Employment contracts often change during employment, e.g. upon a pay rise or promotion. Such changes are consensual and cause no problems. But can less welcome changes be made?
Changes not authorised by the contract
If the change desired by the employer is not allowed by the contract (for example, by an express flexibility clause), there are three options:
- Obtain consent;
- Impose the change and rely on conduct to establish implied consent;
- Terminate and offer re-employment.
This is simplest option, but agreement must be given voluntarily by the employee. The employee must also receive something in return (i.e. consideration). However, in the employment context that is rarely an issue because consideration can be found in the fact of the continued employment.
Unilateral imposition of the change
If the change has an immediate practical impact and the employee continues to work without objection, they will have implicitly consented. If, however, the change does not have an immediate impact, silence may not be sufficient.
Imposing a contractual change without consent is a breach of contract and the employee can:
- Work under protest and claim breach of contract and/or unlawful deduction from wages (if the change involves wages). This is known as ‘standing and suing’;
- Resign and claim for constructive dismissal;
- If possible (for example, in relation to a change hours), refuse the new terms.
Terminating employment and offering re-engagement on new terms
The alternative option is termination of the employee (on notice) and re-engagement the new terms.
This will enable a claim to be brought by the employee for unfair dismissal, even if the employee takes up the re-engagement To defend such a claim, an employer must:
- Establish a potentially fair reason or the dismissal;
- Show it acted reasonably in dismissing the employee for failure to agree the change.
If there is a sound business reason for such a dismissal, it should be possible to establish a fair reason, i.e. a “some other substantial reason” (SOSR). It does not have to be crucial to the survival of the business, but evidence will be needed to show it is not trivial
For the dismissal to be fair the employer will in almost all cases be expected to have consulted with the affected employees, even where the business is faced with financial problems meaning that time is of the essence.
Factors commonly taken into consideration when assessing the fairness of such dismissals are:
- The employee’s reasons for rejecting the change;
- Whether reasonable warning of the proposed change was given;
- Whether the full effect of the change was sufficiently and clearly explained;
- Whether an assessment of the impact of the change on the employee has been carried out and whether alternatives have been considered;
- Whether the employer has attempted to obtain voluntary agreement;
- Whether genuine consultation has taken place, including listening to any reasons for objection, responding reasonably to objections and making concessions, where reasonable to do so;
- Whether a majority of the employees affected have accepted the changes;
- Whether any recognised trade union recommended or objected to the changes.
Posted on 02/06/2016 in Legal UpdatesBack to Knowledge