Changing terms and conditions of employment
Changing terms and conditions of employment is a complex area and one which can cause problems in balancing the needs of the business and the rights of staff. Fortunately, our employment law experts are on hand to provide advice for employers and mitigate risk.
Variation by Agreement
The ideal way of making contractual changes is with employee consent as there is unlikely to be any dispute in the future. Unless stated otherwise, variations can be made orally or in writing, but written agreements are essential in order to minimise any later dispute as to what was agreed.
Employers should issue the revised contract or variation letter and ask the employee to sign and return a copy containing a declaration that they have read, understood and agree to the change in terms and conditions. An employee continuing to work without objecting to any new or revised terms may suffice as consent to the revised terms (i.e. implied agreement). Relying on an employee’s subsequent conduct to signify agreement to a contractual change is not recommended.
Any change in the contract to the employee’s detriment must be supported by consideration (i.e. monetary or other benefit) – a necessary legal requirement for a variation of contract. Consideration is not required in Scotland.
Some types of consideration are obvious: a pay rise, bonus or extra holiday. It is also arguable that continuing to work without objecting to the new terms will suffice as consideration. However, something more than this will be required where the employer wishes to change or introduce restrictive covenants and some designated consideration will be required such as a pay rise or promotion.
Salary sacrifice arrangements, whereby an employee gives up the right to receive part of their cash salary in return for the employer’s agreement to provide a non-cash benefit (e.g. workplace nursery vouchers or extra pension contributions) are a good example of consideration being given for a change in terms of employment.
Problems can arise when an employee’s terms and conditions of employment are contained in a collective agreement negotiated between an employer and a trade union.
If the employer and union negotiate a change with which an employee does not agree the employee may want to claim that they are not bound by the changes. Their legal position will then depend on whether the collective agreement was formally incorporated into his employment contract and if so whether it was incorporated ‘as from time to time’ in force.
Once a term in a collective agreement has become incorporated into an individual’s contract, it remains incorporated even if the agreement itself is terminated.
How can we help?
At Davenport Solicitors we can provide expert advice on changing the terms and conditions of employment. If you have any concerns over what is required and ideal for your business, please contact our legal team here.