Changing terms and conditions of employment – can it be done?

Guidance for Employers

Changing terms and conditions of employment – can it be done?

Changing terms and conditions of employment can be difficult.  We’ve recently had a number of our clients ask whether they can change their employees’ terms and conditions of employment, particularly following a TUPE transfer. A simple answer is yes you can, but you need to follow a diligent process and be aware of potential pitfalls.

Can You Change an Employee’s Terms and Conditions?

2 July, 2021

by Erica Hameed

Changing terms and conditions of employment can be difficult.  We’ve recently had a number of our clients ask whether they can change their employees’ terms and conditions of employment, particularly following a TUPE transfer. A simple answer is yes you can, but you need to follow a process and be aware of potential pitfalls.

If you have a staff base made up of employees on differing terms of employment, either due to different Employment Contract revisions or having transferred employees through business purchases, you may get to a point where you want to have all employees on one set of terms and conditions (referred to as ‘harmonising’). This may be for economic reasons, to help with administration and management or just to ensure everyone is getting the same deal.

1. The Process of Changing Terms and Conditions of Employment

Changing terms and conditions of employment can be done through a process of ‘consultation’:

  • You need to identify who you need to consult with. There is always a need to consult at an individual level but you may also need to consult with a work’s council, elective staff reps or a trade union. Before you launch to action, do make sure that you check what your consultation requirements are and involve the right people.
  • Having identified who you need to consult with about changing terms and conditions of employment, you start your consultation process. This will involve clearly explaining the changes that you intend to make and how they will affect individual employees and when you want the changes to become effective.
  • Make sure you explain why the changes are being proposed (the business context)
  • Allow the employees a period of time (we typically recommend a period of 4 weeks although this may need to be significantly longer if you are undertaking collective consultation) to read through and understand the changes and to ask any questions (or in some cases, make counter proposals) – it’s good to be clear on who their point of contact will be for this process
  • Finally, issue employees with their revised terms and conditions and obtain their signed acceptance.

If you cannot come to an agreement with individual employees on the proposed changes you have a few options:

  • You revoke the changes and retain the employees’ existing terms – this may not be ideal given the time you have invested to make the change and doesn’t get you where you wanted to be.
  • You negotiate revised terms that are mutually agreeable – this can become complicated if some employees had already signed and accepted the new terms. You would need to extend your consultation to allow for the further required discussions.
  • You terminate their employment and offer to re-employ them on the new terms – this will be a last resort as it does carry risk.  In this scenario you have to ensure you have followed the right process to instigate the changes (as above) otherwise you could be at risk of unfair dismissal claims.

2. Changing terms and conditions of employment following TUPE Transfers

When you look at changing terms and conditions of employment following a TUPE transfer you need to be more cautious particularly around the reasons why you are making the changes. Before you do anything, it’s worth bearing in mind that TUPE legislation (Transfer of Undertakings (Protection of Employment) Regulations) is a complex part of employment law and we would always recommend seeking professional guidance when entering into any process associated with a TUPE transfer.

TUPE legislation gives employees protection of their existing terms and conditions of employment when they transfer from one employer to another. Therefore generally, if you want to change the terms and conditions of incoming employees just because they are different to those of your current employees you can’t. However, if you have a viable reason for making the change, notably an economic, technological or organisational (ETO) reason then you can potentially justify the commencement of consultation on changes to terms and conditions.

Note: There is no ‘safe’ time period after a transfer to implement changes to a transferred employee’s terms and conditions unless you have a justifiable ETO reason.

3. Recommendations

When you propose to make changes to employees’ terms and conditions, it’s worth looking at which of your existing or proposed employment terms are better than their current terms so that you can use these as leverage to encourage their acceptance.

Employees are likely to be more receptive if you are clear on why you want to make the changes and if you help them to look at the bigger picture and impact on the wider company rather than just personal to them.

Changing employees’ terms and conditions, particularly to their detriment, can be an uncomfortable process but it’s not impossible and it is often fully justified so don’t put it off; we would however encourage you to get in touch before you start so that we can support you through the process to minimise your risk of employee upset or litigation.

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