Changing employment terms

Businesses often need to change employment terms as their circumstances evolve. Whether you want to promote an employee, change their role, salary or working conditions, make sure you avoid the pitfalls when it comes to changing terms for your staff.

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What are the basics on changing employment terms?

All UK employees are deemed to have an employment contract, even if no agreement was ever documented or even discussed. Once signed, employment contracts can only be changed if both parties agree; neither side can change the contract unilaterally.

Agreement to change employment terms can be reached at the time of the change or may be given in advance in the employment contract, which may reserve the right for the employer to make certain changes.

It is always useful to consult employees over changes to their terms and, in some cases, it will be essential. Always record changes in writing; consider using a Change to employment terms letter, which should ideally be signed by both parties.

What if I just impose the change?

If you impose a change to employment terms without agreement then this is likely to be a breach of contract giving the employee a legal claim. In some cases the change may amount to constructive (unfair) dismissal.

If the employee does not object to a change that has an immediate impact then, in some cases, it may be possible to later argue that they have effectively consented to the change. However, where employees object or the impact of the changes is delayed or deferred (such as pension changes or changes to insurance benefits) then, even after a long time, the employee can claim the change was invalid. They can also seek compensation or request that the employment contract is carried out by the employer as originally agreed.

What if there is a right to make changes written in the contract?

Even where you have a contractual right to make the change, it will usually only allow minor or reasonable changes (even if this is not stated). To make changes that have a significant impact on the employee such as reducing pay, changing hours or changing the place of work, clear and specific wording allowing these sorts of changes is needed; consider using a Change to employment terms letterIf your staff work over or near the 48 hour weekly working hours limit, then try to obtain an Opt-out agreementto working in excess of the limit.
Contractual rights should never be exercised in a way that makes it impossible for the employee to comply or is irrational. 

What if the employee just won’t agree?

Consider offering something in return for agreeing to the change or linking it to a pay review or bonus. Employees who do not have unfair dismissal rights could be dismissed for refusal to agree to the change, provided there is no discrimination.

In rare cases, it may be a fair reason for dismissal if employees won’t agree to an essential change but you should Ask a lawyer for advice first.
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