How do you Change a Contract Legally?
30 March 2016
Employers frequently wish to make changes to the contracts of their employees. Often these changes are favourable, such as the introduction of a bonus scheme, and it is highly unlikely that staff will dissent if changes of this nature are proposed! However, companies may decide to make changes employees are less willing to consent to – often in response to business demands. If employees refuse to agree to a change, what options are open to the employer?
The first option is to simply impose the change unilaterally. This would amount to a breach of contract and is not something we recommend! Such a breach could potentially lead to an employee resigning and bringing a claim for constructive dismissal.
The second option is to dismiss the employees from their previous contract of employment and then to immediately offer re-engagement on the new terms. Even if the employer offers continued employment on the revised terms, a dismissal has still taken place and therefore there is the potential for unfair dismissal claims. Whether these claims may succeed will depend upon a variety of factors, including the extent of any consultation and how sound the business is reason for the dismissal.
The third option, and the option we would recommend, is to continue to seek agreement from the employees. Offering an additional benefit (this could be financial, but doesn’t have to be) in return for a detrimental change is often an effective way of securing agreement. Not only does this option avoid the potential claims that the first two options could bring, but it is also far less likely to have a disruptive and demoralising effect on your workforce.
At Alpha, we have a vast experience in providing bespoke, practical advice on HR and employment law issues. If you would like to have Alpha on your side, please feel free to contact us.
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