Contract changes

Employers should never introduce contract changes without consulting either the union, other employee reps (if there is no recognised union) or the individual employee.

Contracts may be changed lawfully:

• where the contract allows for a change — for example, if there is a reasonable mobility clause allowing the employer to change the place of work;

• if the parties agree to the change;

• through collective bargaining; or

• by terminating the existing contract by giving full contractual notice and simultaneously offering new terms. (This could be an unfair dismissal — see Chapter 10: Unfair dismissal).

If an employer insists on changing terms without agreement, this is a unilateral variation of contract and the employee may be able to pursue a claim for breach of contract or for unlawful deduction of wages (see Chapter 4).

An agreement to a change of contract can either be express (for example if the employee verbally consents or signs a new contract) or implied by the employee’s conduct. For example, if an employer announces that the hours of work will change from a 9.30am start to a 9.00am start and the employees come in at 9.00am the next day and carry on coming in at 9.00am without objecting, this is an implied agreement to change their hours to a 9.00am start — even if they have not said “yes” or “no” to it.

It is important that employees are made aware that a failure to oppose a change could mean that they will be taken to have accepted it and may not be able to challenge it at a later date.

However, this is not necessarily the case if the proposed change does not take immediate effect:

An employee’s failure to sign to show that they agree to a contract term (or a change in contract terms) will not necessarily prevent it being legally enforceable, even after the employment has ended (for example, where there is a valid restrictive covenant):

An employee will only be taken to have impliedly accepted new contract terms by conduct if the only sensible explanation for that conduct (such as taking up the offer of insurance in the Farnsworth example) was that the employee having accepted the new contract.

If contract terms change, the employer must issue a new statement of employment particulars detailing the changes within a month (section 4, ERA 96). If the employer changes its name, a new statement must be provided, which must include the date on which the employee’s continuity of service began.

In workplaces with a recognised union, contractual changes usually occur through collective bargaining. Collective agreements typically are incorporated into individual employees’ employment contracts by a specific reference to the agreement in the contract. However, if changes have always been made through collective bargaining in the past, this might be taken as implied agreement to changes made in that way.

Sometimes, the contract of employment itself provides for changes to the terms and conditions. For example, it may include a mobility clause purporting to permit the employer to change the place of work, or a flexibility clause allowing it to change employees’ duties.

If there is an express clause allowing for a change, there is no general implied term that this must be exercised in a reasonable way. However, the employer can only impose it in such a way that the employee can comply (United Bank v Akhtar [1989] IRLR 507), and it must not do so in a way that destroys trust and confidence (White v Reflecting Roadstuds [1991] IRLR 331).

Also, a change for which the employer fails to offer any consideration (something in exchange), or which results in too much being asked of the employee, may be a breach of the implied term of trust and confidence (St Budeaux Royal British Legion Club v Cropper EAT/39/94).

In the following case the EAT held that a flexibility clause did not require the employee to do whatever the employer asked:

Contrast the following example:

In a recent case involving discretionary bonuses, an employer’s contractual right to make unilateral contract changes worked against it. In Dresdner Kleinwort Limited v Atrill [2013] EWCA Civ 394, a bank used the medium of an internet broadcast to the whole workforce to explain that it was creating a €400 million bonus pool to be shared among its staff. When it later tried to argue that it should not be bound by this promise on the basis that employees had not formally accepted it, the Court of Appeal said there was no need for employees to accept it, since the bank’s staff handbook gave it the right to make unilateral changes to the contract of employment, which it had exercised by making the announcement.

An employer may be able to force employees to move to another location instead of making them redundant if there is a mobility clause in their contract (Home Office v Evans & Laidlaw [2007] EWCA Civ 1089) (see Chapter 11: Redundancy). Note that there is no entitlement to be paid to relocate unless the contract says so. However, in United Bank v Akhtar ([1989] IRLR 507), a requirement for an employee to relocate from Leeds to Birmingham the following week with no relocation expenses was held to be a breach of contract, because the employee was unable to comply. Reps should also consider whether the effect of a mobility or flexibility clause is discriminatory (see Chapter 6) or in breach of terms protected following a TUPE transfer (see Chapter 12).

Mobility clauses generally tend to be interpreted narrowly, and any ambiguity will be resolved against the employer, as the party that insisted on including them in the contract. Especially in a TUPE transfer, this can have the effect of defeating the clause altogether. For two recent examples, see Tapere v South London and Maudsley Trust ([2009] UKEAT 0410/08/1908) and Abellio London Limited v Musse (UKEAT/0283/11), discussed in Chapter 12: TUPE transfers.