It’s not all bad news
In the first of three pages packed with advice for employers, Rebecca McGuirk, a partner at Shoosmiths, looks at ways to avoid job losses
One alternative to redundancy that many employers have been exploring is changing terms and conditions, on either a temporary or permanent basis. Even if an employer is already consulting with its staff about possible redundancies it needs to remember that it has a duty to consider alternatives to dismissals. Many companies have successfully negotiated with their workforces recently to reduce working hours and pay, to take unpaid sabbaticals or to give up certain benefits. Employees are often willing to do this if it means that they will keep their job.
Changes to contractual terms and conditions cannot be imposed on employees unilaterally - it must be done with their consent. An employer who tries to force changes onto an employee could find themselves facing a claim for breach of contract and/or constructive dismissal.
Persuading employees to accept such changes to their terms and conditions requires an effective communications programme.
Be clear about your motive for requiring the change. Is there a good business reason? Consider the impact of the proposed change on the employees. Is there any alternative to this particular change which might have a less detrimental effect on the employees? Can the effects of the proposed change be mitigated in some other way?
Look at the documentation. Is this a contractual change or a change to a discretionary term? If the former, review the contractual term to see if it can be read as giving you flexibility or whether there is any other flexibility in the employment contract to make the changes. Don’t assume that all employees have the same terms.
If the change is to a contractual term, consent will be needed. Decide whether you will require express agreement in writing from the employees or rely on implied consent. Written consent is usually the preferable way of evidencing acceptance, an email would suffice.
Consider the likelihood of the employees’ agreement to the change and, in the event of the employees failing to agree, what the consequence of that will be.
Consider the numbers of employees affected. Assess whether collective consultation with a trade union or other employee representative body will be required or whether consultation will be carried out on an individual basis only.
Carefully plan your communications programme and draft the documentation which will be sent to the employees.
Consider whether obligations to consult under specific legislation apply, for example, information and consultation of employees, European works councils, collective redundancy consultation and pension consultation requirements.
Consult with employee and/or employee representatives to reach agreement on the changes. Explain fully why the changes are proposed and the consequences of them not being accepted - effectively you need to ‘sell’ the changes to the employees. Give employees the opportunity to ask questions or suggest alternatives. Keep a record of the consultation meetings.
Write to the employees formally setting out the proposed changes and reasons. You could include a tear off strip for employees to reply, indicating whether or not they accept. Impose a deadline for a response.
If the employees all agree then a written statement of the change should be sent to them. If not all the employees agree then you will need to consider your options.
Make sure that you actively consider any alternative proposals or specific objections raised during the consultation. In some cases, it may be appropriate to allow objectors to remain on their old terms and conditions.
Where this is not viable the only option may be to terminate on notice with re-employment offered on the new terms. However, this should be a last resort: remember that the statutory dismissal procedures will apply where fewer than 20 employees are to be dismissed.