David
Gibson outlines the factors that should be taken into consideration when
considering changing terms and conditions
In
the ever-changing world of work, an employment contract signed some years ago may
now resemble a piece of antique furniture. Indeed, over the course of an
employment relationship, developments like statutory initiatives and
reorganisations are likely to demand a change in terms and conditions that were
previously fine. When this happens, it is vital that you find the governing
terms and conditions and make sure that you are fully aware of what they mean
before you make any changes.
Where
can I find the terms and conditions?
Terms
and conditions of employment are not always only contained in a written
contract of employment.
Often
a company will have a staff handbook which may contain contractual terms and
conditions. And other sources include the initial offer letter. While this
document is often a brief summary, it can be used as a starting point. Custom
and practice within a particular industry may also imply terms which ‘fill out’
the offer letter as may verbal and collective agreements.
How
can I vary the terms and conditions?
Once
the terms and conditions are located you can then give consideration to
variation (changing them).
There
are three main routes to do this:
· Both parties agree the change or the employee accepts the change by conduct
(ie. by carrying on working under the change of contract without raising a
complaint).
· The contract provides for change
(usual examples include contractual mobility clauses)
· The employer may (in more drastic
circumstances) force through the variation, or terminate the existing contract
and impose a new contract of employment.
Variation
by agreement
Primarily,
it is important to consider whether the variation requires agreement. A
non-contractual benefit may be modified or withdrawn at any time. Certain
changes can be said to fall within managerial prerogative (such as methods of
working).
If
it is a term such as duties or pay, then consensual variation must be informed
and given freely.
Problems
arise when the employee believes the change is detrimental. If there is a
threat of dismissal or other form of duress by an employer then the variation
will not have been given freely and will not be binding.
Implied
agreement should not be presumed and silence does not amount to consent to a
variation, but a small bonus or salary increase can often ease matters along
and act as consideration for the variation.
Contractual
right to vary
This
is where the term is drafted widely enough to be construed that it covers the
proposed change (ie, mobility clauses)
When
this is done, you need to be aware that an express term in the contract of
employment, which provides the right to vary a contract, can be limited by the
implied term of preserving trust and confidence. Therefore, even where there is an apparent right to vary,
reasonable notice should be given to the employee together with adequate
consultation.
Forced
variation, termination and re-engagement
Often
an employer needs to introduce changes to terms and conditions because of
pressing business needs. Where there is no consent and it is imperative to push
through the change, an employer may either impose new terms as a fait accompli
or terminate the contract and re-engage on new terms and conditions.
What
if I vary consent, misuse a variation clause or dismiss and re-engage?
When
you decide to change terms and conditions you need to be aware that it can have
an adverse impact. For instance:
·
Varying without consent or misusing a flexibility clause could be a fundamental
breach of the contract enabling the employee to resign and claim unfair
constructive dismissal
· The employee could refuse to work under the new terms and conditions
· The employee could stay at work and sue and bring an action for breach of
contract in the High/County Court or bring a wages claim under Part II of the
Employment Rights Act 1996 (if the matter related to pay)
· Where there is termination with notice and an offer of a new contract, the
employer is exposed to a potential claim for unfair dismissal. The potential
fair reasons to defeat a claim are that there is a genuine redundancy situation
or some other substantial reason.
Summary
When
you are looking to change terms ands conditions it is best to seek express
consent at all stages (even where there is a contractual right to vary), as
getting the employee on side will make it much easier to avoid any potential claims
in the future.
Unilateral
variations should only be seen as a last resort when all other avenues of
action have been exhausted.
Finally,
remember to ensure that the employee signs a letter/document confirming
acceptance of any variation.
David
Gibson is a solicitor at law firm Dickinson Dees. For further information
contact him at [email protected]
(www.dickinson-dees.com)
