Changing Terms of Employment

Key Points

  • Adverse (to the employee) changes in existing terms of employment are usually made in one of three ways: by agreement with the employee(s), possibly with a cash "sweetener"; by unilateral variation of contract terms (or of works rules applied by the contracts); or by giving required notice to terminate existing contracts and offering new contracts on new terms.
  • Choices open to an employee are: agree with the employer's proposals; reject them and quit, perhaps claiming constructive dismissal , or reject them but continue to work on a without prejudice basis (i.e. "under protest") on the new terms, reserving all rights, negotiating if possible and ultimately bringing court or Tribunal proceedings if agreement cannot be reached.
  • The basic rule is that a unilateral change to terms and conditions of employment made by an employer without agreement of the employee is generally a breach of contract, in serious cases giving the employee the right to resign and claim constructive dismissal.
  • To avoid the risk of a successful unfair dismissal claim employers must be able to demonstrate a substantively fair reason for making the change and must be careful to carry out appropriate procedures.
  • Even a clause agreed by an employee giving the employer the right to make unilateral changes will not give the employer a total carte blanche.
  • Changes in terms of employment must be notified to employees within one month, or sometimes sooner if overseas work is involved . 
  • It is essential that employees are fully aware of, and accept, any detrimental changes to their terms of employment if the changes are to be legally binding.
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