Legal Article - Employment Law

Changing the Terms of the Contract

Any changes of terms of the contract should not be implemented without prior discussion and, where possible, agreement with the employee.
Disagreement over the changes may lead to the ending of the contract and employers may face claims for unfair dismissal and/or wrongful dismissal.

Alternatively the employee may carry on working under protest and sue the employer for breach of contract, or bring a claim under the Employment Rights Act 1996.

If the employee suffers a financial loss as a result of the change and the problem is not resolved for several months or years, this could be expensive to the employer in back pay, especially if large numbers of employees are involved.

Changes in any express terms of the contract can be made in the following circumstances:

i. Where the contract expressly provides for a specific change (e.g. a person is obliged to work in any part of the United Kingdom; the company reserves the right to increase or decrease working hours to meet urgent customer requirements).

These terms must not be vague or ambiguous and should be implemented in a reasonable way and sufficient weight given to the employee’s personal circumstances. For example, the tribunals have stated that a clause allowing the employer to rearrange hours of work to suit the requirements of the business did not entitle him to place a 58-year old long serving female employee in poor health on a night shift. Again, the tribunals have said that the introduction of a mobility clause is subject to an implied term that the employee is entitled to reasonable notice of the move.

ii. Where an employee voluntarily agrees to a change or continues to work in accordance with the new terms without objecting to the changes. This only applies where the change comes into effect immediately.

Where a change is made to the contract but has no immediate practical effect (e.g. a mobility clause that will only operate in the future) it should not be automatically assumed that the employee has accepted the change, but attempts should be made to clarify the employee’s views towards the change prior to its implementation.

iii. Where the employer believes the changes to be made are crucial to the effective operation of the business, they may unilaterally impose the change.
This should be done by notifying the employee that their original contract will end on a specified date with an offer of alternative employment made under different terms and conditions.
The employee should be given the notice to which they are entitled to receive to terminate the original contract.

The employee may then either accept the change by continuing to work without further protest, or to raise a grievance.  Following the completion of the grievance procedure the employee can make an application of unfair dismissal to the Employment Tribunal provided they have sufficient service i.e. one year. 
There is always a risk that the employer could lose at tribunal however this risk can be minimized if the employer can substantiate that there is an important business reason for the change, has genuinely consulted with the employee prior to the change and the employee is not put at a significant financial or personal disadvantage.

For example, a tribunal said the dismissal of a salesman was fair when he refused to accept the reorganisation of contracts to include a reasonable restrictive covenant preventing him from soliciting his employer’s customers for 12 months after leaving the job.

The employer had been losing business to some of its former salesmen who had inside knowledge of customers and call schedules.

If the majority of the other employees affected accept the change, or a recognised trade union has accepted the need for the change, then the risk to the employer is minimized further.

For example, any collectively agreed terms and conditions will bind all employees even those who are not members of the union if the terms are incorporated into the contract of employment.
Any variation, whether the contract provides for it or not, must not be discriminatory. For example, a company that applied new rostering arrangements for a single mother was held to have discriminated against her.

Previous shift arrangements had enabled her to be at home, in the evenings, which enabled her to look after her child.

The new rosters would have allowed this, but only if she worked much longer hours at other times. The employer could, without significant harm to its aim of achieving savings, catered for those who could only work social hours.

In another case, a variation that prevented employees from taking annual holidays during the employer’s busiest time of the year, resulted in an Asian employee being disciplined  for taking a day off to celebrate an important Muslim religious festival.

This was unlawful racial discrimination as inconvenience and loss of production did not justify the variation, particularly when the workers affected were prepared to do additional hours to compensate.

Published: 24 Mar 2011


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