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.
If you have a staff base made up of employees on differing terms of employment, either due to different 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.
The Process of Changing Terms and Conditions of Employment
Changing terms and conditions of employment can be done through a process of ‘consultation’:
- Clearly explain the changes 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) 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, you need to 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.
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 T&Cs 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 T&Cs unless you have a justifiable ETO reason.
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. Give us a call on 0203 319 1649 and we can talk to you about your situation. Alternatively, you use our contact form to send us an email and someone will be in touch.