Changing the terms and conditions of an employment contract – the facts!

The challenges of running a business in a fast changing environment, together with ensuring stability for employees, can sometimes lead to problems if an employer wishes to vary the terms of an employee’s contract, eg holiday entitlement, working hours, duties or location. Unfortunately for an employer, but fortunately for an employee, an employer cannot change an employee’s contract of employment without their agreement. If the employer makes significant and fundamental changes to the contract then the employee could claim constructive dismissal.

The test in a constructive dismissal case is not whether the employer has acted reasonably but rather whether the employer has acted in breach of +contract in such a way that entitles the employee to resign and treat himself or herself as dismissed. The crucial point in a constructive dismissal claim is that the employer must be adjudged to have acted in such a manner so that they are in breach of a fundamental term of the contract of employment.

The breach of contract may be an anticipatory rather than an actual one, ie even though no breach has yet occurred it is sufficient if the employer has indicated a clear intention not to fulfil the terms of the contract in the future and the employee accepts that intention to commit a breach as bringing the contract to an end, see Norwest Holst Group Administration Ltd v Harrison [1985] ICR 668.

If an employer wishes to vary terms of the contract they must consult with the employee or employee representative explaining the reasons for the change allowing the employee an opportunity to express their views. Any agreed changes should be agreed in writing. It may be worth considering offering an incentive to the employee to agree to the variation as imposing changes without agreement could result in an employee resigning and claiming constructive dismissal.

If you are an employee you must immediately make it known to your employer that you do not agree with the variation as working under the new contract for any length of time could be seen as you waiving the breach and agreeing with the variation. You should raise a formal grievance with your employer and, if you are still unhappy, you can leave and claim constructive dismissal.

Should you require advice on any employment matter whether you are an employer or an employee please contact our team of Employment Solicitors.