Covid – 19 Employment News Update (5/6/2020)

Changes to Terms and Conditions

There are many reasons why a business would seek to vary the terms of someone’s contract of employment. In the light of the current pandemic and  economic times, the most likely changes that an organisation would be seeking are:

• reduction in rates of pay
• reduction in hours
• agreement to unpaid leave (or “lay off”)
• change to the standard hour pattern, perhaps because of safety concerns, or in order to bring staff back utilising the “flexible furlough” scheme.

It is important not to simply alter the terms of a contract of employment without discussing it with the employee, even if your contract states that variations can be made to it. Whilst this clause may assist with defending a breach of contract claim, acting in this way could still breach the implied term of mutual trust and confidence and potentially give rise to a claim for constructive unfair dismissal.

When making a change to the contract that is potentially negative to the employee, it is important to be prepared. If you are seeking to instigate a pay cut, for example, you will know that the individual is likely to be upset about this and will not want to accept it willingly.

If the individual will not consent to the change to the contract, there is a decision to be made. The individual’s right is to continue with their contract under the terms they had before, and it may be that the business decides it can take that approach. However, if there is a genuine need to make the change and the organisation can demonstrate the business case in doing so, it would be time to move towards a “dismissal and re-engagement” process.

This process involves consultation meetings with the concerning employees, initially at first still with the intention of getting their consent. It may be that as part of this that other options can be considered too. During this process, the employee should be notified that dismissal is a possible outcome if agreement cannot be reached, and the usual considerations under the ACAS Code apply. If there is no agreement from the employee and the variation is the only option, then the business can, dismiss on notice and offer re-engagement (if they wish) on the new terms.

This would be a dismissal and so it is important to do it correctly to avoid the risk of a claim for unfair dismissal following.  It is important to be mindful of the numbers affected in such a process – if there is a chance you may end up dismissing and re-engaging 20 or more in a 90 day period then collective consultation obligations will be invoked.

Further advice

Varying contracts of employment can be a complex issue, and it is very important to take the right measures and process to avoid costly Employment Tribunal Claims.  For more advice and assistance with varying contracts of employment, please get in touch with our Employment Law Solicitor Sasha Brine by calling 07475069698.