Changing Contractual Terms and Conditions

In general, the employment contract is just that, i.e. a contract and it is not open for an employer to unilaterally impose new changes on employees. This is the established law as per the House of Lords case of Rigby v Ferodo.

Therefore as a general rule changes should be made by consent with the employee.

If consent can’t be obtained, employers may nevertheless take a gamble by imposing the new changes in hope that employees will accept the new terms by conduct, therefore waiving their right to object.

However, if employees object, they could bring a claim (e.g. for loss of wages) whilst remaining in post (stand and sue). Alternatively they could resign and claim constructive unfair dismissal.

Alternatively, employers can give notice under the old terms, and offer to rehire the employee on the new terms at the expiry of the notice. This is also risky as it involves termination of the original employment and puts the employer at risk of a claim for unfair dismissal. However, a defence of economic necessity is available combined with information and consultation. Dismissal in respect of employees who reject the changes can be justified under the ground of ‘some other substantial reason’, where the employer acts reasonably.

Bateman v ASDA is a useful case which held that provisions in a staff handbook empowered ASDA to impose changes to ensure that all store employees were on the same pay and work structure. The handbook included a provision which ‘…reserved the right to review, revise, amend or replace the contents of this handbook, and introduce new policies from time to time reflecting the changing needs of the business’. This clause was held to be (a) incorporated into the employee’s contracts (and not merely applying to handbook policies) and (b) unambiguous.

The tribunal held that this permitted ASDA to impose the new pay regime without consent from all employees. However, this was off the back of a long and careful consultation exercise including a vote where over half the work force agreed the change.

The case demonstrates that carefully worded clauses of this nature can result in the employer unilaterally imposing contractual changes. However, the clause must be unambiguous and properly incorporated into the contract. The changes must not be imposed arbitrarily or ‘capriciously’ which could breach the implied duty of trust and confidence. Hence, information and consultation is crucial.

For further information please contact Ian Hopkinson at ian@mb-law.co.uk.

Please note this information is for general guidance only and is not intended to be a substitute for specific legal advice.