In the United Kingdom, employment terms are fundamental to the relationship between employers and employees. Whether due to economic pressures, organisational restructuring, or shifts in operational strategy, employers may find themselves needing to alter the terms of their employees’ contracts. However, such changes come with significant legal implications.
What Are Employment Terms?
Employment terms outline the agreed-upon conditions of the working relationship between an employer and an employee. They can include explicit aspects, such as salary, working hours, job responsibilities, and place of work, as well as implied terms like mutual trust and confidence. Employment terms are typically set out in the employment contract and the written statement of particulars, which UK law requires employers to provide to all employees from day one of employment.
Express terms are those explicitly stated, such as salary or holiday entitlement, while implied terms may include unwritten understandings, like a safe working environment. Both types of terms form a binding agreement between the employer and employee. Changes to these terms must be approached with care to avoid breaching contractual obligations, as doing so can expose employers to legal risks.
Legal Framework Governing Changes to Employment Terms
UK employment law provides a robust framework to protect employees from unfair changes to their terms of employment. Key legislation includes the Employment Rights Act 1996, which governs many aspects of the employer-employee relationship, and the Equality Act 2010, which ensures that changes do not discriminate against employees based on protected characteristics.
Employers also need to consider implied terms of the employment contract. The implied duty of mutual trust and confidence means employers cannot unreasonably impose changes without consulting employees. Additionally, employees have the right to receive written notice of any changes to their terms, ensuring transparency and compliance with legal requirements. Failing to adhere to these rules can result in claims of breach of contract, constructive dismissal, or unlawful deductions from wages.
Common Reasons for Changing Employment Terms
There are several reasons why an employer might seek to change an employee’s terms of employment. Economic pressures, such as rising costs or reduced revenue, may lead to pay cuts or altered working hours. Employers might also need to adjust terms due to operational changes, such as relocating to a new office or introducing shift work to meet customer demand.
Other scenarios include adapting roles to incorporate new responsibilities, updating policies to comply with legislative changes, or restructuring during a merger or acquisition. While these reasons are often valid from a business perspective, it is crucial for employers to communicate these drivers clearly to employees. This transparency not only builds trust but also reduces the likelihood of disputes.
The Importance of Consultation and Agreement
Under UK law, employers must consult with employees before making changes to their terms of employment. Consultation involves informing employees of the proposed changes, explaining the reasons behind them, and seeking their feedback. This process is not only a legal obligation but also an opportunity to foster goodwill and minimise resistance.
For workplaces with recognised trade unions or employee representatives, consultation should involve these parties. Employers are required to negotiate in good faith, and failure to do so can lead to claims of unfair treatment or constructive dismissal. Achieving employee agreement is paramount, as imposing changes without consent can amount to a breach of contract. Written confirmation of any agreed changes should be provided to ensure clarity and avoid future disputes.
Making Changes Lawfully
To make changes lawfully, employers must follow a clear, structured process. The first step is open communication: employees should be informed about why changes are necessary and how they will be implemented. Employers should invite feedback, showing a willingness to adapt their plans where feasible.
If employees agree to the changes, it is essential to document this agreement in writing, issuing updated contracts or written statements. Where flexibility clauses exist within the contract, employers may have some leeway to implement changes. However, such clauses must be used cautiously and reasonably to avoid claims of unfair treatment. For employees who refuse the changes, options include negotiation, mediation, or, as a last resort, dismissal and re-engagement on new terms, though this carries significant legal and reputational risks.
Risks of Unlawful Changes
Imposing changes without employee consent exposes employers to several legal risks. One common issue is unlawful deduction of wages, where pay is reduced without agreement. Similarly, making unilateral changes can lead to breach of contract claims. For example, altering an employee’s duties or working hours without their consent may fundamentally breach the employment agreement.
Employees who feel forced to accept detrimental changes might resign and claim constructive dismissal, arguing that the employer’s actions made their position untenable. Discrimination claims can also arise if changes disproportionately affect certain groups, such as women, disabled employees, or older workers. The financial and reputational costs of defending tribunal claims can be significant, underscoring the importance of following proper procedures.
Special Considerations
Certain industries or scenarios require additional considerations. For instance, public sector employers may need to follow specific statutory procedures, while unionised workplaces often involve collective bargaining agreements. Employers should also be mindful of data protection regulations when handling employee consultations, ensuring that personal data is processed in compliance with the UK GDPR.
During redundancy processes, changes to employment terms are often necessary but must follow strict legal guidelines. Employers must consult affected employees and offer alternatives where possible. In all cases, seeking legal advice can help employers navigate the complexities of these situations.
Best Practices for Employers
To minimise legal risks, employers should adopt proactive strategies. Regularly reviewing employment contracts ensures they remain fit for purpose and include relevant flexibility clauses. Building trust with employees through open communication and transparency is equally important, as employees are more likely to accept changes if they understand the rationale behind them.
When considering significant changes, seeking legal advice early in the process can provide clarity and guidance. Maintaining detailed records of consultations and agreements is essential to demonstrate compliance if disputes arise. Employers should also provide training to managers on handling sensitive discussions to ensure consistency and fairness.
Final Thoughts on Legal Implications of Changing Employment Terms
Changing employment terms is a complex process that requires careful planning and adherence to UK employment law. Employers must balance their business needs with their legal obligations, ensuring that employees are consulted and treated fairly. By following best practices and seeking agreement wherever possible, employers can protect themselves from legal risks while maintaining positive workplace relationships.
Need guidance on the legal implications of changing employment terms? Rubric Law’s experienced solicitors are here to help.
Contact us today for tailored advice and practical support to protect your business and ensure compliance.
