Weekly dilemma: withdrawing company cars

The employment contracts we use provide for staff to be given company cars. My employer wants to withdraw them and implement a car allowance scheme instead. How can I do this with the minimum amount of disruption to existing contracts?

You should not change the terms and conditions of the contracts without your employees’ consent as they have a contractual right to a company car, so their consent will be needed in this instance. Consent may be express – by the employee agreeing to the change orally or, preferably, in writing or implied – by the employee continuing to work for the employer without protest, for a significant period of time while being aware of the change.

Employers should consult with the staff concerned about the proposed changes and the reasons for them. Such consultation may involve inviting employees to meetings individually, or allowing them to elect representatives who will be responsible for liaising with the management to agree mutually acceptable variations.

When a trade union is recognised by the employer, they must be significantly involved in the consultation process and employee agreement should be confirmed in writing. Any change in terms to which the employee does not consent is effectively a breach of contract on the part of the employer. If the change is significant, the employee may resign and claim constructive dismissal.

If agreement cannot be reached, a flexibility clause in the contracts may assist. Such clauses state that the employer withholds the right to vary the terms and conditions of employment upon reasonable notice. However, such clauses should be used with caution as it may be argued that they are not precise enough to be relied upon.

The employer could terminate the contracts with notice and issue new contracts incorporating the changes. Employers should ensure there is a sound business reason for the changes and that genuine consultation takes place.

Any changes in contractual terms must be set out in a written statement that must be given to the employee at the earliest opportunity, and not later than one month after the change. If an employer fails to do this, the employee may make an application to an employment tribunal, who may then rule that the employer has acted unlawfully.

Daniel Wilde, partner, Dolmans




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