Expert Opinion: A guide making a change to an employment contract

The coronavirus pandemic has required many people to change their working habits temporarily, but workplaces reopen, many employers and individuals are re-evaluating their ways of working. HR Consultant, Simon Bellard, from Cheshire law firm SAS Daniels, explains what needs to be considered when making or requesting a change to an employment contract.

It is highly likely that an employee’s terms and conditions will need to be amended at some point during the course of their employment. An obvious change to an employment contract could be in relation to a promotion or salary increase. These are likely to be mutual changes that both parties are in agreement with and will therefore be fairly straightforward to achieve.

However, there may be times when the employee or the employer proposes a change to the employment contract that the other party is less willing to agree to.

Changes to Proposed by the Employer

The employer may seek to vary the terms and conditions of its employees for a number of reasons, for example:

• Changes to pay rates, bonus schemes, hours of work, staffing structures and place of work
• Harmonisation of terms and conditions across the business

Consultation with employees with a view to obtaining agreement is likely to be the easiest way for an employer to change terms and conditions. However, where this cannot be achieved, the employer could consider a variety of ways to implement the change including:

• Terminate the existing employment contract and offer re-engagement on different terms – often known as ‘dismissal and re-engagement’. This could carry the risk of unfair dismissal if a fair process is not followed, and breach of contract if the required notice is not issued.
• Unilaterally impose the changes and rely on the employee’s conduct to establish implied agreement. This could result in the employee resigning and claiming constructive unfair dismissal, or working under protest and bringing claims such as breach of contract or unlawful deduction from wages.
• There may be a collective agreement in place in individual contracts of employment, which may enable the employer to make the change they are seeking, without breaching the terms of the contract.

Where an employer is proposing to vary terms and conditions for 20 or more staff, this would fall under collective consultation rules. Failure to comply with these rules could result in the employer being ordered to pay a protective award of up to 90 days’ pay to each affected employee.

It is therefore important that advice is sought at an early stage before any contractual changes are implemented without express agreement.

Changes to an Employment Contract Proposed by the Employee

All employees have a statutory legal right to apply for flexible working if they have been working for their employer for a minimum of 26 weeks. There are many ways of working flexibly and some examples of this could be:

• Requests to reduce their working hours either on a temporary or permanent basis
• Requests to vary their working pattern, to take into account childcare needs
• Requests to work from home
• Requests to change their place of work
• Requests to work compressed hours
• Requests for phased retirement

Employees are required to submit their application to work flexibly in writing to their employer – their employer then has 3 months in which to consider the application and respond accordingly, or longer if agreed with the employee.

If the employer agrees to the change, then this is put in writing to the employee. However, if the employer disagrees, they must write to the employee giving the business reasons for the refusal.

Currently, employers can reject an application for flexible working on the following grounds:

• extra costs that will damage the business
• the work cannot be reorganised among other staff
• people cannot be recruited to do the work
• flexible working will affect quality and/or performance
• the business will not be able to meet customer demand
• there’s a lack of work to do during the proposed working times
• the business is planning changes to the workforce

Employees can make one application for flexible working every 12 months.

There are various options available for employers and employees to seek flexibility in their working arrangements and we would always recommend you seek advice should you receive a flexible working request or wish to seek to vary terms and conditions of employment.