4 key things to remember when changing terms and conditions

Posted in : HR Updates on 23 June 2016
Matthew Hamilton
Think People Consulting
Issues covered:

"Can my employer change my contract?"

It is unsurprising that this question appears as an auto-suggestion in Google search. It is one of the most commonly asked questions by employees and when they hear that their employer intends to make changes, Google is probably the first place they’ll go for advice.

A family member recently sought my advice on this very issue. His employer had been in touch to inform him that he would need to start working weekends immediately! This wasn’t part of his existing terms and conditions and there was no flexibility clause to allow for such a change. My relative believed that there was a business reason for this decision, but this had not been openly discussed with him. In fact, the employer had made no effort to discuss what was happening or what had been proposed at any stage.

As you can imagine, he was angry and frustrated about the whole issue. “How can they do this?” “What can I do about it?” “What are my rights?” were the questions they put to me on the phone. He had been with the employer for years, loved his job and there had never been any issues before.

Anyone reading this will recognise the frustration and consternation in those questions. You don’t need to be a qualified HR professional to see the potential issues the employer is likely to face in the weeks ahead. But does it really need to be that way? More importantly, is there an easier way for an employer to change the status quo, without charging in like a bull in a china shop?

Why change terms?

As an employer you may already see the benefits of having flexibility in your contracts of employment. After all, things change, your organisation changes, the economy changes, the products you produce, services you provide and how you make or deliver these may also change over time. Why then, is it not straight forward when you need to change something in your contracts of employment?

The short answer is trust!; Employees, like most of us, trust that when they agree to something (in this case, the terms of their employment) that the terms of that agreement are going to stay the same and not become a set of ever moving goalposts. As your employment relationship is built on trust, employees rightly expect that their employers will treat that relationship fairly, by honouring those terms. But what happens when there is a genuine need to change things?

A mutually beneficial relationship between the employer and the employee can be a good starting point to any reasonable discussion when contemplating change.

Early, early, consultation

If you believe that there is a genuine reason to change the way staff are employed, it is absolutely crucial that you communicate this change to all staff affected. Starting this process of consultation early gives you more time to manoeuvre, consider options, meet with individual staff and, most importantly, listen to what your employees have to say.

The most effective way of announcing a possible change to terms and conditions is to meet with staff and their representatives in groups. This will allow you to maximise your audience, deliver a cohesive message and reduce the chance for gossip via the ‘organisational grapevine’ (which travels at an alarmingly fast rate!). However, in doing so, remember not to overlook the importance of consultation on a one to one basis and take on board any individual concerns.

Informing your staff representatives or union representatives is also worthwhile. If you can get them involved at an early stage, they are far more likely to support your proposals and work with you. They can also help you to explore alternatives that may allow you to avoid any changes to terms and conditions in the first place.

The business case

During your communication cycle, you will rely heavily on your business case. This must be robust and stand up to scrutiny before you make any announcement for change. Once the genie is out of the bottle it can be difficult to back-track and any fundamental flip-flop may leave your employees wondering about your intentions, or worse, your competence! Your message will be consistent if you have done your homework. Your rationale will be clear, and importantly, your staff will see that there is a clear business need for the change.

Achieving mutual agreement

Any change to an employment contract must be done by mutual consent, which is why consultation is very important. Remember that agreement can take time, and there are various ways to get there.

Look at the specific term you are proposing to change, the impact that it may have on staff (be it time or money) and what that condition means to them. You may be able to offset any impact by increasing another benefit but this will have to be considered carefully, especially if financial reasons are behind a change in the first place.

What is the staff refuse the change?

Ideally, if you can negotiate some form of compensation for the proposed change via a beneficial change in conditions elsewhere in the contract, this will usually help to get negotiations over the line. You may wish to buy out your employees from their existing contracts, by paying notice and asking them to sign the new contract. The final option is a last resort but if there is a strong business case for it, you may consider serving notice to your employees that you will need to terminate their employment and will re-engage them on the new terms and conditions. Both of these avenues involve balancing a risk to the business and the business’ commercial needs. This should only be considered where there is a compelling business case to do so. Ultimately unilateral changes can lead to claims of unfair or constructive dismissal.

Collective Bargaining

Employers with more than 20 staff should also remember that where there is be a failure to reach agreement, Union’s may apply for formal recognition in order to collectively bargain on behalf of employees. This may result in a collective agreement being formed between the recognised Union and the employer. While the process may increase timescales involved and the process will have an emphasis on reaching voluntary agreement, the right to request formal recognition is protected under law. Ultimately any collective agreements that cover employees must be outlined in their contracts of employment.

Flexibility clauses will not save the day, but are a basic foundation for agreeing change

Flexibility clauses are very useful in establishing a joint understanding that you reserve the right to make changes which are required. However, be aware that employment tribunals take a fairly narrow view of any clause granting wide flexibility and care should be taken in the language used in the contract. If you are reviewing your contracts and anticipate changes in the future, introducing reasonable and clear flexibility clauses is considered standard practice and, when related directly to contractual terms, these help facilitate a smoother transition if and when the need arises.

So what do you need to remember?

Step 1: Know your business case

Establish clear and well-researched business reasons why things need to change. If your business case is robust, it will reinforce your position that there is a genuine requirement for change. It will also allow you to respond to challenge without mixing the message.

Step 2: Prepare a communication plan

Whether it is one employee, a small group or an entire workforce, prepare for how you will deliver information about the proposed changes and more importantly what are your timescales in order to consult with everyone involved?

Step 3: Consult and try to seek agreement

Be willing and ready to listen and more importantly take on board, or try out suggestions. Simply repeating the need to move things forward because of a deadline will make you appear rigid, unreasonable and may make things more difficult to get where you want to go.

Step 4: Don’t be deterred

Don’t be deterred at the first sign of resistance. Take and allow time for you and your staff to re-examine the proposal and evaluate how the landscape has changed. Time is also a helpful tool in allowing space for real consideration to take place.

This article is correct at 23/06/2016

The information in this article is provided as part of Legal-Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article.

Matthew Hamilton
Think People Consulting

The main content of this article was provided by Matthew Hamilton. Contact telephone number is 028 9031 0450 or email Matthew.Hamilton@thinkpeople.co.uk

View all articles by Matthew Hamilton