CONTRACT CHANGES: There are problems to avoid or resolve when changing an employment contract.
Step 1: Getting the Agreement
As a rule, both the employer and the employee need to agree to make contract changes.
But, in some cases the employee can insist on a change to certain terms and conditions. They must have a legal right to force this particular issue.
Role of Employers
An employer cannot change an employment contract without employee consent. They must get their employee’s full agreement if they want to make changes to the contract.
Before an employer starts changing an employment contract terms and conditions they should:
- Set up a consultation to negotiate with their employees. In some cases negotiations may occur with staff representatives. This could be an official from a trade union or from a staff association.
- Give a full explanation outlining the reasons for wanting to change their employment contract.
- Give their employees an opportunity to suggest alternative ideas.
This is also an opportunity to talk with your workers and inquire about their future plans. Older employees may give you their thoughts on early retirement and other plans for work. This might include making changes to their role in the workplace or their average working hours.
Role of Employees
Start the process by explaining to management why you want to make some changes. There are situations when you can insist on a change to your employment contract. But, it must be a change that a statutory right covers (e.g. to stop working on Sundays).
Step 2: Making Changes to the Contract
Having agreed the contract changes with their staff, the next step for employers is:
- Updating the terms of the written statement of employment conditions in their employee’s contract.
- Writing to their employees within 1 month informing them exactly which parts changed.
There may be instances where an employer changes some terms and conditions that are not in the written statement. An example might be an employee’s right to sick leave.
In this case employers should inform their workers where to find the changes. The changed information could be in a company handbook, intranet site, or noticeboard.
These type of changes can affect the terms of written statements like maximum weekly working hours and pay. This can happen even if they are not a member of the union or staff association.
Flexibility clauses are part of some specific terms in a contract. As a rule they give employers the right to make changes to some conditions to employment. A common flexibility clause could include employee relocation for example.
Note: Employers can only use flexibility clauses when the changes are reasonable. An unreasonable example could be giving only 1 week notice to an employee to go work overseas.
Changing Your Employer
What happens if you start working for a different employer? In this case, you would usually will get a new written statement of employment within two (2) months.
The rules for changing employment contracts do not apply if only a business name changes. The same would also apply if workers get a new employer (e.g. business transfers, takeovers and TUPE) but no other changes occur in the t’s and c’s.
In both these cases, employers do not need to issue a new or changed written statement. But, they must inform staff about the changes within one (1) month.
Disciplinary Measures and Demotion
It is not uncommon for disciplinary measures to result in a change an employment terms and conditions. The same might also apply in a case of employee demotion.
Employers should ensure the staff handbook or intranet site provides this information. You can give an outline on how this could happen in the disciplinary procedures section.
Step 3: Dealing with Contractual Problems
When you change an employment contract terms and conditions problems can occur if:
- Employers try to change the contract without mutual agreement. Problems may also arise if they try to re-employ an individual on new terms and conditions.
- A breach of contract occurs where one of the terms in a contract gets broken. An example could be if an employer fails to pay agreed wages or an employee fails to work agreed hours.
Solving an Employment Contract Dispute
There are various ways employers and staff can solve a workplace dispute. But, solutions are usually less formal when disputes involve contract changes. You can try talking it through or using mediation.
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As a rule employers or employees can take legal action if the problem remains unsolved. At this point, getting legal advice is important because it can be expensive. Trade union members can usually get legal counselling from their union.
Making Contract Changes without Agreement
Employers should not make changes to an employment contract without getting staff agreement. This includes using flexibility clauses in unreasonable situations. If any of these contractual breaches occur employees may:
- Have the legal right to refuse working under the new terms and conditions of the contract.
- Choose to resign from work and claim for constructive dismissal.
- State they are working the new terms under protest. In this case they are treating the amendments as a breach of contract.
- Qualify to take their case to an employment tribunal.
Note: An employment tribunal is also called an ‘industrial tribunal‘ in Northern Ireland.
What if employees disagree with the new terms and conditions but say or do nothing? In this case it often counts as agreeing to the changes made to the employment contract.
Re-employing Staff on New Terms and Conditions
In some cases, employers can end a contract and then re-employ the staff member. But, re-employing the same employee on new terms and conditions is often seen as a last resort.
All employers must follow employee dismissal procedures when they end an employee’s contract. That also means adhering to the required:
- Proper redundancy procedures in England, Scotland, and Wales.
- Statutory minimum dismissal in Northern Ireland.
In some cases dismissing and re-employing staff could qualify them for a tribunal. Your employee could then make a claim for:
- A breach of employment contract.
- An unfair dismissal from work.
Employee Claim for Breach of Contract
An employee may claim breach of contract if they fail to solve an issue with their employer. In this case they might take their case to an employment tribunal or a civil court. It would be an industrial tribunal if the case occurs in Northern Ireland.
Even so, in most cases the employer would be able to make a counterclaim to the action.
Employment tribunals only deal with claims and counterclaims if they:
- Are related to a specific issue with an employment contract.
- The issue remains unsolved when the employee terminates their employment.
Note: You cannot connect this type of claim or counterclaim to a personal injury. This also includes certain types of contractual terms such as the rights of intellectual property and your work.
Tribunal Time Limit
As a rule, employees must make their claim to a tribunal within 3 months of losing their employment. Employers get 6 weeks from the time they receive a copy of the claim to choose whether to make a counterclaim.
Award Compensation Limit
The tribunal may award compensation if they agree with the claim made by the employee. But, compensation can only be for a financial loss such as non-payment of salary. The maximum award compensation limit for this type of claim is £25,000.