Changing Terms and Conditions of Employment

An employee’s terms may change throughout their employment for example in relation to pay. A lot of changes will not be controversial however if an employer wants to do something to the detriment of the employee the employee may be less agreeable.

First consider whether the change is a contractual term i.e. it could relate to a non contractual benefit such as a bonus or commission. Be aware that sometimes terms that are stated to be non contractual or discretionary can become implied into a contract over time.

Consider whether the contract allows for the amendment to be made and whether the contract includes a right for the employer to change the contract.

In practice the following options are likely to be relevant:

1. Obtain the employees agreement to the new terms. This is likely to be the least risky option, however in some circumstances may not be commercially wise as a period of consultation in relation to changes could result in a drop in morale and the employees may not agree to the changes.
2. Enforce the change and if the employee does not complain or refuse to agree then their conduct over time may mean that the change is accepted. This may be risky as the employee could argue that the employer has breached the fundamental and implied term of trust and confidence. The employee could resign and claim constructive dismissal.
3. Terminate the contract and offer employment based on the new terms. This too will be risky as the employee could argue that they have been unfairly dismissed in light of their being no fair reason for dismissal and that the dismissal was procedurally unfair. In this situation an employer should carry out a period of consultation with the employee before dismissing and clearly demonstrate the reasons for the proposed changes.

Be sure that the proposed changes are not discriminatory because they are likely to impact a particular employee or group of employees because of for example their sex or religion.

All employees are entitled by law to a statement of various terms in relation to their employment. This must be provided within 2 months of an employee commencing employment. The employer should provide the employee with a written statement in relation to any changes within one month of making the changes.

Be aware that there may be further risks if the changes are being made as a result of a sale of a business. In this situation the employees are likely to be protected by legislation meaning that their terms cannot be varied unless there is an economic, technical or organisational reason.