1.3 Changing a contract

Employers frequently wish to change their employees’ pay, hours of work, location, bonuses etc and ask whether they can make changes to employees’ contracts once the terms and conditions have already been agreed. Changing a contract is a nuanced process and the answer is: it depends!

Generally, a contract of employment cannot be amended without both parties’ agreement. Therefore, the best approach is as follows:

  • Call the affected employee/s into a meeting, explain the proposed changes and the business reasons why they are necessary and give the appropriate amount of notice.
  • Follow this up with a letter setting out the changes and asking them to either sign to indicate their consent or to put any objections in writing.
  • Arrange a one-to-one meeting with any employee who has objections and attempt to reach a compromise.

It is important to think through all the possible implications of the changes. For example:

  • If employees’ hours increase, their holiday allowance will increase too.
  • If they are changing from day to night work and rely on public transport, they may struggle to get to work.
  • A change which requires employees to work weekends rather than weekdays is likely to more adversely affect people with children to look after. Since more women than men are single parents, unless the change is essential for the business, it may present a discrimination risk.
  • Is there a collective agreement in place? If so, trade unions will need to be involved.

If employees do not agree to the changes, an employer should first try to negotiate with them. An understanding of the reasons why they do not agree may lead to a compromise being found. For example, if an employee objects to moving to a different location because it is not on a bus route, the employer may be able to arrange for them to work the same shifts as a colleague who lives in the same area and can give them a lift into work. If employees object to their bonus being taken away, an employer may wish to offer them a few extra days of annual leave in exchange. If employees realise that cutting down their hours is an attempt to avoid possible redundancies, they may be more understanding.

What if the contract has a term in it which states that the employer may vary the terms and conditions? Although this is useful to have, it certainly does not give an employer free reign to make any changes which they wish. If the right to change relates to one term in particular (for example, a clause stating that hours of work are 9am to 5pm but may be changed to 8.30am to 4.30pm upon one month’s notice), it is much more likely to be enforceable than a vague, sweeping statement that the employer can change any of the contractual terms at any time for any reason. Any change must always be reasonable and, although this is clearly a matter for debate, Employment Tribunals would generally take a narrow interpretation of reasonableness.

If an employee has been employed for under two years and the change in terms and conditions does not relate to a discriminatory factor, it will often be possible to dismiss an employee with notice and offer them immediate re-employment on the new terms and conditions. Always seek legal advice before doing this as there are many exceptions to this rule!

For employees who have over two years’ service and will not agree to a change in terms and conditions, as a last resort, an employer may be able to take the same approach as those with under two years’ service and dismiss and re-employ them. In such a situation, the employer should be very confident that there are good business reasons why the change is necessary since there is a serious risk of an unfair dismissal Employment Tribunal claim if there are not.

Sometimes employers may be in the situation where most employees agree to a change but one or two do not. In such cases, the employees who object may be left on the previous terms and conditions whilst the others change to the new ones. Although this may be seen as unfair or administratively inconvenient, as long as there are no discrimination elements at play, this is legally sound.

Sometimes, of course, it is the employee who wishes to make changes via a flexible working request. This frequently comes in the form of asking to work part-time, work flexibly, work from home or perhaps take an extended lunch break. Previously, this had to be for reasons of caring for a child or a vulnerable adult; now the employee can make the request for any reason (even to watch more daytime tv, pursue a hobby, or pop home to let the dog out!). Employers are legally obliged to consider such requests and, if possible, they should accommodate them. If they cannot agree to it, they must explain why not; there are several prescribed legal reasons which this refusal must fit into. Employers would be expected to inconvenience themselves slightly to allow the change but they are not expected to go completely out of their way to do so.

If an employer wishes to change terms and conditions after a TUPE transfer, they are advised to seek specialist legal advice. However, if the sole or principal reason that changes an employee’s terms and conditions is the transfer itself, then the changes will be void even where the employees agree to them or carry on working without protest unless in very limited circumstances.

Often employers are concerned about setting a precedent; if they allow flexible working for one employee, won’t they have to allow it for anyone else who asks? Not necessarily. It is perfectly plausible that, for example, starting an hour late each day is fine for one employee out of a small department but if everyone started late the business would run considerably less efficiently. In such cases, “first come, first served” is a good general rule; it is not for the employer to make moral judgements about whether the employee’s reasons for asking are good ones, simply to decide whether or not each request can be accommodated in the current circumstances. Once a request is agreed, a contract variation should be drawn up and the employee should be reminded that (unless specifically stated otherwise), this is a permanent change with no automatic right to revert to previous terms and conditions.

For more advice on whether a contract can be varied and how, contact info@p4b-law.co.uk

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