Following some redundancies my business is functioning well. However, the process raised some problems with the terms in my employees’ contracts of employment, which I’d like to rectify. Can I alter them without notifying staff first?
If you change the terms and conditions of contracts without staff agreement you risk claims of breach of contract and constructive dismissal.
Review the existing terms to establish if the contracts have some flexibility built in – you may have an existing express right to vary certain elements. However, even if you do have a contractual right to change terms, you will be able to effect a change safely only by acting reasonably and not undermining the mutual duty of trust and confidence. For example, you may have the right to require an employee to work from another office, but asking an employee to move a long distance on a week’s notice may well be unreasonable and leave you vulnerable to claims.
If you don’t have a contractual right to enforce the changes then you should try to agree them with your employees. In these difficult times, many employees will appreciate the need to change contractual terms if they are genuinely consulted on the matter and the rationale behind the changes is explained to them.
To reduce the impact of the changes, you could consider phasing them in over a period of time. You might also try introducing the changes as part of a package of measures, where some of the changes are beneficial to the employees. Depending on the terms of the employees’ contracts, it might be possible to introduce the changes alongside pay reviews.
If you cannot agree the changes with your employees then, as a final measure, you may have to terminate their current contracts by giving lawful notice, and then offering those employees immediate re-employment on the new terms that you want to introduce. If the changes that you plan to introduce are likely to affect 20 or more employees, then you will be under an obligation to carry out collective consultation. This will mean notifying the Secretary of State and, often, the election of employee representatives.
This collective consultation procedure is the same process that you would carry out in a redundancy process that might result in the dismissal of 20 or more employees. Although it may be too late to turn back the clock now, collective consultation processes are a useful vehicle to consult on contractual changes for the future as well as making your business leaner.
Kevin McKenna, senior associate, Weightmans LLP
XpertHR guidance on changing contract terms