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Varying an employee’s terms and conditions in your small business.

Varying an employee’s terms and conditions in your small business.

September 15, 2015

Can an employer change an employment contract, and if they do will such changes lead to a claim for breach of contract?

This is one area of employment law that we advise you take advice on before you act.

Importantly we recommend you take advice at the ‘thinking about it stage’ before you have talked to your employee or set the ‘wheels in motion.’

Seeking to vary an employee’s terms and conditions can be fraught with pitfalls and risks and sometimes we will determine with the employer that the change proposed is not worth falling out with the employee over.

3 main areas

The 3 main areas where is can go wrong include:

  1. Failing to understand what constitutes a unilateral change. However justifiable these may be on economic or organisational grounds. Asking a day worker to work nights is an example of a unilateral change.
  2. Failing to understand that clauses you have as discretionary may not hold up in Tribunal. Common examples of this are ‘discretionary bonuses’ always paid, and discretionary sick pay.
  3. Failing to appreciate that existing terms and conditions may have been altered by ‘custom and practice’. For example, you contract may say you must be prepared to work shifts but if you have worked 8.30 am. to 4.00 p.m. for 5 years, custom and practice states you don’t.

So what do you do if you need to change an employee’s terms and conditions?

  1. Review your terms and conditions.
  2. Decide what is custom and practice.
  3. Decide what the business need is.
  4. Commence consultation with the employees about the proposed variation.
  5. Seek the employee’s agreement to the variation.
  6. Decide whether you need to serve notice on the contract and risk the consequences of this action.

If you need any assistance with any aspect of HR for your small business, please contact us on 01527 909436.

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