Practical reasons for doing so might include restructuring within a business, changes of working hours or location or very commonly to bring all employees onto a standardised contract. For larger organisations there may be collective bargaining agreements and union representation which simplify the process, but this is unusual for smaller employers or for more senior/managerial staff.
When changing T&Cs, there are several options available to employers:
Option 1 – the “nuclear option” of simply pushing through the changes to employment contracts without employees consent (as the Government is trying to do with doctors). This is particularly dangerous because it gives employees the right to claim they have been dismissed and bring a constructive dismissal claim to the employment tribunal. The employer can claim that the business needed to change the terms of the contract of employment to survive and compete in the market and it will depend on the circumstances as to whether this is accepted or not. A serious practical problem can also arise if the employees refuse to return to work.
Option 2 – the usual approach of asking employees to sign new employment contracts. This is the approach that we would normally recommend taking, in conjunction with a communication programme with employees to obtain their buy-in to the changes. If employees can be persuaded to agree in this way the process will happen more quickly and opposition is likely to be limited. There are still risks, as there will nearly always be employees who don’t return their new contracts signed, or give them back unsigned and hope the employer doesn’t notice. When a problem later occurs, these employees will often claim they didn’t agree to the new contract and were still working under their original signed contract, so making sure signed contracts have been received is very important. One way round this is to combine the changes in T&C’s with other pay rises or bonuses which will incentivise the employee to return the contract. However, if an employee has been sent a new contract and continues to work without any apparent objection for a significant period of time then an employer may claim that the employee has accepted the new changes by his conduct, and thus forfeited any right to bring a claim against the employer.
Option 3 – the fire and re-hire approach. In some extreme circumstances where great changes are required, it may be appropriate for employers to dismiss all of their employees and then re-hire all or some of them into new roles. This process is not at all straightforward, and shouldn’t be attempted without taking advice first. For example, if it involves more than 20 employees, collective redundancy consultation will almost certainly be required and failure to do so could result in a 90 day protective award per employee issued by a Tribunal. There is also the significant risk of an unfair dismissal claims by employees who do not wish to be re-hired under the new terms, and potential breach of contract claims from those who initially agree.
Backhouse Solicitors are experts in all areas of employment law. If you would like further advice or guidance relating to your individual circumstances please contact our legal team today on 01245 893400 and book a FREE 30 minute consultation.
The Backhouse Solicitors Team