The economic effects of the COVID-19 pandemic continue to affect businesses of all shapes and sizes. As the end date for Furlough Leave gets closer, lots of businesses are faced with having to decide how to continue to work effectively and make the most out of their workforce, especially where they have seen a downturn in work or have had to make redundancies.
It is vital that businesses are aware of the implications of restructuring their workforce and make changes in a compliant and legal manner.
Varying employees’ terms
Due to a reduction in staff or work, there may be circumstances where it would benefit the business to make changes to the following terms for employees:
- Hours or days of work
- Job description
- Salary
- Place of work
- Holiday allowance
- Length of notice
An employer can only vary the above terms if:
- The employee agrees to the change;
- There is a clause in the contract which allows you to vary the specific term; or
- The employee’s representative (e.g. a trade union) agrees to the change.
Even if there is a clause which allows such a change, it is important to seek legal advice to ensure that the way the clause is enforced is legal and to understand the correct process required when applying the changes in order to stay compliant.
Communication really is key in these situations. Speak to your employees to explain any proposed changes so as to give them an opportunity to agree to changes and to prepare accordingly for when those changes are implemented. If changes are agreed to, it’s essential to record everything in writing.
When employees don’t agree
Due to the uncertain nature of the economy and job market consequent upon COVID-19, it may be that some employees would rather accept small detrimental changes than risk re-entering the job market.
However, in some circumstances it may be the case that proposed new terms of employment which are less favourable than previous terms will not be approved by employees.
Introducing new terms which are to the detriment of the employee and introduced unilaterally will put you at risk of a claim for breach of contract, constructive dismissal or unfair dismissal.
In the case of non-agreement to the proposed new terms from all or any employees, employers should try everything they can to negotiate and reach an agreement, considering alternatives and compromise solutions.
As a last resort, however, it is possible for employers to dismiss employees and rehire them on the varied terms, although, in those circumstances, it is essential that employers have a justifiable reason for the dismissal and follow a correct and fair dismissal procedure. In the absence of this, employers will be at risk of their employees bringing claims at the Employment Tribunal, which could lead to substantial awards of compensation.
Seek legal advice
Due to the risks associated with Employment Tribunal claims, in terms of both compensation and legal costs, it is vital that employers seek legal advice to assess the scope for change afforded by their existing employment contracts and that any proposed changes to working terms are implemented fairly and legally.
If you would like to speak to a specialist Employment Solicitor from our Corporate & Commercial Team to obtain guidance about how to legally restructure your business’s workforce, please contact us on 01244 354670 or by email at law@oliverandco.co.uk.
