Varying terms and conditions of employment

The opportunity to change employees’ existing terms and conditions of employment has always been a challenge for employers.  However, recent decisions, have allowed employers some flexibility to make changes.

That said, the employer will need to demonstrate that changes are reasonably required and have been subject to an appropriate process of consultation and discussion before implementation. 

The Employment Appeal Tribunal recently held that an employer did not necessarily act unfairly when, after failed negotiations to change terms of employment which included an offer to “buy out” certain existing terms, the employer terminated existing contracts with an offer of re-employment on the new terms which did not then include the "buy out" payment. 

The case in question involved the proposal by an employer to remove a bonus payment which they negotiated with employees - the negotiations including an offer of a buy out payment.  However, the employer warned that if the deal was declined, existing contracts would be terminated and an offer of re-employment made on terms which would not include the bonus. 

The focus for the Employment Tribunal, confirmed by the Employment Appeal Tribunal, was the reasonableness of the employer’s decision balancing the advantages to the business with the effect on the employees who made a claim that they had been unfairly dismissed. 

Taking into account the band of reasonable responses which the Tribunal considered should be applied, the conclusion was that it was not right to say that the only reasonable response for the employer would be to offer re-engagement on terms which included the "buy out". 

The Tribunal considered that it was open to a reasonable employer to conclude that they should not offer a lump sum on re-engagement when they were not going to achieve any of the benefits of a negotiated agreement for which the lump sum buy out had been offered. 

This was an encouraging outcome for employers.  Disregarding the facts of this case, in general terms the key to success in this area remains clear and transparent communication and consultation and a balance between the benefits to the business and the impact on the employees. 

For further information on this and all employment-related matters, please contact Jane Laidler