DAVID ROYDEN - EMPLOYMENT SOLICITOR
UK EMPLOYMENT LAW

David Royden is a Partner with Laytons Solicitors and Head of Employment Law, Manchester, UK

Laytons Solicitors is a national law practice specialising in all aspects of Company and Commercial Law

Laytons Solicitors, 22 St John Street, Manchester M3 4EB.
Tel: +44 (0) 161 834 2100
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VARYING TERMS AND CONDITIONS OF EMPLOYMENT

A significant number of enquiries employment solicitors receive relate to varying terms and conditions of employment and specifically business re-organisations. This is a complex area and one which often causes problems in balancing the needs of a business and the rights of its employees.

Some Other Substantial Reason – A Genuine Business Need?

In one recent case an employer was undergoing changes in the shift patterns of the business in order to meet the changing demands of the customers. The change was essential in order for the business to continue successfully. Collective consultation had taken place with the union and the employer was also undergoing consultation with individuals in relation to the changes required. The warehouse supervisor employed by the company was refusing to accept the change but was failing to provide any substantial reason why this should be the case. The company having undergone a substantial period of consultation with the employee and still unable to persuade the employee to agree to the change took the decision to terminate the employee’s contract of employment. The employee had been employed for over 1 year and so had unfair dismissal rights. The reason for the dismissal was stated to be a business re-organisation amounting to some other substantial reason. The employer subsequently received an Employment Tribunal application for unfair dismissal but was successful in defending the claim because it had a genuine business need for the change, and it had followed a fair procedure and consulted with staff. Not all employers who change terms and conditions are so thorough.

The tribunals have taken the view that employers should have the ability to reorganise the workforce so as to improve efficiency. An employer does not have to show that the change is essential but just that there is a sound business reason for the change. In the above case scenario the employer was able to demonstrate this. However, many business reorganisations are done at the whim of a manager without real justification.

Reasonableness

The employer must also be able to show that the dismissal is reasonable in the full context of the reorganisation. This means that the employer must show that a proper procedure has been followed in implementing the proposed change. This is usually where employers cut corners and staff are rightfully left feeling frustrated and vulnerable. Consultation is an important factor in judging the reasonableness of the proposed change. In the case scenario above the company had undergone extensive collective consultation with the union and individual consultation with employees in relation to the shift changes. This will assist the company in being able to show that it not only had a good business reason for the change but that it had implemented it fairly.

Constructive Dismissal

In some cases where the employer unilaterally imposes a change in contract the employee is entitled to resign and claim constructive dismissal on the basis that the employer has committed a fundamental breach of contract. This is especially so were the employer has acted unreasonably in introducing the changes to the employee’s terms and conditions.

It is also essential that the employer serves the correct amount of notice in order to avoid a breach of contract claim. In the case of long serving employees this could be a minimum of 12 week’s notice.

In the above case scenario the employer had conducted the dismissal fairly. All the essential criteria were satisfied namely;

  • the employer had established a sound business reason
  • the reason for the dismissal was proved
  • the employer could submit evidence to demonstrate what the business reasons were
  • the business reasons were substantial
  • the change was reasonable
  • the employer had followed a fair and reasonable procedure
  • the dismissal was within the reasonable range of responses of an employer

If any of the above factors had not been present the employee would usually have been successful in his claim. In such circumstances the Tribunal can well in excess of £50,000 in compensation.

Conclusion

A degree of flexibility in the ability of employers to vary the terms and conditions of employment of their employees is not only desirable but essential to meet changing business needs and/or economic changes and uncertainty. However, this needs to be balanced against ensuring that there is a genuine business need for the change, that any changes are introduced fairly after due consultation between the employer and the workforce through the Trade Union or Elected Employee representatives, and that appropriate notice is given to the workforce prior to the implementation of the change(s). In the absence of any of these factors employers risk multiple party Employment Tribunal claims.

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Employment Law Procedures - view section

Tribunal Claims - view section

Sample Documents - view section