CORONAVIRUS - CONTRACTS - 18.05.2020

Changing contractual terms

Seeking permission. The safest way to vary an employee’s terms and conditions of employment (assuming that you don’t have the express contractual power to do so) is by mutual agreement. You should always seek an employee’s consent in writing, in advance of the change you wish to make, and give them adequate evidence and time to consider your proposal (see The next step ). If a change is in the employee’s favour, they will almost certainly agree to it.

Consent refused. However, they are unlikely to be keen if the variation is detrimental to them, particularly where it relates to a reduction in pay and/or other financial benefits. Should consent be withheld, it might be tempting to immediately terminate their contract and look for a new member of staff. Unfortunately, this approach is fraught with danger and could lead to a tribunal claim.

Two options. If you’re met with resistance to a contractual variation, your two options will be to: (1) make the contractual variation anyway and gauge the employee’s reaction - they may do nothing, work under an objection or decide to resign; or (2) take steps to terminate the employee’s existing employment contract and offer to immediately re-engage them on new terms.

Tip. If you make the variation anyway and the employee says nothing, you can’t assume that they’ve automatically accepted the change. The Court of Appeal has ruled that agreement to a contractual change cannot be inferred by an employee’s silence - we looked at this in a previous article ( yr.20, iss.15, pg.5 , see The next step ). Make it clear in your discussions that you’ll assume a variation has been accepted if an employee doesn’t raise a formal objection by a certain date.

For a letter seeking agreement to vary contract terms and the previous article on contractual variation, visit http://tipsandadvice-personnel.co.uk/download (PS 22.11.01).