Varying Contracts of Employment

You may be wondering how the Government and the Junior Doctors have managed to make such a mess of varying the Junior Doctors’ Contracts. But how would you go about it?  Do you know just what is involved?

No matter how valid or important the reasons for the change might be, it can be a surprisingly difficult and complex thing to do, particularly in the face of opposition from employees. Where the change is clearly beneficial to the employees, the variation of Contract of Employment is unlikely to result in any challenge from them, but it is nonetheless important for employers to understand the legal implications of varying Contracts.

It’s therefore important for employers to give careful thought to the reasons for the change and be certain that there is a genuine business reason for making it. Being able to demonstrate to employees why the change is necessary can help achieve their “buy-in” and agreement to the change. Further, if an employer decides it’s necessary to dismiss and re-engage employees to achieve the variation (see later section), they will need to show that they had a genuine business reason for imposing the change, and that they acted reasonably in dismissing the employee/s.

Things that need to be considered include:

Timing

The timing of the process could be one of the most crucial considerations. How long it will take to vary the employees’ Contracts will depend on the nature of the changes proposed and how cooperative the employees are. Employers should not expect to be able to complete the process within a short timescale, and some form of genuine consultation and communication should always take place even if the variation is small.

The risk of discrimination

The potential “knock-on” effects of contractual changes, such as risks arising under discrimination or equal pay legislation, also need to be considered. For example, changing working hours or shift patterns could constitute indirect sex discrimination if it makes it more difficult for employees with childcare responsibilities to attend work, as this is likely to affect a greater number of female employees.

TUPE

If employees have transferred to the employer under TUPE, their terms and conditions will be protected to some extent. The UK’s TUPE Regulations were amended in 2014 to allow employers to make some variations to employees’ terms and conditions that would otherwise be void under TUPE, where there is a contractual clause that authorises the variation, e.g. a mobility clause, however making changes following a TUPE transfer, even after some considerable time, can still be fraught with difficulty.

Contractual clauses that authorise a change

Some Contracts of Employment have express clauses that allow the employer to make specific changes to certain terms and conditions or, a Contract may provide the employer with a general power to vary any of its terms. However, such clauses tend to be interpreted restrictively by the courts and implied terms in the Contract may limit the effect of the clause.

Communication and consultation

Communication with employees is key to obtaining their consent to any variation. In some circumstances, a statutory requirement to consult collectively will apply (check with us here at Su Allen HR If you’re not sure whether this applies to your situation). Regardless of whether or not collective consultation is required, some form of communication exercise should be carried out with the affected employees to try to obtain their agreement to the change, prior to it being made.

Unilateral variation of the Contract

Varying employees’ terms and conditions unilaterally can be extremely risky. Other than in cases involving changes that are clearly non-contractual or where a flexibility clause applies, employers should think very carefully before taking such a step. Even in these two cases, the employer will need to consult on the changes with the affected employees, to reduce the risk of a constructive unfair dismissal claim.

Obtaining express agreement to the change

Obtaining express agreement to the change, either individually or through collective consultation, is normally the safest option open to employers, although, unless the change is clearly beneficial to the employees, it may not be the most straightforward.

Dismissal and re-engagement

As an absolute last resort, if employees refuse to consent to a variation and there is no clear flexibility clause in their Contracts and the employer still wishes to go ahead with the variation, there is the option of dismissing and re-engaging the employees. To do this, the employees will need to be issued with a new Contract of Employment, which they must sign to indicate acceptance of the new terms, and at the same time be given notice of termination of their old Contract of Employment. This should happen only after a proper process of consultation has taken place and been exhausted.

Individual consultation on dismissal

Any employer proposing to dismiss and re-engage employees must ensure that he/she follows a fair procedure in carrying out any dismissals.

Implementing the variation

Easy, right?  And there’s still all the paperwork to be completed and issued correctly …

As you will have realised, making a change to an employee’s Contract of Employment may be a surprisingly complex thing to do.  If you think you may need to vary any terms of your employees’ Contracts of Employment, we’d be pleased to help you.  Su Allen HR helps employers by providing a range of HR support that includes advice on how to handle difficult situations, writing clear policies which ensure fairness and consistency in all aspects of managing employees, and providing coaching and training where required. Contact us on 01582 883299 if you’d like to hear more.