Whether it’s exploring cost savings, responding to local lockdowns or ensuring your contracts are flexible enough to deal with the ever-changing ways of working – there are lots of reasons why you may want to make changes to contracts.
We’ve set out below our thoughts on the options available to employers when making changes to contractual terms.
Get agreement/ negotiate – asking employees to expressly agree to a change (or giving them something in return for agreeing) carries the least risk – but in practice, it can be tricky to achieve!
Flexibility clause – check whether you have a clause within your contract giving you the right to make certain changes (for example, a mobility clause allowing you to change their place of work). Approach this option with caution – changes under a flexibility clause need to be reasonable (and usually minor) otherwise employees could argue you’ve exercised the clause unreasonably and bring claims for breach of contract, or even that you’ve given them no option but to resign and claim constructive dismissal.
Argue implied agreement – if you don’t get agreement or you don’t want to ask for agreement, you could try to make the change and then argue that employees have accepted the new terms through their continued employment if they don’t challenge it. You should always take advice on this approach, as successfully arguing implied agreement depends on the type of contractual clause you’re changing.
‘Fire and rehire’ – if, after consultation, you’re unable to reach agreement about the proposed change, you could terminate and offer to re-engage on the new contract terms. However, this is a somewhat ‘nuclear approach’ as employees with two or more years’ service could bring claims for unfair dismissal. For these reasons, it should generally be a last resort.
There’s lots to consider when making changes to contracts; for example, whether there are contractual terms contained in other agreements, such as a collective agreement with a trade union and whether any terms are protected under TUPE. Get in touch if you’d like to discuss changing terms with our expert employment lawyers.