Amending employee contracts: know your entitlements
When your contract of employment says you have the right to amend terms, can you?
Yes, was the initial decision. The employer had a clause in the contract that read:
‘The following paragraphs summarise the main current terms and conditions of your employment. Detailed particulars of conditions of service are to be found in the relevant sections of the HR manual… They are subject to amendment…any significant changes affecting staff in general will be notified by Management’
The employer wanted to amend and reduce the employees’ generous leave and sick pay benefits. The employer began by discussing the changes with the employees, who refused to agree to the changes. After failing to reach an agreement, the employer, thinking they could just rely on the term above, looked to impose the changes without an agreement in place. They had, after all, covered the eventuality in the contract, right?
WRONG, according to the Employment Appeal Tribunal. The first tribunal supported the employer but the Appeal Tribunal reversed the decision and found in favour of the employees.
The reasons for the decision started with the lack of clarity in the contractual clause. The Appeal Tribunal thought that it was too vague and unclear. The Appeal Tribunal criticised the employer because, if you read the clause carefully, it doesn’t actually say who has the right to amend the contract. Rather it simply states ‘they are subject to amendment’. Furthermore there is no mention on the method that would be used. Consequently it was deemed too vague and lacking in detail. Clauses that are designed to be a ‘catch all’ can, and very often do, end up catching nothing as they are not enforceable and entirely ineffective.
When looking at changing and varying contracts of employment, you need to follow some basic principles in every case;
Have good reasons and rationale behind the change you want to impose. You will need evidence to support the change to the contracts you want to make.
Make sure that what you want to change is reasonable. Look at each individual it affects and look at their individual circumstances and how it affects them. For instance, if it is the employees pay you are altering, you must have a detailed look at how will that affect each employee.
Meaningfully discuss the matter with employees. Start with group consultations initially and move onto look at individual employees circumstances. Some employees may benefit from the change, some may not, and the reasonableness can depend on the change and the impact of that change.
Employers have a duty to maintain good relationships with staff and not to breach trust and confidence. Step 3 above should assist maintaining this relationship. Simply telling employees you have the right to change their contract could breach the trust and confidence and incite tribunal claims.
As a general rule, clauses like the above can be relied on only to amend very insignificant and minor changes and certainly not significant changes. Telling your employees that their terms of employment are ‘subject to amendment’ will just not suffice.
Norman and others v National Audit Office UKEAT/0276/14
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