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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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