Changing an employment contract

Question 1

Getting agreement

Answer 1

If employers want to make changes to an employee’s contract, they must get their agreement. They should:

consult or negotiate with employees or their representatives (eg from a trade union or staff association)
explain the reasons for any changes
listen to alternative ideas from your their employees
If employees want to make changes to their contracts, they should explain the reasons. They can’t insist on making a change unless it’s covered by a statutory right, eg not working on a Sunday.

Once any changes are agreed, the employer needs to confirm them in writing to their employees.

Question 2

Part 2 of 3:

Making changes

Answer 2

Once employers have agreed on changes with their staff, they need to:

update the terms of their employees’ ‘written statement’ of employment conditions
write to their employees within a month to tell them exactly what has changed
If an employer changes terms and conditions that aren’t in the written statement (eg the right to sick leave), they should tell their employees where to find information about the change. This could be in a company handbook, noticeboard or intranet site.

Collective agreements

Employers must write to their staff to let them know about any changes to collective agreements with trade unions or staff associations.

These changes might affect the terms of employees’ written statements, including pay and working hours, whether or not they’re a member of the union or staff association.

Flexibility clauses

Flexibility clauses are terms in a contract that give employers the right to change some conditions of employment, eg relocation.

Employers can only use flexibility clauses to make reasonable changes.

Example

An employer couldn’t use a flexibility clause to insist on an employee moving to another country to work with 1 week’s notice.

Changes of employer

If someone starts working for a different employer, they’ll normally have to be given a new written statement within 2 months.

However, if the name of a business changes or there’s a new employer but no other changes in terms and conditions, the employer doesn’t need to issue a new written statement. They still need to write to their staff about the changes within a month.

Disciplinary measures

Sometimes changes to an employee’s terms and conditions, like a demotion, can happen as a result of a disciplinary measure.

Employers should make sure the staff handbook or intranet site contains information about how this could happen in the section dealing with disciplinary procedures.

Question 3

Part 3 of 3:

Dealing with problems

Answer 3

Problems can arise if:
an employer tries to change a contract without agreement, or re-employs someone on new terms and conditions
there is a breach of contract where one of the terms in a contract is broken (eg an employer doesn’t pay agreed wages or employees don’t work agreed hours)
Solving disputes

If there’s a disagreement over contract changes, employers and their staff should try to solve things by talking informally or through mediation.

Employees can also get advice from their trade union representative (if they’re a member of a union), Citizen’s Advice or Acas (Advisory, Conciliation and Arbitration Service). In Northern Ireland, they can get advice from the Labour Relations Agency (LRA) .

Acas helpline
08457 47 47 47
Monday to Friday, 8am to 8pm
Saturday, 9am to 1pm

LRA helpline
028 9032 1442
Monday to Friday, 9am to 5pm

If the problem can’t be solved, employers or employees may have the right to take legal action. It’s important to get advice first because legal action can be expensive. If you’re a trade union member, you may be able to get legal advice from your union.

Making a change without agreement

If an employer makes a change to a contract without getting agreement (including by using flexibility clauses unreasonably), employees may:

have the right to refuse to work under the new conditions
say that they’re working any new terms under protest, and are treating the change as a breach of contract
resign and claim constructive dismissal
be able to take a case to an employment tribunal
In Northern Ireland an employment tribunal is known as an ‘industrial tribunal’.

If an employee disagrees with new terms and conditions but doesn’t say or do anything, this may count as agreeing to the changes.

Re-employment on new terms and conditions

Employers may, as a last resort, end a contract and re-employ someone on new terms and conditions.

Employers who are dismissing employees must follow the legally required:

redundancy procedure in England, Wales and Scotland
statutory minimum dismissal in Northern Ireland
If an employer does dismiss and re-employ someone, they may be able to take a case to a tribunal and claim:

breach of contract
unfair dismissal
Breach of contract claims

If an employee claims breach of contract and they can’t solve things informally with their employer, they may be able to take their case to a civil court or an employment tribunal (or an industrial tribunal in Northern Ireland).

Their employer may be able to make a counter-claim.

Claims and counter-claims can only go to a tribunal if they:

are related to an employment contract issue
still haven’t been solved when the employee ends their employment
The claim or counter-claim can’t be related to a personal injury, or certain types of contract term like intellectual property rights.

Time limits

Usually, employees must make a claim to a tribunal within 3 months of ending their employment. The employer gets 6 weeks from receiving a copy of the claim to decide whether to make a counter-claim.

Compensation limits

If the tribunal agrees with the employee’s claim, they may award compensation. This can only be for financial loss (eg non-payment of wages), up to a maximum of £25,000.

Part 2
Making changes
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