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Changing Employment Contracts- What Can you change and when do you need to consult?

I often get emails to the HR helpline from Practice Managers who want to make changes like aligning holiday entitlements, sickness policies or even just changing rotas around.

But what can/can’t you change? And is there a way of changing something that is in a contract?

The general rule of thumb is that a contract cannot be changed in any way without the agreement of the employee and by following a consultation process. It is likely that most aspects of employment are mentioned in the contract, such as hours of work. However, there are sometimes changes in the business that mean a contractual change needs to be made.

Flexibility Clauses 

Many contracts contain ‘flexibility clauses’ that basically state that the employer has a right to change terms and conditions of the contract without needing the consent of the employee. This sounds like the ideal answer for employers, but it comes with definite risks.

Having a specific flexibility clause around a specific aspect of a contract, such as Job Role/ Responsibilities, is likely to be upheld by a tribunal, but a more generic “Variation Clause” that states that terms and conditions may be changed by the business, is not as likely to be upheld. For example, if a contract states an employee works 40 hours a week, if an employer tried to change those to 30 hours based purely on the Variation Clause, the employee would still be likely to have a claim. The business would still need to enter a consultation period and seek the employee’s agreement to make the changes.

Policies and Procedures

Policies and procedures contained within a company handbook are not likely to be contractual. Therefore implementing a new policy is usually perfectly acceptable, and the best advice is to ensure all staff members are aware of the new policy and accepting of the terms.

This can get a little more complicated - sick pay for example, is likely to be mentioned in the employees’ contract, and as such is a contractual term, therefore this cannot be changed. However, the policy could be updated to modify the Practice’s way of managing sickness, such as by adding trigger points. This does not change anything in the employees’ contract but would change the sickness policy. It is advisable to write in certain policies and procedures that they are not contractual.

Making Changes to Contractual Terms

So what is the final option, if the change you need to make is certainly contractual and there is no variation clause?

The only option is to get the employee’s agreement through a consultation process. A consultation process is what employers must do when making changes that could ultimately end in dismissals, this is no different when changing contractual terms.

If there are less than 20 employees, there is no need for a set period of time, and no necessary need for trade union or employee representatives. The best idea is to arrange a meeting to inform the team of the change that needs to be made and why, before then meeting with each individual to discuss any concerns they might have.

Ideally, most employees will be understanding and agree to the change. This should be confirmed in writing and signed by both parties.

If there are some of your employees that don’t agree, there are a few options;

  • Try to negotiate with the employee - is there a “you scratch my back, I'll scratch yours” approach that might work? Could working hours be amended, for example?
  • Go ahead and make the changes. If you make a unilateral contractual change, even following a period of consultation, you do risk the employee resigning and claiming unfair constructive dismissal.
  • Dismiss the employee and immediately re-engage them on their new terms and conditions. This may sound daunting, but is actually less risky than simply making the change unilaterally. It is not, however without some level of risk.

 

Contracts are put in place to protect both the employee and the employer and it is only right that it is not a straight forward exercise to make big changes that could potentially seriously impact an employee. If you would like more help with a situation you are in, FPM Members can contact our HR Specialist on hrhelp@firstpracticemanagement.co.uk

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