Ask the Expert: Changing terms and conditions of employment

Practices are becoming more financially aware in this current climate and one area which has been raised recently by MDDUS members is how to change employees’ terms and conditions.

Practices are becoming more financially aware in this current climate and one area which has been raised recently by MDDUS members is how to change employees’ terms and conditions.

In many situations, practices feel that certain benefits, such as enhanced occupational sick pay, is having a detrimental effect on their resources. So is it possible to change current employees’ terms if there is a sound business reason?

It is very difficult, but not impossible, for an employer to alter an employee’s terms and conditions of employment. Like all legally binding contracts, the terms of an employment contract can only be altered if both parties agree to the changes.

The terms of a contract are the rights and obligations which bind the parties together and should be given within eight weeks of the employee commencing employment.

In order to change a term of an existing contract of employment, consultation and agreement needs to take place. Employees should be fully consulted and it should be explained why the change is needed.

Employees need to know that there is no ‘hidden agenda’ and that the reason for the change is due to genuine business reasons. It is important to listen to the employees’ views, discuss the reasons why they are not keen to change and any concerns they have.

When a full and frank discussion has taken place, this may be enough to create the right environment for agreement to be reached. If employees agree to any changes to their terms, this should be confirmed in writing within a month of the change taking effect. The employee should then sign and return a copy of the letter to indicate their acceptance.

Unfortunately, in reality, employees are unlikely to readily accept any changes and it may then be the case that the practice needs to consider imposing the changes. This may lead to a potential breach of contract claim if the change is deemed to be fundamental.

A fundamental term will include such aspects as pay, hours, contractual sick pay and holiday entitlement. There may also be a risk that, if they feel the practice has acted unreasonably and they feel they cannot reasonably be expected to continue working, employees may decide to leave their employment and raise a constructive dismissal claim (if they have over a year’s service).

Another option available if agreement cannot be reached is to terminate the original contract, giving the proper notice, and offer the employee re-engagement under a new contract that includes the revised terms. In this situation there will be no breach of contract but the termination of the old contract will be regarded as a dismissal and will therefore be open to a claim of unfair dismissal, again if the employee has over a year’s service.

When a practice terminates the old contract and offers a new one, it is essential that the matter is handled correctly. When considering whether a dismissal has been fair, some of the aspects that an employment tribunal would look at include:

• The business reasons for the change

• The employee’s reasons for objecting

• If any alternatives to dismissal were considered

• Has a fair procedure been followed?

• Have majority of other employees accepted the change?

• The benefit to employer versus the adverse impact on the employee

Another option a practice can consider is to retain the terms of its current staff but to offer any new employees different terms on joining. Take caution, however, by having different terms in relation to the Equal Pay act and there is also potential for problems amongst employees if they discover they are on lesser terms than colleagues. Also from a discrimination point of view, you may wish to ensure certain groups of people are not disadvantaged.