When considering ‘contract’ changes there are in essence 3 options.
- Impose the change. To make it easier to vary certain aspects, a variation clause can be included into the contract. This provides flexibility to make certain changes. However, changes which involve employees suffering financial loss will usually be a breach of the implied term of trust and confidence regardless of the variation clause and therefore should not be imposed.
Any variation should be recorded in writing within one month of the change in order to comply with the Employment Rights Act 1996.
- Consult with the employees and attempt to gain their agreement voluntarily. The consultation must:
- Explain the proposed changes to the employees;
- Discuss the reasons behind the change;
- Explain what will happen if the changes do not occur;
- Give employees the opportunity to raise their concerns and put forward their suggestions.
Any variation should be recorded in writing within one month of the change. If the employees agree to the change, they should be asked to confirm their agreement by signing a document recording the variation. The signed document should then be appended to the contract of employment.
- If it is not possible to impose the change, nor is it possible to gain agreement voluntarily, you can bring the original contracts to an end by contractual notice and then immediately offer to re-engage on the new terms and conditions. By bringing the contract to an end you are in effect dismissing the employees and must therefore be able to justify their decision on the basis of ‘some other substantial reason’. In assessing whether a dismissal is fair a tribunal would assess:
- Presence of a sound business reason for effecting the change;
- Any alternatives;
- The proportion of the workforce who were willing to accept the change;
- The impact on the particular employees and their reasons for not agreeing to the change and whether or not there was adequate consultation.
Note: depending on the wording within the contract, it is usual that general ‘policy / procedure / rule’ changes may be implemented without the need to obtain agreement from the employees.
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