Ah, hi, I'm Mike Hibbs, a partner in the employment team here at Shakespeare Meissner. Welcome to today's webinar On Changing Terms and Conditions of Employment.
Before we start, just a few points on how this online session will work.
On your screens, you'll see a Q and A icon. Please use this to ask your questions. We will respond to all these directly after the session.
You don't need me to tell you that we're living in challenging times as we seek to find what our CEO calls the new abnormal.
But many businesses are in a position where they need to change employees, terms, and conditions of employment in their contracts.
That's because they can no longer afford to be as generous.
Maybe the work available is different, The location of the work is different. They want to insert layoff and short time provisions into the contract. There are changes to holidays, all those sorts of things.
And there are probably a whole lot more that I just haven't mentioned, but how can you do this when employees simply refuse?
This session will give you some practical suggestions on this and remind you of your statutory duties.
I'll look to help you with timing and approach.
So the starting point is whether the term you're proposing to change is contractual.
Many documents contain terms, which are simply policy. And although others, which are called policies, are actually contractual. So do check first. Clearly, such things as wages and hours of work are obviously going to be contractual terms.
Then how to look through your contracts, to see if you have a specific flexibility clause.
Usual areas where those sorts of clauses apply are where someone works, where they, what they do, and their hours of work.
There are two ways in which such changes may be restricted in their implementation.
The courts will give a restrictive interpretation, of course, and implied terms may stop their use in some circumstances.
So ambiguities are generally interpreted in favor of employees. For example, where employers have tried to change shift patterns and in doing so extended hours an express agreement has been necessary.
The courts may imply terms of reasonable notice, for example, in relation to immobility clause.
And sometimes, not just specific flexibility clauses, but there are general flexibility clauses.
Those tend rarely to be allowed to be enforced because they need to be really clear and precise. And because they only generally will affect administrative things, such as who the health care provider is or something of that sort.
So it's always wise to take advice before imposing xpress terms.
So what are the options that are available to you? Well, first of all, what you would like most of all is the express agreement of the employees, clearly the ideal circumstance, is to get that consent to any changes.
To do so, they must act voluntarily and not subject to duress and actually, there's no clear authority to decide where the threatening to dismiss.
If changes are not agreed to amounts to the uterus, although on the whole, it tends to go through without that being challenged.
Oral agreement is sufficient, but it's better to get written confirmation, especially, if the term is a reduction in pay.
There also needs to be something in exchange. What lawyers call consideration.
Some benefit to the employee in agreeing to that change taking place.
And this is usually continued employment, but this will be much more difficult if you want to impose some restrictions on the employee where they to leave.
Those sorts of changes often happen at salary review or promotion time.
So do check also the contract just to whether the changes need to be in writing or not.
What about collective agreements with the trade unions? They usually incorporated into the individual contracts of the employees entitling the trade unions to agree changes on behalf of all employees in the representative group.
There may be implied agreements if employees continue to work, after the new terms are put in place, but that tends to be the case. Only if the imposed change has immediate practical effect, So if it's a change which is going to take months and months to come into effect or even years, then it will be an opportunity for them to protest at a much later stage.
So what about a unilateral change without any agreements at all? Well, clearly, that would be a breach of contract, but in those circumstances, what would the employee do? Well, they could do a number of things. First of all, they could simply agree and carry on working, of course. Secondly, they could work under protest and bring a claim for breach of contract, or for unlawful deduction from wages if that was the nature of the change.
What's known as standing ensuing.
And if the change is a very big one, then the employer may be deemed to have dismissed the employee. They may have a claim for unfair dismissal.
Also, the employee could if the breach goes to the heart of the contract, leave and claim constructive dismissal.
The employee could refuse to work under the new terms, or if a new contract is offered, the employee could simply claim unfair dismissal from the old one and continue to work under the new one.
What most employers do if some or all of the employees will not consent, is to terminate contracts and re-engage.
This will involve giving notice under contract to avoid a wrongful dismissal claim and an offer of the new terms on termination will still be a dismissal, but generally, employees will only claim, as if they didn't want to work on the new terms.
Employers will have the defense that they've acted reasonable in.
And that rely on the what's called some other substantial reason as being potentially fer reason for the dismissal.
So sound business reasons will be needed. And that means sound business reasons for a reasonable employer. Tribunals are not going to or shouldn't make their own minds as to whether it's reasonable or not. It's for you to decide whether this is an appropriate business reason, so long as you're behaving reasonably, then that will be satisfactory.
There'll be a balancing act, looking at the employers' motives, the employee's reasons for rejection, whether full explanation have been given to the employees of the effect of those changes, whether alternatives have been considered, and whether most tellingly, a majority of the employees, have accepted the changes.
It may also be possible to show that by refusing the new terms, the employee has failed to mitigate that loss.
So how do you set up a fair procedure and how should you consult?
Well, many employees are surprised to discover that they need to consult collectively. This is because of the definition of redundancy, which is dismissal for a reason, not related to the individual contract.
So, as usual, it's triggered by a proposal to dismiss more than 20 employees and an establishment within a 90 day period.
If you don't recognize a Trade Union, then you'll have to attempt to elect representatives.
Since failure to comply could lead to a Protective Award of up to 90 Days, Gregg's pay per affected employee, and, of course, if you don't follow the Child one form, with the Secretary of State, a criminal offenses committed, then that sort of decision is crucial.
Many employers, who don't want to collectively consult, take the gamble to consult employees widely, but not representatives on the basis that if they get all, but 19, in one establishment to agree, then, they will not need to collectively consult.
If the gamble fails, then, they will need to take 30 or 45 days to consult with the employee so, they will simply have delayed enforcement of the new changes.
What about individual consultation? Well, you will need in any event to consult with the employees individually, even if not with their representatives. And, key to that stage is deciding which of the changes you propose are important. How to set out a clear business reason, and how to persuade groups of employees or individual influences, to accept the changes.
In these current time, Zoom calls or team calls will help.
It certainly easier to do a video call, that phone call, and you can then see the reaction to the proposals, and adjust your tone or your words to suit.
Whilst I certainly do not advise rushing this stage, it's important to keep discussions moving. Because so often, people can become entrenched in an early and instinctive reaction, rather than considering the value to the business of what's proposed and the effect the change will have on their long-term security of employment.
Many people will be desperate to keep their jobs in the current economic circumstances.
So a couple of the pitfalls which may not immediately spring to your minds. First of all, ... the transfer of undertakings regulations.
If you have employees who've transferred undocked UP from another employer, they will have stronger protection to their terms and conditions because the only way in which changes can take place is if you have an economic, technical or organizational reason for making the changes which entails changes in the workforce.
The general lesson from this is that in such circumstances it's helpful to change terms and conditions at the same time, as making redundancies, businesses have lost out in arguments with employees at tribunal by leaving the changes to terms and conditions until after redundancies have been completed and then being unable to comply with the entails changes in the workforce part of the itto definition.
And the second point is Section four of the Employment Rights Act.
Employers need to provide a written statement of all the changes.
Now, what's easy to overlook that, even though you would have undoubtedly been going to do that, is that you now need to comply with the April changes to the law. Which means that all those extra terms and conditions you may not have put in the past, which are now putting into contracts for your new employees, will also apply to all those for whom changes have been made to that contract of employment.
So, some practical tips, this is a selling exercise.
So first of all, find those things which make employees more inclined to accept, list them out, if it helps.
Secondly, explain what is often the lesser of two evils, the changes, or the job losses, but don't suggest that you've made your mind up because obviously that might trigger some collective consultation if you're not planning to do it.
Then thirdly consider whether changes could be staggered.
Not all brought in at once, Sometimes employees finding that find the timing more disconcerting than the change, time to plan, may help them, as well as you potentially.
Before, they, can, you offer any incentive, not necessarily suggesting a financial incentive, although that sometimes that helps, but maybe you could find something else to sweeten the pill. Maybe an additional benefit or something of that sort.
Fifth, they listened to the employees.
Often, if they feel that they're being listened to, they will be more ready to agree.
So, in conclusion, set a strategy and be prepared to move on it.
Make sure that you get your communications right, both in substance and in tone.
See, how many agree and then decide whether you want to press on with the rest, by dismissal and re-engagement, and, obviously, take advice.
That brings us to the end of this webinar. I hope you found it useful and relevant to the current circumstances. If there's something you'd like further information on, or you have a specific query on, any matter that you would like to discuss, then please do let me know, and I'll be happy to help.
In the meantime, we've launched a free Helpline giving you direct access to a senior team of experts for free legal guidance over a 20 minute phone call or video call.
Details are on the screen if you'd like to Bushing Session.
Finally, do please visit S H M a on demand pages to access recordings of all webinars and SH MA talks.
Please join in our conversation on LinkedIn and Twitter.
Thank you for joining.