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Considering employment contract changes

As it is not possible to vary contracts unilaterally, any changes to employment contracts must be agreed by both employee and employer. In some cases, employers will also need to obtain union approval, such as where there is a collective agreement in place or where collective consultation is triggered.

It is important that employers consider how the proposed change(s) may impact the workforce, whether certain groups of people may be affected differently to others, whether the proposed changes will solve whatever issue they are faced with and whether the changes could be considered discriminatory.

Employers should also think about the number of employees affected by the change, as if it exceeds 20 employees, it will require a collective consultation.

Proposing employment contract changes

As above, even where a contract of employment contains a variation or flexibility clause, these should not be relied upon blindly, as doing so risks potential claims of breach of contract and/or constructive dismissal.

Where contractual changes are proposed, employers must inform all affected employees and/or union representatives about:

  • what the proposed changes are;
  • who might be affected;
  • why the changes are required;
  • a timeframe regarding the proposed changes; and
  • any other options which the employer has considered.

A consultation process should then be commenced during which the proposed changes can be discussed with employees and/or representatives and feedback provided. Whilst there are no minimum consultation periods unless collective consultation is triggered, ideally this should be done as early as possible to allow sufficient time to try and reach an agreement on the proposals.

Consulting about employment contract changes

Clear communication and consultation are helpful, as employees are more likely to be open to the proposals where they understand the background thinking or intention behind them and are given the opportunity to provide their views on the proposals.

Consultation should be a two-way discussion between the parties, and employers should approach this with an open mind and try not to prejudge the outcome of a process. Employers should avoid being intimidating or giving ultimatums to their employees, as to do so may give rise to claims such as constructive dismissal.

Acas suggest that it may be helpful to ensure that those involved in the negotiations and consultations have received training around how to approach the process to ensure that they are consistent and fair.

Handling requests to change an employment contract

In some circumstances, it may be the employee who is looking for an amendment to their terms and conditions, for example in a situation where flexible working is being sought.

Any requests from employees should be treated reasonably, with two-way discussion and it should then be considered whether the request can be accommodated. In some cases there may be additional guidance for the employer, such as in the case of statutory flexible working requests.

If employment contract changes are agreed

If an agreement has been reached it is imperative that this is confirmed in writing. It is entirely up to the employer whether this is done in the form of a variation letter, or a re-issued contract of employment which has been updated with the agreed terms. This is especially important where the change relates to the written particulars which must be provided to an employee under the Employment Rights Act 1996.

If a temporary variation has been agreed, a clear timeframe should be set out identifying how long the change will take effect for. Acas also recommend that employers monitor changes once implemented to ensure that there is no adverse impact on staff, especially where the changes were not readily accepted.

If employment contract changes cannot be agreed

If, despite consultation, it is not possible for the changes to be agreed between the parties, in limited circumstances it may be possible to instigate a dismissal and reinstatement process by giving employees notice of termination of employment together with an offer to rehire them on the new terms.

This can be a difficult process to navigate and carries with it the risk that employees may resign and claim constructive dismissal or continue to work, but under protest, meaning they are still within their rights to bring claims against an employer such as breach of contract.

Whilst the new guidance published by Acas could be seen in some ways as overcautious, this does highlight the need to seek legal advice as early as possible when looking to implement changes to terms and conditions to ensure that any risks are managed and minimised.

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