Tricky Issue – Changing Terms of Employment

Insights - 31/07/2020

As businesses seek to move past the challenges brought about by the COVID-19 pandemic,  many are considering new or revised ways to continue to operate which may also involve having to make redundancies. Download our previous guidance note on dealing with redundancies here.

Alternatively, many employers will simply be considering amending their terms and conditions of employment for existing staff to accommodate the evolving needs of the business.  This could include temporary or permanent changes including:

  • reductions in pay or hours of work;
  • revised duties and responsibilities; or
  • introducing lay off or short time working clauses into contracts in anticipation of further lockdown periods.

It is unlikely that such significant changes will be authorised by the employee’s contract of employment.

Express Agreement

The best and simplest way to make amendments to terms and conditions of employment is to obtain express written agreement from the affected employees.

It is important to consult with employees to seek their agreement to such changes. The way consultation will be carried out will depend on a number of factors including the number of employees involved and whether the workforce is subject to collective agreement.

Consultation should involve notifying employees of the proposed changes as soon as possible. The information provided should include the nature, proposed timing and business reasons for the proposed changes.  The process should also include setting out the potential benefits for employees (even if just limited to avoiding their or others being made redundant) and the likely implications for the business if the changes are not implemented.  This is effectively a selling exercise and an employer should always look (where possible) for ways to make the changes more palatable for the employee.  If necessary consultation may need to be conducted with employees over Zoom/Teams.

As part of the consultation, employees should be invited to raise any questions or concerns about the proposed changes.  Employees are more likely to give their consent if they are involved in the discussion and required to think them through as part of this exchange.

Employees should also be provided with the revised terms and given an opportunity to consider these. It is preferable to provide a deadline within which employees are required to sign the revised terms whilst simultaneously advising that if they don’t accept their employment may be terminated albeit with an offer to re-engage on the new terms.

Terminate and re-engage

Problems arise when employees do not agree the proposed changes to their contracts. In some cases, an employer may decide to accept this. If not, then the alternative is to terminate the employee’s employment and then offer re-engagement on the new terms immediately after termination of their employment.

If 20 or more employees are or are likely to be affected by the proposed change and, if their dismissal may be required if they do not accept, the employer will also need to carry out collective consultation.  This will involve electing and consulting with employee representatives and where applicable notifying the Secretary of State of the proposed dismissals.  Individual consultation with affected employees is also advisable.

Dismissal should be the last resort due to the risk of claims for unfair dismissal and wrongful dismissal (if the dismissal takes place without notice).  If faced with an unfair dismissal claim, an employer would need to evidence the business reasons for the change and the consultation carried out in order to show that it was fair and reasonable to treat the employee’s refusal as justifying dismissal.

Implied Agreement of New Terms

An alternative way to implement changes to terms and conditions of employment is to simply impose the new terms and rely on the employee’s actions in continuing to work under the new terms as their “acceptance” of the new terms.  This approach often causes significant employee relations issues and is risky as an employee may make it clear that they do not accept the new terms and are continuing to work under protest.  This approach can lead to claims for breach of contract and unlawful deduction from wages (if the breach involves a reduction in wages). Alternatively the employee could resign and claim constructive unfair dismissal if the change is deemed to be a fundamental breach.

Conclusion

Changing terms and conditions of employment can be a tricky and complex task. It is important to decide what changes need to be made and why, plan how these changes will be implemented and engage employees in the process to minimise employee relations issues and to increase the likelihood of obtaining express agreement to the changes from all employees.

If you require advice on changing terms and conditions of employment or any of the specific issues raised in this blog contact your usual Morrisons adviser or Reena Sharma in the employment team at [email protected]

Disclaimer:

Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.