Making changes to contracts of employment

As businesses consider a return to working, many are considering employment contracts and seeking to make changes to suit the new normal, or to save costs.

In situations where employers wish to make changes, it is best to start an open discussion (consultation) with employees. If this is successful it means that employers and employees work together to agree changes and an prevent potential disagreements or legal disputes.

Employers should set out why they need to make a change and what they need to achieve by making a change. Then, during consultation the employer should take time to explain the reason behind making the change, as follows:

• invite employees to talk about their concerns and suggest ideas for alternatives
• listen to employees’ concerns and consider their ideas
• do everything they can to resolve any employee concerns

In turn, the employee is expected to:

• consider the proposed change and reason for the change
• share the views, concerns and any ideas for alternatives with the employerir
• continue to talk to the employer about any concerns
• make sure they have tried all options to reach an agreement

Depending on the proposed change, employers might consider:

• asking for volunteers (if the change might suit some employees more than others)
• offering incentives to employees
• taking on some of the employees’ ideas

Contractual changes must be agreed in writing, within a month of the change taking effect, using a variation letter setting out the change, the date that the change takes effect and the length of time for which the change will be in place (if not a permanent change).

The types of change which might require this approach include changes to:

• the job title
• the job description
• the job location
• pay and contractual benefits
• working hours
• holiday entitlement

If an employer and employee cannot agree a change, it is worth extending the consultation period to try to reach agreement rather than force the change.  If, however, agreement cannot be reached, an employer might decide to dismiss and rehire (‘re-engage’) the same employee under a new contract.

If deciding to dismiss and rehire, the employer must:

• follow a fair dismissal procedure
• give the employee enough notice (statutory notice or what’s in the contract – whichever is longest)
• offer the employee a right of appeal against their dismissal

Changes should not take place until the employee has been fairly dismissed and then rehired under the new contract. The employee keeps continuous service if the new contract starts immediately after the old contract ends.