As the title suggests, variations/changes to contract of employment are occasions where your employer is looking to amend your terms and conditions of employment.
There are many different types of variations commonplace in the UK, some of which are technical while others can have a significant impact on your long-term employment/income prospects.
- Common changes to employment contracts
- What happens if your employers business changes hands?
- Negotiating terms on transfer of business
- Variation clauses in employment contracts
- Refusing to accept changes to your contract of employment
The key to any major change to an employment contract is consultation and negotiation. Nobody wants the workforce and employers at loggerheads with each other. This does nothing for staff morale and nothing for company output. On occasion, proposed changes can sometimes be unavoidable if for example there are financial constraints with the company.
Some of the more common changes to employment contracts include:-
- Reduction in remuneration
- Adjustment to working hours
- Expansion of job role/job description
- Changes to place of work
- Enhanced entitlement such as sick leave
- Benefits/perks above and beyond the statutory requirements
- Enhanced maternity rights
- Enhanced redundancy rights
As you will see, many of the more common changes to employment contracts refer to enhanced benefits. For example, with maternity rights and redundancy rights, your employer is not able to adjust your contracted rights below the statutory level. They are perfectly entitled to rein in enhancements to statutory rights.
Unfortunately, from time to time some employers may suffer financially and need to reduce their costs. One alternative to large-scale redundancies is a reduction in remuneration across the board. There are numerous options such as:-
- Reducing your basic rate of pay
- Reducing bonus/overtime rates
- Removing additional holidays
- Reducing any top up sick pay
Some of these contractual changes may be short-term while others may be permanent. As an employee, you would need to weigh up the potential knock-on effect of refusing a change in your contracted rate of pay, against potential unemployment. This is the stark reality for many employees when their employer experiences financial difficulties.
Whether a company is expanding or consolidating, from time to time they may need to adjust working hours for employees. In the majority of cases this will have a direct impact on their level of remuneration, but not always. Some of the more common adjustments to working hours include:-
- Reducing contracted working hours
- Increasing contracted working hours
- Changing working patterns, such as moving from nightshift to dayshift
In many cases, you will find that employers have various options already written into your original contract of employment. For example, they may offer a relatively low level of contracted hours with the option for overtime. In this scenario, an employer would just use this clause to make the necessary adjustments. However, where there are clearly defined working hours there may need to be some contractual changes going forward.
It may be that your employers business changes hands as a consequence of financial trouble or they may have been acquired by a competitor. Whatever the case, you will likely come across the term Transfer of Undertakings (Protection of Employment) regulations. These are commonly referred to as TUPE and protect employment conditions when there is a change in employer.
Some of the more common protections include:-
- Rates of pay
- Pension rights
- Redundancy rights
- Continuous employment
The above list will give you an idea of the type of protections afforded under TUPE. One important area is that of continuous employment. It may seem irrelevant at the start but where for example you are made redundant in the future, it can have serious financial consequences. In the following scenario:-
- 10 years continuous employment with previous employer
- 10 years continuous employment after transfer of the business
Under TUPE this would equate to 20 years continuous employment with different employers. So, if for example you were made redundant after 10 years with your current employer, your redundancy payment would be based on 20 years continuous employment. It is very important!
In reality, there may be some scenarios where a business is in serious trouble and about to be bailed out by a competitor. If the business is struggling, this would indicate the need to refinance the operation or reduce costs. Even though employees would have TUPE protection on any transfer of their employment, it may be sensible for employees to negotiate collectively with their new employer. This may result in temporary or permanent:-
- Reductions in pay
- Reductions in hours
- New job descriptions
- Reduced overtime
Those who refuse to transfer their employment to a new employer would still be entitled to redundancy. However, if the original employer was suffering financial problems they may not be in a position to cover pay and wages and other financial obligations.
As we alluded to earlier, some contracts of employment may include a number of variation clauses. In troubled times your employer may be forced to activate some of these clauses as a means of reducing the workforce/reducing costs. The activation of such clauses tends to be a last resort, as they can cause friction between employees and employers.
Any employer in this situation would be advised to undertake a fair procedure when communicating changes to their employees. For example, instigating a pay cut overnight would not go down well. This may lead to legal action, impact on the company’s reputation and almost certainly reduce productivity.
The subject of variation clauses is one you should be aware of when checking and signing your original contract of employment. This type of clause may seem relatively innocuous when joining your employer but could turn out to have serious repercussions in the long term. Nobody can see into the future, but employees need to protect themselves or at least be aware of potential issues.
When faced with potential changes to your contract of employment, you can refuse to accept these changes. In this situation, it is advisable to communicate with your employer via email or written form in order to create a paper trail. Some of the options available include:-
Negotiations between employees and employers are the best way to undertake changes. However, if you do not wish to accept changes in your contract of employment then you can inform your employer that you are working “under protest”.
In effect this means that you are still willing to negotiate, still willing to work but have not accepted the proposed changes. In this scenario, the outcome can be difficult to predict, especially if both parties are unable to find any middle ground.
There are numerous reasons why you may refuse to accept changes such as:-
- Inadequate notice period
- Lack of consultation
Once you have refused to accept proposed changes to your employment contract, it is advisable to return to your employer with a potential compromise. This shows that you appreciate the difficulties your employer is experiencing and you are willing to at least discuss potential changes.
In this scenario it would also be sensible to advise your employer in writing/by email that you are working “under protest”. At least until the situation is resolved.
If you are unable to come to an agreement with your employer, again, it is important that you advise them of this in writing/by email. There will come a point when continued employment, even under protest, may effectively be seen as an acceptance of changes. You are not forced to accept any changes, but at some stage you would need to consider your position.
In some circumstances you may have a legal argument for compensation. Your employer may not have followed the statutory procedures, which could include for example collective consultation. It may be that you can take your employer to an employment tribunal for breach of contract or constructive dismissal. Obviously a last resort, there does come a point when this may be your only option.
If there is no room for compromise, and your employer is determined to push through the contractual changes, you may need to consider tendering your resignation. On occasion, you may be able to sue for breach of contract or a form of constructive dismissal. However, this is not always the case.
In reality, tendering your resignation would lead to an immediate drop in your income, with a knock-on effect to your home life. As a consequence, many people continue in employment while looking for alternative arrangements in the longer term.
Equality and discrimination have been at the heart of many recent changes in employment legislation. If proposed changes to your contract of employment were for example discriminatory against the disabled, then they may well be illegal. As a consequence, you may well have grounds for taking legal action and suing your employer.
While there needs to be a degree of common sense when your employer is forced to make variations in your contract, there are still legal protections for employees. In many of these scenarios employees have collectively negotiated with their employers to find some “middle ground”. Unfortunately, there are occasions where this is not possible and legal action is the only option. This can very often sour a working relationship beyond repair.
You need to be aware of your legal obligations, those of your employer and also the array of employment regulations protecting employees. As a consequence, it is advisable to take advice if you find yourself in one of these difficult situations due to changes to a contract of employment.