Varying Terms and Conditions

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Most Companies at some stage, for whatever reason, will want to understand how to vary or change terms and conditions of employment. In short, it is possible to change terms and conditions but any change should follow a consultation process and wherever possible, a mutual agreement to change terms and conditions is always preferable.

What do we mean by varying terms and conditions of employment?

In most cases when an employer wants to explore varying terms and conditions, it will result in a change and that change may be detrimental to the employee or adversely impact them. For instance, an employer may want to reduce sick pay terms or holiday entitlement, change working hours – maybe introduce Saturday working – change roster and shift patterns.

What is a variation clause in a contract?

In most contracts of employment, there will be a variation clause which provides for the employer to make reasonable changes to terms and conditions and the clause may provide that such changes can be made within 1 month. This sounds straight forward but it will, as ever, come down to the interpretation of the word “reasonable”. If there isn’t a variation clause, this does not mean that the employer is unable to make changes.

What should you do if you intend to change terms and conditions?

The employer should meet with the employee(s) affected and explain what changes they propose to make and why and consult about the proposals. The purpose of the consultation process is to discuss and understand how they will be affected by the proposals. Ideally after consultation, the employee and employer will agree to the change or variation and it will be implemented by mutual agreement.

Where the changes are contentious, it is likely that the employees will not accept the change and it’s not possible to mutually agree to the change regardless of how long they consult. In this situation, the employer reserves the right to effectively issue contractual notice of the change whereby the employee is given contractual notice that with effect from a certain date, they will cease to be employed under their existing terms and will be re-employed  with continuous service under new terms and conditions from the agreed date. This process is sometimes referred to as a form of “fire and re-hire”.

“Fire and re-hire” is lawful but an employee can choose not to accept the new terms and conditions in which case they are effectively resigning and their redress would be to pursue an action for constructive dismissal.

Whether the employee would succeed with such an action will be determined by a number of factors and considerations – including

  • What was the change, was it fair and reasonable?
  • Why were the changes being made?
  • What was the negative impact on the employee(s) and how were they affected?
  • Did the employer consult with the employee(s) regarding the proposed changes and – for how long?
  • Were the changes in any way either a direct or indirect form of discrimination?

What changes are likely to be most contentious?

It is unlikely that an employee will be aggrieved if the employer is proposing to change the holiday year but the employee is unlikely to be happy if there is a proposal to reduce holiday entitlement and/or long service holiday increments.

Similarly, any detrimental changes to sick pay are likely to be unpopular but whatever the change, it is necessary for the employer to still meet their statutory obligations regarding holiday entitlement, statutory sick pay etc.

Withdrawing a contractual benefits ie a Company car – will also be sensitive but as a general rule, if the employer no longer wishes to offer a Company car, it is reasonable to offer a car allowance instead or increase basic salary to compensate for the value of the benefit.

Can you change the employee’s working hours?

Yes – but this will manifest itself in different ways. For instance an employee may be contractually required to work 35 hours per week and the employer proposes that the employee still works 35 hours but those hours will be worked in a different pattern ie different start or finish times.

This may cause the employee issues in terms of personal commitments outside work or childcare drop off etc and these factors should be considered and, ideally, a mutually acceptable solution found.

If it is proposed that the 35 hours will now include Saturday working where currently it is only Monday to Friday, this is likely to be face some resistance and the employee may be unable to meet the new conditions so may feel the need to resign or the employer may have to issue contractual notice. It will make a big difference whether the proposal is that the employee now works every Saturday or works Saturdays on a roster and may only have to work 1 Saturday in 5 – for instance.

What happens if the employer proposes to move the office?

Most contracts will stipulate a “normal place of work” and the employer may have to move offices occasionally for any number of reasons. Contrary to popular belief, there is not a specific distance referred to in legislation that a Company can move a “normal place of work”. It will depend on a range of factors and if the Company moves an office location, there will be some winners and some losers.

Employees will be impacted differently if they use public transport to get to work so, without stereo-typing, it would be perfectly reasonable for the MD with a Company car to be told that their “place of work” is being moved by 20 miles but it might not be reasonable for an employee on minimum wage who now has to catch 2 additional buses and leave home 2 hours earlier to get to work.

If you want help dealing with any of these issues, you’re going to need HR Support – either call Adrian on 07885 714771 or e-mail adrian@abhrsolutions.co.uk

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