficiently and pre-empt any potential objections/queries to the proposals; and (2) to ensure the employer has solid evidence to be disclosed should any claims be made by employees if the employer has the need to proceed with a dismissal and re-engagement process.
A consultation with the affected employees is vital and this consultation can be conducted in several ways, depending on a number of factors, including (but not limited to): how many employees the changes will affect; whether there is a trade union involved; or whether you need to appoint employee representatives.
The employee(s) should receive information as early as possible prior to the changes taking effect and, again, the manner in which the employer deals with this will depend on the make-up of the workforce, numbers, representations and union involvement. It is not advisable to warn the employees at this stage that, in the absence of any agreement, the process could involve a termination and re-engagement. It is highly likely to antagonise the situation unnecessarily at this point and it is preferable to wait to see if agreements can be reached without having to go through what is really a last resort.
The provision of the relevant information should then be followed up in writing and once that step has been completed then the consultation process can begin. Again, this consultation process all depends on the particular workforce make-up. Where there are no union representations or employee representatives and particularly where the numbers are low then the employer should hold individual meetings with the affected employees. These consultations should allow the employees to provide feedback by being allowed to put forward their own views and any objections.
Any representations either from unions, employee representatives or individual employees should be given serious consideration.
There should then be further consultation responding to any feedback received and it may be appropriate at this time to warn the employee(s) that if agreement cannot be reached it could mean providing notice to terminate the current contract with an immediate offer of re-engagement on the new terms and conditions emphasising that the employer sees that proposal to be a last resort.
If there have been any new representations following from the above step then these should be considered and thereafter the employer should notify the employee(s) of a deadline for the proposals to be put into effect.
Any further responses should be considered and, thereafter, individual meetings should be held with any employee(s) who do not agree to the change in terms and conditions.
For those who do not agree, only provide them with written notice of termination of employment and provide a copy of the new contract of employment asking that they inform you in writing that they now agree to these terms. If they do not agree then they should be given the right to appeal against the decision to terminate the old contract.
A review of the responses should be made and if relevant an appeal meeting should be held. Following the appeal meeting a letter confirming the outcome should be sent to the employee(s) with confirmation that the outcome is final and that no further appeal is allowed.
If you would like more information on changing terms and conditions of employment, or any other aspect of employment law, you can speak to one of our specialist employment solicitors on 01782 262031.