Changing staff employment contracts

We assist employers to successfully alter, vary or update employment terms, including key aspects such as contracted time, pay, location of work, changing bonus structures.

We also help employers who may not have followed the process correctly and are now facing employment claims from employees.  If any claim is made we defend employers robustly and mitigate the costs.

We are helping many employers deal with lay-offs, sabbaticals, reduced hours, working from home and salary reductions in the current economic climate. We are always happy to discuss a problem and provide an initial scope and fee estimate.  Please do call us.

Can the employer change the contract without the employee’s consent?

If an employer unilaterally changes an employee’s employment contract, without their express or implied consent, this is a:

• Breach of contract which could give rise to a claim of constructive dismissal; and
• Repudiatory breach, possibly which can leave the employer’s restrictive covenants unenforceable.

Ideally, employers seek voluntary agreement. This avoids forced changes and litigation. The law stops employers using their greater bargaining position to impose contractual variations on employees against their will.

To ensure that a change is properly achieved, and that the employer does not inadvertently expose themselves to claims for unfair dismissal, it is important that a proper consultation process is followed. Gannons can help advise on this process and draft necessary communications.

Changing employment contracts by consent

There are a number of ways employers can successfully change employment terms.  The easiest way is to offer an incentive such as a pay rise if the employment changes are agreed.  Changes to restrictive covenants are often implemented in connection with a promotion as often the employee will agree to the changes.  In other cases employers may have to consider implied consent and other possibilities as discussed below.

Employment terms altered through custom and practice

Custom and practice may be considered to amount to contract alterations and changes to an employment contract may arise where :-

• the employee’s job role or working conditions have changed from the contract’s express written terms;
• in reality, the employee has been doing a different role to that listed in the contract;
• partial home working has become a contractual right.

Rights to change employment terms in Policies and procedures

Staff handbooks, policies and procedures can, if appropriately drafted, be treated as separate from the employment contract.  Separation means that employers can usually change these without breaching the employment contract.

Nevertheless, putting everything in policies rather than the employment contract may not work. In employment law, it’s the substance, not the label, that counts.

What can employees do if employment terms and conditions are changed?

The risk for employers lies in the potential employment law claims arising if the employment contract is changed without consent. Typical scenarios, depending upon the facts for an employee include :-

• The employee works under the new employment terms in protest – Sometimes termed standing and suing. The employee chooses to work under the new terms, but protests, i.e. makes clear they do not accept the terms. The employee has an ongoing claim for breach of contract,  can claim for any financial loss and can claim for losses going back up to 6 years. Potentially, a significant liability. An additional risk, where the change imposed is substantial, the employer may be deemed to have dismissed the employee and re-engaged them on new terms.  In this situation, the employee may also bring a claim for unfair dismissal.
• Claim constructive dismissal and breach of contract – an employee can first resign, then claim constructive dismissal. However, the breach of contract must be a fundamental breach i.e. go to the root of the contract.
• Refuse to work under new employment contract terms – the employee could refuse to accept the new terms and continue to work under the old terms. This situation is different to where an employee works under the new terms, but clearly protests. Employers have to manage the obstructive employee. In the situation where an employee resists an employee’s request that they move to short-time work or consent to being laid off, refusal may be grounds for redundancy, provided that the employee has acted reasonably.

Common changes to employment terms

There are many ways employers, for business or operational and commercial reasons, may seek to change employment contract terms. Some of the more common changes we are seeing at the moment include :-

• Right to temporarily lay off staff – involves an employer taking an employee off work and pay for a period of time. Short time working is similar, but rather than providing no work refers to the situation where the employer provides reduced work and pay. Both situations require consultation unless they are permitted by an express term of the employee’s contract.
• Working from home – working from home became a very big issue after the pendemic. Employers need to tread carefully in this area if considering requiring employees to return to the office.
• Changing bonus terms – many employers are caught out when relying on an express discretionary bonus clause. Employees have successfully argued that custom and practice over many years has, in reality, resulted in a more narrowly constrained discretion than the employer believed to be the case. Whether employers can make savings by cutting bonuses depends on the employment contract express terms, and the employer’s custom and practice.