Now’s the time to review employment contracts… but look before you leap!

It is fair to say that these are uncertain times. As the economy restarts, we could experience the ‘V-shaped’ recovery that everyone hopes for (namely a sharp “bounce back”), or there could be further hard times ahead.

Recent news stories have referred to a large number of redundancies being made by household name employers. However, making redundancies at this time may not be the correct approach for all businesses; it could leave them understaffed if there is a sharp improvement in the economy. Equally for individuals, the risk of their job being made redundant, when facing an uncertain future cannot be understated.

As with the last big downturn following the financial crisis in 2008, employers will want to consider alternatives to redundancy. With no one entirely sure what the ‘new normal’ will look like, Employment Solicitor Stephen Woodman says businesses and their employees may need to continue to be agile in response to the challenges brought by COVID-19.

However, contracts of employment were written at a different time and employers may feel that they need to impose changes to contractual terms. There are several ways of doing this, but all carry some degree of risk depending on the overall circumstances.

One method that has been applied by some businesses, is to try and impose the new contractual terms unilaterally without the consent of the employee. This a breach of contract (particularly if the previous terms were more favourable to the employee).

Employees will respond in different ways. Some may object straight away, for example by raising a grievance. This is probably in both the employer’s and the employee’s best interests: the employer could potentially be facing an Employment Tribunal claim but at least everyone knows where they stand and there is an opportunity to resolve things before they escalate.

Given the overall uncertainty however, some employees may not want to ‘rock the boat’ by objecting formally. Interestingly this does not always mean that the employee accepts the changes. In general, the longer the period of time that has passed and the employee continues to work before any objection is raised, the more likely that the employee has begrudgingly accepted the change. ‘Inaction’ however should not always be interpreted as ‘acceptance’ and there have been instances where there has been an actionable breach of contract even though the employee continued to work for months (and in one instance years) after the changes were made.

It is preferable for all concerned for businesses to impose changes in consultation with employees and by seeking agreement to new terms or working practices. Communication is key, and in the case of employment and HR law, prevention is better than cure.

The situations can vary greatly depending on the individual circumstances of the case, so whether it is the employer who is looking to make changes, or the employee who considers change is being imposed upon them the best thing to do is to take legal advice as soon as possible. And ideally before the changes are actually imposed.