Kiera Lee, writes:

1. Introduction

The recent case of Bateman and others v Asda Stores Limited provided that ‘Asda’, the well known supermarket, was entitled to unilaterally impose a change to pay and working conditions because the terms of employees’ contracts of employment were wide enough to allow them to do so.

This case is particularly important in the current climate of pay cuts and other tactics adopted by employers trying to avoid redundancies. Birmingham City Council will not need to be convinced of the importance of getting it right. They have just announced planned flexible working for up to 26,000 employees. The union is already planning opposition to the changes and the Council will have to ensure they do exactly what is needed to achieve the planned changes.


2. Can I rely on my contract to make changes?

Employers occasionally need to make some changes to the way their business operates, to cut costs or increase efficiency. These changes, more often than not, will impact upon employees. Some changes are innocuous, and require little more than notifying the employee of the change. However, making fundamental changes to contracts of employment can be fraught with difficulty and must be handled with care. Changes should be imposed only after careful consideration.

It is important to note that that Asda had two very significant factors in their favour – only one employee alleged they had suffered any loss and there was an extensive consultation process seeking agreement before the change was imposed.

The starting point for change is to consider the contract of employment and whether it allows the change the employer is seeking to implement. However, provision within the contract is not enough in itself. The law determines that some changes are just so fundamental to the continuance of a contract that consent must be sought and notice given in any event.


3. What if employees will not agree to the change?

Seek consent for the change. Whether or not this will be forthcoming will depend on the nature of the change. The employer will need to consult with employees individually and/or collectively. The appropriate method of consultation will depend on the number of affected employees. The employer will need to look at any collective or recognition agreement that may be in place and make sure all employees are represented in any negotiations.

Employers may consider a ‘sweetener’ to push through the change. Employers have the opportunity to be creative - one of my clients offered free travel to work for a month (to buy out a change to travel allowances); another offered holiday vouchers (to buy out a change of holiday shutdown). Generous pay offs or benefits may not be a realistic idea, depending on the numbers involved.


4. A fresh start?

Employers can terminate contracts, giving employees the appropriate notice and offer new contracts including the amended term. This is a risky step. The employees may treat themselves as permanently dismissed and claim unfair dismissal. The employer may lose valuable employees and face tribunal claims. If the termination affects more than 20 employees the employer is obliged to comply with statutory obligations on collective dismissal and consultation.


5. Last Resort

Imposition of the change without consent should be a last resort. There is a real risk of claims, and the action will undoubtedly prove damaging to employee relations. Employers should not rely on employees choosing to simply accept the change in the hope of job security.

There is no doubt the way in which contract terms are drafted is important and, following the Asda case, contracts should be reviewed to allow employers as much flexibility as possible. However, this does not change the emphasis on consultation and agreement. Employers should equally consider putting consultation agreements into place. These agreements can help set out a framework for future change.

A good structure for managing change in the workforce, including well drafted contracts, and a mechanism for consultation, is essential to provide employers with the flexibility they need and should avoid the irrecoverable time and money spent on defending tribunal claims.


6. Guidance

Both The Labour Relations Agency in NI and ACAS in GB have guidance notes on varying contract terms:

http://www.lra.org.uk and http://www.acas.org.uk

Employees are usually suspicious about any contract variations but today’s reality is that employers as well as employees are facing a choice between change and redundancies. Even Bruce Forsyth, Mr Saturday Night himself, has had to accept a lower wage for his appearances on Strictly Come Dancing following the pressure on the BBC to reduce its entertainment budget.