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 a contract term expressly permits unilateral change — for example, if an existing express mobility clause allows the employer to change the place of work;

• if the parties agree to the change; or

• through collective bargaining.

An employer who insists on forcing through changes to contract terms without agreement will be imposing a unilateral variation of contract and employees may be able to pursue claim for breach of contract and/or unlawful deduction of wages (see Chapter 4). Contract terms can only be changed through agreement.

Increasingly, employers are imposing contract change by giving notice to end the existing employment contract, while at the same time offering replacement contract terms containing the change. See page 107 for information on how the law treats this kind of employer behaviour.

An agreement to a change of contract can either be express (for example through verbal consent or by signing 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. This is not necessarily the case if the proposed change does not take immediate effect:

The law says that an employee will be taken to have impliedly accepted changes to their contract terms if that is the “only sensible explanation” for their behaviour, viewed objectively. For example, in FW Farnsworth Limited v Lacy and others [2012] EWCH 2830, an employee was offered a promotion with benefits including private health insurance. The new written contract terms also included restrictive covenants. He did not sign and return his new contract terms, but he did apply for the insurance. In a later claim by his employer to enforce the restrictive covenants, the court said that, by taking up the private health insurance after reading the new terms and without protesting about any of them, Lacy had accepted the whole of the contract, including the restrictive covenants. The fact that privately he did not intend to accept the new contract terms was irrelevant. What mattered was how his behaviour would appear to a reasonable outside observer.

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

In workplaces with a recognised union, contractual changes usually occur through collective bargaining. Collective agreements are typically 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 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 term permitting change, there is no general implied term that it must be exercised reasonably. However, the employer can only impose it in such a way that the employee can comply (United Bank v Akhtar [1989] IRLR 507), and must not do so in a way that destroys trust and confidence (White v Reflecting Roadstuds [1991] IRLR 331).

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).

Flexibility and mobility clauses will always be interpreted restrictively, and any ambiguity will be interpreted against the interests of the employer. For example, in Land Securities Trillium Limited v Thornley [2005] IRLR 765, Ms Thorley was an architect. Her employer was not allowed to rely on an express contract term requiring her to perform “any other duties which may reasonably be required” to force her to change from a hands-on architectural role to a managerial one. The EAT said imposing the new job description was a fundamental breach of contract which had the effect of deskilling her.

A less encouraging result was produced in the following case, in which retail giant Asda relied successfully on a wide express contract term in the staff handbook permitting unilateral changes to employment terms “to reflect the changing needs of the business”:

Employers increasingly reserve themselves wide powers to enforce unilateral changes to work location whether permanent or temporary. These terms are known as mobility or relocation clauses. A mobility clause cannot be implied. It must always be express and clear.

Union reps need to be very cautious when faced with mobility clauses. Employers have used these clauses to avoid paying redundancy payments. In Home Office v Evans & Laidlaw [2007] EWCA Civ 1089, the Home Office relied successfully on an express mobility clause to argue that two employees who refused to relocate to a different office following a branch closure were dismissed for refusing to obey a lawful order to relocate, rather than for redundancy.

There is no entitlement to be paid to relocate unless the contract says so. But 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).

Mobility clauses are interpreted narrowly and any ambiguity will normally be resolved against the employer, even if it means the purpose of the clause is defeated.