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Changing Terms and Conditions

Can terms and conditions of employment be changed?

The terms and conditions of a contract can usually be changed only with the agreement of both parties. This is particularly so in relation to remuneration or other terms that are fundamental to the contract and important to the parties. Most written contracts provide that minor terms can be changed on reasonable notice in writing, (say) 28 days.

In some circumstances an employee’s contract of employment may make provision for the employer to change certain terms as of right, for example in relation to an employee’s place of work or duties. In most cases such changes are subject to an implied term that any changes will be reasonable in nature.

In other circumstances an employer may stipulate that certain terms do not acquire contractual status, for example bonuses terms that are expressed to be discretionary in nature, or non-contractual employment policies that may be varied from time to time on reasonable notice.

How can agreement be reached with employees?

If an employer does not reserve the right to enforce changes to a contract of employment, then the contract should only be changed by consultation and agreement.

Consultation will involve explaining the change and the reasons for it, as well as considering and responding to the views and objections of the employee.

If agreement can be reached, then this should be confirmed in writing – preferably in the form of a revised contract in writing to avoid any confusion.

What if agreement is not reached?

If agreement cannot be reached after consultation, then an employer has the option of giving notice of termination under the old contract and offering new employment to the employee on the proposed terms to take effect when the old contract expires.

What are the risks of termination?

This amounts to a dismissal and therefore care should be taken to ensure that (1) satisfactory consultation has been carried out and the employee has been informed of the consequences of their objection in writing, (2) reasonable objections have been addressed so far as possible, (3) there are sound business reasons for the proposals and (4) the action in giving notice is a proportionate response and a fair procedure has been followed. Expert legal advice should be taken before proceeding to this stage.

If the employee accepts the new terms, then the variation will take effect from the date the new contract begins. If not, then the employee’s employment will end when the old contract expires. The employee will be able to bring a claim alleging unfair dismissal, which the employer can defend on the above grounds.

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