How to Change Terms and Conditions of Employment - Vista
Person making changes to terms and conditions of employment
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How to Change Terms and Conditions of Employment

We’re entering a period of change for many businesses following the Covid-19 pandemic. Here’s our guide for employers who are looking to make a change to terms and conditions of employment.

If you prefer, you can watch the video here.

Transfer situations aside, where the reason for the change relates to or is because of a business transfer under TUPE, there are three lawful means by which an employer can vary terms and conditions:

  1. Make changes in accordance with the existing terms of contract
  2. Agree the change with the employee
  3. Terminate the existing contract and offer re-employment on varied terms

Under the third situation, if the offer of re-engagement is accepted then, of course, the change is agreed. If not, the individual stands dismissed. In those circumstances the potentially fair reason for dismissal is what is called ‘some other substantial reason’ (SOSR). This is a potentially fair reason for dismissal under The Employment Rights Act.

However, SOSR, as it is commonly known, can only be relied upon successfully where there is ‘a sound good business reason’ or substantial business reason for the change in terms and conditions. If there is, and the dismissal is in all other respects procedurally fair, then the entire dismissal should be held to be fair and reasonable.

So, how does the system of dismissal and re-engagement work in practice?

First of all, an employer needs to decide how many people will potentially be affected by the change. If that is 20 or more at one establishment, employers will be required to collectively consult. More on that here.

Assuming the business reasons are not collectively agreed with the recognised trade union, the requirement for the change can nevertheless be agreed collectively, as a precursor to the changes being communicated for acceptance on an individual basis.

Those letters would outline:

  • The reason for the change
  • The basis for them
  • What’s required
  • Invite the employees to sign and confirm their acceptance

In the absence of such, an employer would then need to individually consult about the proposed changes and the reasons for them. Importantly, the employer should seek individual acceptance, by balancing the company’s own business needs with the individual needs. If those individual needs cannot be accepted, and there is a sound business reason for the change, then it would be permissible for the employer to serve notice of termination of the existing contract and offer re-employment on varied terms. Providing the employee with a right to appeal against that decision.

It’s therefore for the individual to decide whether they are willing and prepared to accept that change for the reasons the employer outlines.

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Employment Law

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