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Varying Terms and Conditions

Varying terms and conditions may be required as your business evolves especially in times of general economic uncertainty . Such times will require you to review your business operations and may need varying terms and conditions to be adjusted for your employees. These adjustments could include working patterns, taking on additional responsibilities, or even a reduction in pay. The ability to change the terms of employment is not a straightforward process and not one without risk. HR:4UK will support you every step of the way as you navigate the complexities of varying terms and conditions, drawing upon our extensive experience in employment law.

This employment guide sets out the process you must follow if you need to change the employment terms and conditions of your staff. 

This guide is not intended to constitute legal advice.

Introduction

As your business grows and develops – or if you hit bad times – you may need to reorganise things. This may involve seeking your employees’ consent to changes in their working practices.

This might include asking them to change their working patterns, take on additional responsibilities or in some cases accept a reduction in their pay.

Contracts of employment cannot be varied without the consent and agreement of the employee.  
If an employer makes a unilateral decision to vary the terms and conditions without first seeking agreement, employees can bring an employment tribunal claim for breach of contract, constructive dismissal and/or unlawful deduction of wages if they suffer loss because of the changes.

Some contracts of employment may have a clause in their contracts that allow the employer to make discretionary changes without the need to get agreement.   

Even with such a clause an employer should always proceed with caution as having such a clause may not necessarily give the employer an unfettered right to make the change.

Before making any variation to terms and conditions of employment, employers should ask themselves:  is it absolutely necessary to make these changes?  What are the issues you are trying to solve and will a change to your employees’ terms of employment solve the issue?

There should be sound business reasons why you want to make the changes.   Being clear about why you need to make a contract change may help when it comes to informing and consulting with employees about potential contract changes.   If your workforce understands the business reasons behind the proposed variation to their terms of employment, may make it easier to get their buy-in and agreement to the proposed change.

Making trivial changes to contracts of employment may have a negative impact on your employee relations and may result in a disengaged workforce.  There is also the risk of having a wider impact on the employer’s reputation.

Making changes

With the exception of certain statutory minimum terms, any term of an employment contract can be changed if the employee agrees to such changes.

Any changes to an employment contract must be confirmed to the employee within one month of the date of change.

So what should you do if you want to vary your employees’ terms and conditions?

You should arrange to meet with your employees and set out:

  • The reasons for the proposed change to their terms and conditions. You need to set out in detail the ‘business case’ for such changes.
  • If there are going to be any changes to pay or benefits, you should be able to clearly demonstrate the financial implications to the business if you are unable to make these changes.
  • You should have an open, fair and meaningful discussion with employees over any proposed changes and listen to any concerns they may have about the proposed change.   Expore and consider any options that may be put forward by employees even if these are not feasible.
  • The discussions should be fully documented with any employee feedback or responses recorded in the document.

If your employees agree to the changes that you have asked for then you need to send them a letter setting out the changes. We recommend that you arrange for your employees to sign the letter as evidence of their acceptance of the changes. This must be done within one month of the date the changes take effect.

If you are unable to reach agreement with your staff on your proposed changes to their terms and conditions you may still be able to make the changes if you feel they are essential, by serving proper notice to terminate the existing contract and offer a new contract with the revised terms.

However, this is fraught with legal risk. If mismanaged it can result in unfair or constructive dismissal claims. Do remember that, if you are going to dismiss 20 or more employees at one establishment, you must consider whether there is a requirement for collective consultation.

It is essential that you seek professional and expert advice.

Changing Terms Of An Employment Contract

An employment contract between an employer and an employee is a legally binding agreement and an employer cannot unilaterally change the terms of that agreement. If you are considering a change to your employees contract of employment, you should first understand that there is a prescribed process to follow. If you require the support of the HR:4UK team in managing the varying terms and conditions for your employees for business, contact us without delay. With our four decades of providing the expert legal advice and guidance you need you will be able to feel reassured and manage the process confidently with us by your side every step of the way.

For further help and advice, speak to one of our advisors by calling 01455 444222 or complete our contact form and an advisor will be in touch shortly.

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