Realistically, an employee isn’t going to complain about a pay rise or more flexible working arrangements – but what happens when proposals are less favourable? How do employers safely impose employment terms?
In the current coronavirus crisis, employers are having to make tough decisions and make the following sorts of changes to contractual terms:
1. Unpaid holiday/sabbatical for a chunk of time – say a month…or two….
2. Pay cut – employees work a full working week for less pay
3. Reduced working hours – reduce to a four, three or two-day week – less work for less money
4. Job shares – employees in a similar job share the job thus both working only half a week
5. Redeployment to other parts of the business in response to workflow requirements
6. No bonus or salary review
7. No overtime even if usually guaranteed
It’s important to understand the rules surrounding contractual changes in order to avoid legal pitfalls………..
Can I impose whatever terms I want, so long as the employee agrees?
No – the law establishes certain minimum duties and obligations that all employers must abide by. For instance, you cannot agree with an employee that you will pay them below the applicable National Minimum Wage. The law will override any agreed terms that do not fulfil statutory duties.
Do I need to consult the employee before implementing a change?
Yes, receiving express agreement from the employee is the safest way to vary a contract, as imposing new terms unilaterally may constitute a breach of contract.
If you want to make the changes you should:
• meet with the employee to explain your case for making the proposed change
• allow the employee time to consider the proposal and to put forward viable alternatives.
It’s likely that engaging the employee in the discussion and allowing them to express their views will make them more receptive to the change.
Do I need to get the employee’s consent in writing to the changes?
Yes, where it has been agreed to vary an employee’s contract and the change relates to a significant term in the contract, as detailed above, the changes should be recorded in a variation of contract letter which must be countersigned by each employee affected within one month of the change taking effect. Once signed this letter is then appended to the contract of employment and put into the employee’s HR file.
If you change terms and conditions that are not included in the contract, you must inform your employees of where they can access information about the change, for example in your Employee Handbook or on your intranet.
The employee is refusing to accept the change. What can I do?
Talk to them and give them time to consider and respond to your proposal. Explain again the reasons for the changes.
If, after lengthy consultation and negotiation, you’re unable to reach agreement, you can serve the individual employee notice that you will terminate their existing contract and offer a new contract with the new employment terms and conditions. If this is the route you decide to take, you must give the correct notice period to help avoid wrongful dismissal claims – although be mindful that claims can still be brought and advice should be sought to navigate safely through this process.
What happens if an employee brings a case for unfair dismissal?
In order to defend unfair dismissal claims, employers must be able to show that they had a fair reason to dismiss and followed a fair procedure (which is where consulting with the employee will come into play).
In unfair dismissal cases relating to changes to contractual terms and conditions, the outcome will often come down to the employer’s ability to demonstrate, with evidence, that they had a sound business reason for the dismissal – the reason given mustn’t be trivial but also doesn’t need to be as extreme as to be the determining factor in your business going under.
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