Varying employee contracts

“A terrible way to conduct industrial relations... leaving staff and their families anxious about their future”

This was the recent quote from David Prentis, General Secretary Unison following Shropshire County Councils announcement that they had issued redundancy notices to all 6,500 staff. Whilst the terminology used is ‘redundancy’ they are actually offering a new contract to start the day after their employment ends. They still need all of those staff but failed to gain agreement from the staff to change their pay and conditions so the staff have been told their existing contract will end and if they do not sign the new one they will be dismissed.

Whilst it may seem harsh, the alternative would have been redundancies and the council are trying to balance the increasing requirements of their customers with a decreasing budget.

Many UK private sector business’s will be facing a similar dilemma and for them losing member/s of staff through redundancy may place unrealistic pressure on the survivors who simply could not cope with the workload. So where the work has not diminished but profit margins are shrinking to untenable levels a change to one of your largest costs – wage bills could be the answer.

There are three ways you can achieve changes to terms and conditions:

Agreement

This is the easiest to implement but the hardest to achieve if the change is detrimental. Reducing staff pay rates is never going to be popular. Explaining the necessity for the business to reduce costs and the possible alternatives of redundancy or insolvency will help staff to understand your reasoning. If you can offer a sweetener such as an additional day off or reduced hours it may help to soften the blow and reduce bad feeling.

Unilateral Change to Terms and Conditions

This where you say what you intend to do and go ahead and do it. You should ensure that you can justify your decision before embarking on any changes. By explaining to staff your reasons and listening to their concerns you may limit the extent of claims including unlawful deduction of wages, breach of contract and constructive dismissal. Take care if applying the changes to one group of employees you could fall foul of indirect discrimination. E.g. if that group of employees were all female.

Dismissal and Re-engagement (Back to Back Contracts)

As in the Shropshire County Council you try and gain agreement through consultation with your staff and consider any alternatives or solutions put forward before issuing notice to terminate. Following the expiry of the notice those who agreed to the new terms will remain continuously employed but on the new contract, whilst those who did not sign up will be dismissed. Because this method involves a dismissal there is a risk that an ex employee may make an unfair dismissal claim to an Employment Tribunal. The tribunal would look at the consultation process, efforts to avoid the changes and the underlying reasoning behind the change.

This can be an alternative to redundancy however it is not without risk. You will need to be very clear on your reasons, try and ensure that your staff understand the only reason you are proposing the change is critical issue/s which are or will affect the business. Nobody would undertake this action on a whim!

If you have or think you may be affected by any of the issues above.... please call Fiona or Sian on 01865 261188 / 01865 261145.

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