Varying Contracts Of Employment The General Rule Of Thumb
The starting point with varying employment contracts is a simple common sense stance: no party to a contract can unilaterally vary a contract i.e. a contract is agreed between two parties and no one party has an individual or separate right to make that change. It is often the case that an employer will want to vary a contract, so how can this be done?
Express Variation Clauses:
Some contracts will have a clause in them that says that a party, usually an employer, can vary the contract at any time, by giving notice to the employee. But can a contract with this clause agreed by both parties always be relied upon? Unfortunately not.
Case law has been toing and froing on this point for a few years. The upshot is that for it to be capable of being relied upon, the clause must make it clear who can vary and in what particular circumstances. Generally speaking, if the variation is not detrimental to the employee, the tribunals will allow it. Detrimental changes are unlikely to be allowed. Where a change is allegedly detrimental, it will be looked at subjectively from the employee’s perspective. This was upheld as recently as last year in the case of Sparks v Department of Transport.
If an employer makes a change to the contract and the employee appears to be working to those terms, without complaint, that could amount to an agreed acceptance of that change. Tribunals will look at this somewhat cautiously though, as they will want to satisfy themselves that the change has been accepted by the employee. They will consider the period of time passed and will, therefore, be reluctant to agree that an “immediate change” has been understood and agreed by the Employee.
If the employee makes it clear that they don’t accept the change and is working “under protest” or “reserving their rights” then the change has not been accepted, despite the employee working under the new terms. In a situation like this, it could be a breach of contract and the employee could resign and claim constructive dismissal. However, if the employee protests and doesn’t resign within a reasonable period of time, the employee could be deemed as having accepted the change after all.
This can arise in two ways. An employer could ask the employee outright to agree to a change and if they sign a document to say that they are happy to do this then the change is accepted. The other way is where there may be difficulty in getting outright consent to the change and then it is necessary to consult with the employee in relation to the change.
Consultation may mean that an employee agrees to the change at the end of the consultation process and signs a document to that effect. Clearly this would be the desired outcome. What if the employee doesn’t agree? Well, they could end up impliedly agreeing as detailed above, but if not, what can the employer do? The answer is the last resort and one the employer should absolutely take legal advice on before implementing. It may be possible to terminate the employee’s contract and reengage them on the new terms. This dismissal MUST be fair and the notice period will need to be paid in lieu or worked and all other contractual benefits owing on termination, will need to be settled. Therefore an employer must have a fair reason to dismiss.
If you have any questions on this, or are going through a process, then Talk To Tollers. We’re HeRe For You.