As the Coronavirus Job Retention Scheme (CJRS) comes to an end, many employers will be considering measures to protect the future of their business.
In an effort to avoid redundancies, employers may be considering reducing employees’ hours, pay and benefits or making homeworking arrangements permanent.
A contract of employment is a legal agreement between the employer and the employee. Receiving express agreement from the employee is the safest way to vary a contract, as imposing new terms unilaterally may constitute a breach of contract.
Flexibility Clause
If an employee’s contract contains a ‘flexibility’ or ‘variation’ clause, this allows the employer to make reasonable changes to the terms of the contract.
For example, a mobility clause allows the employer to require the employee to work at a different location. However, the employer must act reasonably in making the changes and exercise its discretion in a way that does not breach the implied term of mutual trust and confidence between the employer and the employee. This will include consulting with the employee before implementing any change.
Obtaining Employee Agreement
In the absence of a flexibility clause, the employer will need to obtain the employee’s agreement to vary the terms of their contract.
This will involve consulting directly with the employee, or their trade union representative where applicable. The consultation should involve explaining fully to the employee the proposed changes and the business reasons for them.
The employee should be given the opportunity to raise concerns and make alternative suggestions. Once new terms are agreed, it is good practice to record the new terms in writing and confirm when these will take effect.
Changing Terms without Employee Agreement
If an employer changes the terms of the employee’s contract when there is no flexibility clause and without the employee’s express agreement, the employer may be in breach of contract.
This could lead to the employee continuing to work under protest, resigning and claiming constructive dismissal and making a claim in the employment tribunal for unfair dismissal or unlawful deduction from wages.
If an employee simply refuses to accept a change, the employer may need to consider dismissing and then rehiring the employee on the new terms. This is a risky strategy and should be done as a last resort and only after meaningful consultation with the employee.
Employees with over two years’ service have significant employment protection and in order to avoid a claim for unfair dismissal, employers should follow a fair dismissal procedure, give the employee enough notice and offer the employee a right of appeal against their dismissal.
Changes should not take place until the employee has been fairly dismissed and then rehired under the new contract. The employee keeps continuous service if the new contract starts immediately after the old contract ends.
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