Cameron Miranda
Employment contracts are legally binding agreements between employers and employees, outlining their rights, responsibilities, and duties. While these contracts can be changed, it must be done lawfully to protect both parties. Changes may occur due to economic circumstances, promotions, updates in legislation, or corrections to previous errors. Both employers and employees can propose modifications, but agreement from both sides is typically required. Employees can insist on changes if they have a legal right to them, such as statutory rights. Employers must provide a valid business reason for adjustments and seek agreement through collective agreements, contract variations, or unilateral imposition. If employees disagree, employers may opt for dismissal and re-engagement, known as fire and re-hire, which has faced scrutiny. Employees can seek legal advice, consult employee handbooks, and raise concerns with relevant bodies like the Workplace Relations Commission.
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What You'll Learn
Employee and employer consent
An employment contract is a legally binding agreement between an employer and an employee. Both parties can propose changes to the terms and conditions, but both must agree to them. This can be done through a collective agreement with a trade union, or through a flexibility or variation clause in the contract. Employees can consent to changes explicitly or implicitly by continuing in their role. If an employee does not consent to the changes, they can reject them and leave, or reject them and continue in their current role, but risk termination if the changes are mandatory for the business.
Employees have the right to be given individual written notice of any changes at the employer's earliest opportunity, and no later than one month from the date the changes take effect. This includes details of the change(s), which should be provided in writing. Employees can also propose changes to their contract, for example, requesting better pay. Employers do not have to agree to every change proposed by an employee, but they should listen and consider the proposal.
If an employee does not agree to the changes, an employer may decide to make them redundant, but they must prove there is a genuine need for redundancy and that fair procedures have been followed. If an employer changes the terms of employment without the employee's agreement, the employee may be able to claim unfair dismissal or constructive dismissal. Employees can also complain to organisations such as the Workplace Relations Commission, or seek legal advice.
If an employee continues to work under the new terms, they can make it clear that they are working under protest and treat the change as a breach of contract. They may also be able to claim unlawful deductions from wages if their pay is reduced. Employers can make changes to work practices without employee agreement, for example, updating work practices to save money or increase efficiency. However, they must be careful not to discriminate or disadvantage employees with protected characteristics.
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Trade union negotiations
Trade unions are an integral part of the process of changing employment contracts lawfully. They play a crucial role in negotiating and agreeing on changes on behalf of employees, ensuring that workers' rights are protected. Here are some key points regarding trade union negotiations in the context of changing employment contracts:
Collective Bargaining
When a trade union is recognised in a workplace, negotiations to change contract terms should occur through a process known as collective bargaining. This means that the employer must engage in discussions with the trade union representatives, who collectively negotiate and agree on changes to the terms and conditions on behalf of the employees they represent. This process ensures that employees have a unified voice and that their interests are protected during contract negotiations.
Mutual Agreement
Any changes to employment contracts must be mutually agreed upon between the employer and the employees, either individually or through the recognised trade union. This means that the trade union, during negotiations, must seek the consent of its members and ensure that any agreed-upon changes are acceptable to the majority. This mutual agreement is essential to ensure the legality of the contract variations.
Good Faith and Transparency
Employers have an implied duty to act in good faith and maintain transparency throughout the negotiation process. They must clearly explain the reasons for the proposed changes and their potential impact on wages, working hours, or other contractual terms. Trade unions, in turn, should engage in open discussions and consider the employer's rationale for the changes. This transparency helps build trust and ensures that all parties understand the implications of the negotiations.
Employee Participation
Trade unions should actively involve their members in the negotiation process. While the union speaks on behalf of the employees, it is crucial that individual workers have a say. Unions should seek input from their members, consider their concerns, and provide them with opportunities to suggest alternative solutions or cost-saving measures. This participatory approach ensures that the final agreement reflects the interests and preferences of the employees.
Legal Protections
Trade unions provide legal protections for employees during contract negotiations. If an employer breaches equality laws, unilaterally imposes changes, or engages in actions that destroy mutual trust and confidence, trade unions can support their members in taking legal action. Unions may facilitate group tribunal claims, protests, or industrial actions to address unfair changes and protect the rights of their members.
Flexibility and Adaptation
In summary, trade union negotiations in the context of changing employment contracts lawfully involve collective bargaining, mutual agreement, transparency, employee participation, legal protections, and the ability to adapt to changing circumstances. By following these principles, trade unions play a vital role in safeguarding employees' rights and ensuring fair and equitable contract variations.
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Contractual flexibility
Additionally, contracts may include clauses that expressly permit employers to make changes to specific aspects, such as the place of work, or to the contract more generally. However, this does not grant employers carte blanche to modify the contract at will. Employers must still provide valid reasons for any adjustments and clearly communicate them to employees.
In some cases, employers may need to alter contracts due to economic circumstances, organisational changes, legal or regulatory updates, or to correct errors in the original contract. For instance, changes in British law, such as the extension of employees' legal entitlement to sick leave in 2023, may necessitate updates to employment contracts.
When proposing contractual changes, employers should carefully consider the potential benefits and risks. Changes can sometimes cause tensions within the organisation, leading to decreased commitment and performance, discrimination, the departure of valued employees, and reputational damage. Therefore, employers should explore alternatives and undertake meaningful consultations with employees or their representatives, such as trade unions.
If an employee disagrees with a proposed change, they have several options. They can attempt to resolve the issue directly with their employer, raise it with the HR department, or seek guidance from their trade union representative. If the problem persists, employees can complain to the relevant authority, such as the Workplace Relations Commission, within the specified time limits.
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Dismissal and re-engagement
While dismissal and re-engagement is not unlawful, it is a risky and difficult strategy as employees are often left in a worse position than they were previously. Employers must handle this process carefully to ensure it is not deemed unlawful. For instance, employers must provide as much notice as possible of the proposed changes and should not use threats of dismissal to pressure employees into accepting new terms.
If an employer decides to proceed with changes to an employee's terms without agreement, they are encouraged to be transparent and share as much information as possible regarding the new agreement. This includes sharing information about the business strategy and plans to minimise the potentially serious consequences for employees.
In some cases, employers may threaten dismissal to try and negotiate, even if they are not actually considering dismissal. This tactic is discouraged by the Code of Practice on dismissal and re-engagement, which states that employers should only consider dismissal and re-engagement if they have participated in a thorough and open information and consultation process and have explored alternative proposals.
The Code of Practice on dismissal and re-engagement provides guidance to employers on how to act when seeking to change employment terms and conditions, and it is intended to ensure that dismissal and re-engagement is only used as a last resort. Employers who unreasonably fail to comply with the Code may face an uplift of 25% of an employee's compensation as imposed by employment tribunals.
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Legal recourse
Employment contracts are legally binding agreements between an employer and an employee, and any changes made to them must comply with the law. Both parties have the right to propose changes to the contract, but both must also consent to the changes. This can be done through a collective agreement with a trade union, or by including a flexibility or variation clause in the contract. However, employers cannot change an employee's contract without their consent, and they must provide a valid business reason for any adjustments.
If an employer changes the terms of employment without informing the employee, the employee should first speak to their employer directly and try to resolve the issue. If this is unsuccessful, the employee can raise the issue with the HR department or their trade union representative, who can provide guidance and support. Employees can also seek free legal advice from organisations such as Community Law and Mediation (CLM) or the Labour Relations Agency (LRA).
If the issue remains unresolved, the employee can take legal action or make a complaint to the Workplace Relations Commission (WRC) within six months of the dispute. Examples of legal action include making an Industrial Tribunal claim if a statutory employment right has been breached, claiming unlawful deductions from wages if pay is reduced, or claiming constructive dismissal if the situation becomes unbearable. However, it is important to note that employment law is complex, and employees should seek legal advice before resigning or taking legal action.
Employees also have the right to be given written notice of any changes at the employer's earliest opportunity, and no later than one month from the date of the change. This notice should include details of the change and should be provided before or by the day the change takes effect. If an employee disagrees with the proposed change, they can temporarily accept and later request to return to the original terms and conditions. Alternatively, the employer may decide to make the employee redundant.
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Frequently asked questions
The first step is to consult with the employee and ask them to make a change, to which they must agree.
If the employee does not agree, you can consult with their representative, such as a trade union, to discuss the change.
In this case, you can consider a collective agreement between you and the employee, or variations already established in the contract. Alternatively, you can consider a unilateral imposition, which involves dismissing the employee and re-engaging them under new terms and conditions.
Changing employment contracts can bring significant risks, including decreased commitment and performance, discrimination, valued employees leaving the organisation, and reputational damage.
Employees can try to resolve the issue directly with their employer or seek legal advice. They can also raise the issue with the HR section or their trade union representative. If they still do not receive written notification of the changes, they can complain to the relevant authority, such as the Workplace Relations Commission.
