When can you vary Employment Contract Terms?

One of the most common questions I am asked by Employers is, “Can I vary the terms of my employee’s contract and how?”.

If I had to answer with one word it would be ‘no’. However, there are various options available to you if your business really needs to make amendments.

Roughly in ascending order of risk, I set these out below:

  1. Agreement

 Have a discussion with your employee about the change you want to make. You might want to  change the employee’s location of work and it might be more convenient for them if, for instance, this makes the school run easier for them. In this case, they may agree and both parties can happily continue with the new change. (To be safe, as with any agreement, make sure it’s in writing to protect both parties going forward).

Remember, your employee cannot be pressured into agreeing.  In other words,  your employee should not be made to feel that they will lose their job if they do not agree; they should be informed that they do not have to agree if they do not want to.

  1. Use a pre-existing contractual right

You might have a term in the employee’s contract which allows you, the employer, to make unilateral changes to certain aspects of the contract without the employee’s explicit consent. Essentially, they will have been deemed to have consented to the change already when signing the contract.

Beware with this method. Case law has shown us that even where a contract term provides this right, it must be used reasonably. For instance, if the term states that, “the Employer has the right to change the place of work from time to time as necessary” , you could be at on shaky ground if you give 6 days notice for an employee to move across the country (as was the case in United Bank v Akhtar [1989] in which the employee brought a successful claim for constructive dismissal against their employer.

The judgment on whether or not a change is reasonable, even under a contractual right, will take into account the employee’s personal situation, whether that be their living or financial situation or their family’s needs.  In the above case, the employee’s wife was very ill making any house move difficult as well as longer days due to commuting to be prohibitive to her wellbeing.

As a general rule of thumb however, the more senior an employee is, the more likely they will be expected to make bigger sacrifices for the workplace, such as relocation if required.

  1. Implication

It could be that by omitting to include a detail in the employment contract, such as a place of work, you can argue that there is an implied term that the employee is willing to move to different locations as required or directed. This again must be used with much caution and must be reasonable. If the employee had always worked within a certain distance from their home and you suddenly required them to relocate to much further away then this would likely be deemed to be unreasonable and the employee could make a claim against you.

If you were asking an employee who had regularly moved around to similarly distanced but different locations, you may be within your right to insist such change again, without attracting a claim.

  1. Fire and Re-Hire

This method is particularly dangerous although it is technically lawful. If you let an employee go while offering them a new and different employment contract, they might accept and you can continue on the new terms. However, if they do not agree, then they would likely have a claim for unfair dismissal against you. Even if they do agree, this can open up a can of worms in relation to whether they were pressured into doing so for fear of losing their job.

Just because employees continue to work under new changes imposed by you as the employer, they can still bring a claim against you as the Employment Tribunal deems it reasonable that many people will not be able to face the risk of ceasing to bring in an income.

Ultimately, if you are making a change, you will need to be able to demonstrate that the employee has consented to it at some stage during their employment. The more recent the better, the more evidence (whether it is in writing or by conduct) the better and the more reasonable the change, the better. Further, before making changes you should consider how much the business really needs the change to be implemented. The greater the case for the business need, the more likely you are going to be able to argue that the change is lawful.

To revert to the original question, ““Can I vary the terms of my employee’s contract?”, my answer is still no. But, if you have to, getting explicit agreement in writing will always be the best way.

(It should be noted that if a change in ownership of the business has occurred in recent months or years, different and stricter rules may apply!)

If you need help navigating the above issue or drafting terms of employment or variations to terms, please don’t hesitate to drop me an email on louise.harcombe@rudlingsllp.co.uk .

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