FAQs: Changing Contracts of Employment

1. Can changes be made to your terms and conditions without your employer being in breach of contract?
2. Can changes be made if you object?
3. If you don’t object, is the change effective?
4. Can you be fairly dismissed for objecting to a change?
5. What effect does TUPE have?
6. Do employers ever have to consult collectively on changing terms and conditions?

Can changes be made to your terms and conditions without your employer being in breach of contract?

Generally, a contract may only be amended in accordance with its terms or with the agreement of the parties. Employment contracts are no exception to this basic rule. Employers are not allowed to use their greater bargaining position to impose contractual variations on employees against their will.

However, not every alteration to an employment relationship or the way in which an employee works will involve changes to the employment contract.

For example, where a procedure does not form part of a contract of employment such as a disciplinary and sickness absence procedures, your employer is free to change them as long as they are not acting so as to breach the implied duty of trust and confidence.

Discretionary bonuses, by definition, can be changed but if a significant benefit is removed this would be problematic.

Some contracts of employment authorise wide changes. These will only be possible if this is not a fundamental or an unreasonable change.

Contracts may contain specific variation clauses relating to the place of work or duties that can be allocated. The more precisely worded the more effective. This is because courts and Tribunals interpret such clauses narrowly. The courts will always construe any ambiguity in favour of you as the employee.

Can changes be made if you object?

If the proposed change definitely is a variation of contract, it cannot be made if you object. Be aware that sometimes approval can be obtained through a collective agreement which is binding on you. Otherwise you must have given explicit agreement for the change to occur, although this does not have to be in writing.

If you don’t object, is the change effective?

If you do not make your position clear that does not remove the necessity for agreement to make the variation effective. However, this can sometimes be implied by your behaviour. If you do not wish to accept the change but continue to work within the terms of the varied contract, you should make it clear that you are working under protest and do not accept the new terms. Otherwise, you are at risk of being held to have impliedly agreed to the change.

If the change is of immediate practical effect (such as a cut in pay or a change in working hours or role) and you continued to work without objection, a court is likely to conclude that you have impliedly agreed to the change. If, however, the change does not have an immediate impact, for example, a new mobility clause that had not been used, then that is less likely.

Can you be fairly dismissed for objecting to a change?

If you have objected to proposed changes and no agreement can be reached, your employer may attempt to terminate your existing contract. They will make an offer of continued employment on new terms.

This still constitutes a dismissal in law and you would be able to claim unfair dismissal if you have two years’ service. Whether the dismissal is fair depends on why the changes are needed. In these circumstances, your employer is likely to rely on the potentially fair reason of some other substantial reason (SOSR). As long as your employer has a sound business reason for dismissing an employee who refuses to accept a change, it should be able to establish SOSR. It does not have to be a reason that the Tribunal considers sound, but one which a reasonable employer would consider sound. However, in assessing fairness a Tribunal would always expect there to have been consultation and an attempt to reach agreement.

What effect does TUPE have?

The TUPE Regulations provide protection against changes to terms of employment in connection with a transfer of an undertaking. These changed at the end of January 2014 and the position is different depending on whether the transfer occurred before or after that date. Under the old provisions, any changes are void if the sole or principal reason is the transfer itself or a reason connected with the transfer which is not an economic, technical or organisational reason (ETO) entailing changes in the workforce. With post January 2014 transfers the restrictions are loosened and changes can be made for ETO reasons if you and your employer agree them.

Do employers ever have to consult collectively on changing terms and conditions?

There are various situations in which collective consultation should take place about proposed changes. If the changes affect 20 or more employees and you are faced with dismissal and re-employment on new terms, the circumstances would be caught by the collective redundancy regulations. Where these apply, you can receive awards of up to 90 days’ pay if your employer fails to comply with the obligation to consult. For employers with 50 or more employees where the Information and Consultation of Employees Regulations apply, and an information and consultation agreement is in place, your employer may also be obliged to inform and consult representatives with regard to proposed substantial “changes in contractual relations.” Finally, particular proposed changes to pension schemes also require consultation with scheme members and their representatives.

If you need help with changing contracts of employment, contact us today on 01273 609911, or email info@ms-solicitors.co.uk.