Varying Employment Contracts: A Legal Overview, Lecture notes of Business

Download Varying Employment Contracts: A Legal Overview and more Lecture notes Business in PDF only on Docsity! VARYING THE TERMS OF AN EMPLOYMENT CONTRACT Set out below are some of the main points employers should consider when looking to make changes to an employee’s terms of employment. When contemplating a variation, each case will need to be considered on its own facts. This information sheet does not constitute legal advice. Should you be unsure as to your rights or obligations you should seek expert advice at the earliest opportunity. Is the change authorised by the Contract of Employment? In some circumstances the contract may in fact allow for the employer to make the necessary change, in which case a formal variation of contract is not required. e.g. mobility clauses regarding the employee’s location of work. However, even if the change is authorised by the contract, the employer still owes the implied term of trust and confidence to the employee, they should therefore ensure they continue to act reasonably and provide the employee with reasonable notice of the changes that will impact them. You must also be sure to check any contractual requirements particularly with regard any notice periods that must be given or any provisions that relate to varying the terms and ensure these are complied with. Changes not authorised by the Contract of Employment If the change is not authorised under the contract, a variation of the contract is required. Consideration To satisfactorily vary a contract there must be some consideration provided to the employee. This may easily be addressed if the employee is receiving some new benefit under the varied terms, in which case the benefit will be the consideration. If the varied terms have an immediate practical effect such as change of working hours or pay the consideration could be the employee’s continued employment. However, if the change will not have effect immediately e.g. change of a notice period you will need to assess carefully what, if any, consideration is being given. How to implement the variation There are a number of options which you can consider when seeking to implement a variation: Gain the employee’s consent (either express or implied) Unsurprisingly this is the most satisfactory outcome. Express consent can be obtained either in writing or verbally. Whilst a verbal agreement is sufficient to vary the terms, you should always seek to obtain signed confirmation from the employee that the varied terms are accepted. Implied consent can be obtained by the employee continuing to work within the terms of the varied contract without raising objection to the new terms. In these cases the employee’s silence can be deemed acceptance of the varied terms. The longer an employee delays in raising an objection the more likely it is the terms will be deemed accepted. Employers must however still be careful as if the varied term does not have an immediate practical effect e.g. a varied notice period, it could be argued that their silence and continued work does not demonstrate agreement to the varied term. Unilaterally impose the variation on employees Whilst you could simply impose the varied terms upon the employees with no consent from them, this route opens up potential claims by employees for breach of contract or constructive dismissal. This is therefore not an advisable approach. Seek to terminate the current contracts and offer re-engagement on new terms. If you are unable to gain the employee’s consent and it is unworkable for the contracts to go unchanged you may have to consider dismissing the employee. In doing so you must be sure to comply with the relevant contractual and statutory notice requirements to avoid a claim for wrongful dismissal. You must also ensure that your actions are reasonable and the dismissal is for one of the permitted “fair reasons”. In such circumstances this will usually be a dismissal for “some other substantial reason”, under this heading a sound business reason may be deemed sufficient to defeat a claim for unfair dismissal, although sometimes “redundancy” is also pleaded.