It is a time of change at Solomon Taylor & Shaw. At the end of this month we will be wishing a happy retirement to our Head of Private Client, Nick Mills. Karen O’Brien will be taking over from Nick from 1 April 2015. In addition, Colin Nahon (Corporate) and Daniel Saunders (Property) will become partners. We were lucky enough to hear Nick speak at his retirement drinks this week: “When I left my first job,” he told us, “I was given a Roxy Music LP as a leaving present.” (He then proceeded to explain what an LP was for the younger members of the practice). “Now on my retirement I have been given a subscription to an online music service, allowing me instant access to a huge library of songs, including, of course, Roxy Music. I guess that gives some indication of the changes I have seen since I started”.
It is quite clear that the number of changes that businesses have witnessed in the past few decades has been unprecedented, especially in respect of technology and the knock-on effect for businesses. Companies survive or fail based on their ability to adapt to an increasingly swift pace of change. But what can employers do to ensure that the terms of their employees contracts can be adapted in order to respond quickly to the ever-changing needs of the business? And what are the pitfalls when they get it wrong?
The general principle regarding changes to a contract is that it may only be amended in accordance with its terms or with the agreement of all parties to the contract. If a change being sought by an employer does not actually affect the contract of employment or is expressly authorised by the contract, then the employer does not need to vary the contract to make the change. Whether a particular clause actually permits the change being sought will depend on the wording of the clause and the change being proposed. If not, the employee’s express consent will be required.
In three recently reported cases, England’s courts and tribunals have considered various questions regarding employers’ rights to make unilateral changes to their employees’ contracts. In each case, the employer sought to rely on a term in the contract of employment which, in their submissions, authorised them to make unilateral changes with no need to obtain the affected employee’s consent. In all three cases, the employer was ultimately unsuccessful.
In Sparks and ors v Department for Transport (High Court (QBD), 2015 EWHC 181), as part of the claimants’ employment they received a copy of a staff handbook which stated that certain terms were to be incorporated into the employees’ contracts of employment. This included absence management provisions, as well as a provision that stated that contractual terms would not be changed detrimentally without consent. When the employer attempted to impose a new standardised attendance management procedure, the claimants took legal action. The High Court found in favour of the claimants, holding that the terms of the handbook regarding absence management had been incorporated into the contracts, meaning that they could not be changed unilaterally. Such a change would be a breach of contract. The employer would therefore have to consult with the employees and get agreement on any new procedure before being able to rely on it. The employer was ultimately unsuccessful in this case because the wording of the clause permitting variation had not been sufficiently clear and unambiguous.
Meanwhile, in Norman and anor v National Audit Office (EAT, 15.12.14, (0276/14)), the Employment Appeals Tribunal (EAT) determined that an employment judge had been wrong to hold that a clause in an employment contract was sufficient to give the employer the right to unilaterally vary the contract. The relevant clause stated that the employment terms and conditions were “subject to amendment” and that changes would be “notified” to employees. As with the above case, the EAT judge ultimately decided that the wording was not sufficiently clear and unambiguous, and as such the employer could not rely on it when seeking to reduce the employees’ leave entitlements without this being a breach of contract.
In the third case, Hart v St Mary’s School (Colchester) Ltd (EAT, 8.1.15 (0305/14)) a part-time teacher’s contract included a term stating that her hours “may be subject to variation depending on the requirements of the school timetable”. When the school imposed a new work pattern, such that the number of hours worked by the employee would remain the same but spread across additional days. The employee resigned and claimed constructive dismissal on the basis that the school had breached the contract. At the Employment Tribunal hearing, the judge held that the clause allowed the school to impose a new work pattern, but the EAT disagreed. The EAT held that the words in the clause were not sufficiently clear, especially when considered in context.
All three cases act as a warning to employers that they may not be able to change the terms of their employees’ contracts without their express consent, even if there is a clause that appears to permit such changes. For more advice on changing the terms of employees’ contracts, please contact our Employment & Immigration department.
As for Nick, we wish him all the best and hope that he has a very well deserved, relaxing retirement!
This article was first published as part of our Employment Law Update - March 2015. Register above to receive our updates as soon as they are published, directly to your inbox!
This article is offered for general informational purposes only, and does not constitute legal advice. The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the views or opinions of Solomon Taylor & Shaw.