Changing terms and conditions of employment

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 A non-contractual benefit may be modified or withdrawn at any time.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 David.Gibson@dickinson-dees.com ( www.dickinson-dees.com)