You will know from my previous articles, the importance of having contracts of employment in place. But once in place, how can you vary or change them?
A contract of employment is a legally binding agreement between the employer and the employee. Any changes to that agreement have to be agreed by both parties.
However, over time the employer may find that the employment terms on which it took someone on are no longer what’s best for the business and the employer may therefore want to make changes to the worker’s contract of employment. They may wish to make changes due to (for example) cost, relocation, to give greater protection to the business or change the hours of work.
The employee may also wish to request changes to their contract, for example, change to their working hours, holidays, etc.
Some changes are easier than others, for example, no one is going to challenge an increase to pay!
Also, not all changes are contractual. If the change is not contractual, you don’t need consent from the individual. However, no-one appreciates being poorly treated, therefore if you are looking to make a non-contractual change, talk to your staff, explain why and get their buy-in – even if you don’t technically need it.
But if the change is contractual, what can an employer do if the worker doesn’t agree to the changes?
How can the contract be changed or varied?
Neither party can change the Terms and Conditions of Employment without the consent of the other party – any change must be by mutual agreement.
The best way forward is to talk to your employee. With any change – employees must be fully consulted with. This includes negotiating with the Union or Staff Council where applicable.
Explain the changes, get their buy-in, allow them to be involved and perhaps come up with alternative solutions. Reach an agreement.
Once agreed, the changes should be confirmed in writing. This varies the existing Terms and Conditions but also ensures there is no future misunderstanding.
What happens if no agreement can be reached?
If the change cannot be agreed you have 3 options :-
1. Impose the change anyway, not recommended and it is likely your employee will challenge with an employment tribunal claim, for example and depending upon the change imposed – breach of contract, constructive dismissal or unfair deduction of wages.
2. Terminate and Re-engage – this involves terminating the existing contract (ie. dismissing the person) and offering to re-engage the employee on the new terms – with the new change. If the employee has been working with you for two years (or one year if they started with you before 1 April 2012) they could make a claim to a Tribunal for unfair dismissal. That is why it is important to carry out a full and thorough consultation and follow a fair dismissal procedure. Remember to offer a right of appeal against the dismissal.
3. Or finally, keep talking to them and try to reach a compromise which both parties are agreeable to.
If you need to make changes to your contracts, please contact Hill HR. We would be happy to talk it through with you and advise you on the correct course of action.
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