Changing Employees’ Ts&Cs
and other cost-effective alternatives to redundancy
Get in touch 0117 325 0526
Get in touch 0117 325 0526
Adjusting employees’ contractual entitlements, such as pay cuts or reducing benefits, can make good savings and staff are often open to pay cuts in order to give a business a fighting chance of remaining solvent.
Pay, benefits and hours of work will all be ‘contractual’ terms of employment for your staff and changing them can be legally challenging. Small changes may be easily achievable but significant changes will require either your employees’ individual consent or, if not forthcoming, the ‘nuclear option’ of terminating existing contracts and offering new ones containing the changes needed (so called ‘fire and re-hire’).
Either route requires careful handling and good advice to avoid triggering your legal duty to consult and potential unfair dismissal claims. We’d also add here that excellent communication is absolutely key to getting employee buy-in and substantially reduces your legal risk.
If you recognise a trade union for any sections of your workforce you have the option of using collective bargaining to reach an agreed change to pay and hours. This is a real area of expertise for us. Our lawyers have significant exposure to unionised clients in manufacturing, engineering and defence and the education sector, some with rather tricky unions!
A reduction to employer pension contributions can look attractive but may still require you to consult with employee representatives. Importantly, special consultation requirements apply to pension schemes. Also, bear in mind the minimum employer pension contribution thresholds set by current pension law. If you are considering making pension changes, do speak to us. We partner with specialist pension lawyers for just these eventualities!
The Government ‘Furlough Scheme’ avoided (for many) the need for lay-offs or reduced working weeks. This was just as well because many employers would not have had relevant clauses in their employment contracts, although these were once standard contractual fare.
Without this sort of contractual ‘permission’, you are back to the ‘changing terms and conditions’ section above. Without your employees’ express and informed consent, you risk claims for unlawful deduction from wages, breach of contract and constructive dismissal if you were to impose a lay-off (temporary suspension without pay due to lack of work for the employee to carry out) or short-time working (reducing hours, work and therefore pay).
Looking to the future, it is worth considering the addition of a power to lay-off and short-time working clauses for new starters in employment contracts.
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