Ask an Ealing Expert

More developments in Employment Law from our Ealing expert, Louise Taft

Changes to Employment Contracts

Whilst the focus in a recession is often on redundancies, many employers want to change their employees’ terms and conditions to avoid having to make staff redundant. Employers might want to cut pay and benefits, hours or both and to do so means changing the terms and conditions of Employment Contracts. But can they do this?

It’s important to remember that contractual terms are not just those that are written down. Terms are often implied by custom and practice: if employees have been given a pay rise that was never written down, they are still entitled to that salary.

There are a variety of methods for an employer to make changes to contractual terms. The first and most ideal is to agree changes with the workforce: this is best done in writing with a letter to the employee to explain the change and the reason for it (eg to avoid having to make some of the staff redundant we are asking you to agree to a cut in hours/pay) and asking them to sign to confirm their agreement.

A riskier choice for employers is simply to impose new terms and see what happens. If an employee continues to work without protest, they are deemed to have accepted the new terms. This runs the danger however of the employee objecting, suing for breach of contract or even resigning and claiming constructive dismissal.

The most drastic option is to terminate the employees’ existing contracts and offer them their jobs back on new terms. For employees who have been with the employer less than a year, this is relatively straight-forward: it can be done simply by giving the correct contractual notice. For longer serving employees, the employer will need to act carefully to avoid claims for unfair dismissal. However, where there is a good business reason for the change (such as a need to cut costs in a recession) and the employer properly consults with the employees over the need for the change and has considered the impact on them, where the change is a proportionate response to a real business need, employees will struggle to bring an unfair dismissal claim.

June 16, 2009