David Seals Partner Employment Department Downs Solicitors LLP

Transcription

1 Changing Terms and Conditions of Employment Avoiding the Pitfalls Surrey Care Association Tuesday, 24 May 2011 SPEAKER David Seals Partner Employment Department Downs Solicitors LLP 1

2 OVERVIEW Current economic conditions: need to change T&Cs Need to make reduction to overheads Examples of changes required Pay reductions Downgrading sick pay entitlements Reducing overtime rates Removing enhanced rates e.g. for working Bank Holidays Changing hours/rota arrangements/shift patterns MYTHS/MISCONCEPTIONS It s impossible to change T&Cs unless employees agree Any change to T&Cs will result in constructive dismissal Changing T&Cs can simply be done by giving 1 month s notice of change 2

3 SUMMARY OF LEGAL POSITION Employers are generally able to change T&Cs where there is a sound business reason for change Procedure adopted is often critical Potential for employment claims if you get it wrong POTENTIAL EMPLOYMENT CLAIMS Unfair constructive dismissal Breach of contract Unlawful deduction from wages Indirect discrimination Protective awards (and others) 3

4 CONSIDERING CHANGES TO T&Cs What are you changing? What are the current T&Cs? Is there a change here? Alternatively, is the change one of policy etc, i.e. non-contractual? If so, there is no change to T&Cs and therefore no/little risk of employment claims IDENTIFYING WHAT THE T&Cs ARE Express terms e.g. written contract of employment Implied terms: by law duty of trust and confidence by custom and practice Incorporated terms: by statute e.g. - Equality clause - National minimum wage - Statutory minimum notice by collective agreement 4

5 IDENTIFYING WHAT THE T&Cs ARE Status of employee handbooks Policies/procedures Contractual or non-contractual? Consider whether changing non-contractual policy could breach implied term for trust and confidence Arbitrary/capricious changes likely to breach implied term DIFFERENT POSSIBILITIES The relevant matter is non-contractual and therefore no change to T&Cs The express terms are flexible/broad enough to allow the change There is a definite change to T&Cs 5

6 FLEXIBILITY CLAUSES Specific e.g. re place of work General e.g. allowing any changes to T&Cs on notice To be treated with caution Courts/Tribunals will generally construe these narrowly Any ambiguity will be construed in employees favour General flexibility clauses particularly open to challenge Assume these will only allow reasonable/minor changes to administrative matters not detrimental to employees CHANGE TO T&Cs EMPLOYER S OPTIONS Obtain employees agreement Impose change unilaterally and treat employee s inaction as acceptance (and therefore agreement) Dismiss employees with offer to re-engage on new T&Cs 6

7 UNILATERAL CHANGE TO T&Cs Risky option Employee may: - stand and sue - resign and claim constructive dismissal - refuse to comply with new terms (e.g. change in duties/hours) EMPLOYEE STANDS AND SUES Employee remains employed Works under protest but complies with new terms In pay cases, potential for employer to face claims of breach of contract (County Court) or unlawful deduction from wages (Employment Tribunal) 7

8 CONSTRUCTIVE DISMISSAL There must be a fundamental breach of contract Technical breaches - e.g. minor change to hours/rota Resignation must be for no other reason Delay by employee in resigning likely to be fatal to claim REFUSAL BY EMPLOYEES TO COMPLY WITH NEW TERMS E.g. change to duties/hours/rota Damage to morale/disruption of operations Disciplinary action Dismissal Potential claims for constructive or unfair dismissal 8

9 DISMISSAL AND RE-ENGAGEMENT ON NEW T&Cs Avoids risks of unilateral change to terms Potential of unfair dismissal claim if not properly implemented UNFAIR DISMISSAL CLAIM Claim will fail provided employer can show: - sound business reason for change to T&Cs - it acted reasonably in dismissing because of refusal to agree new terms Sound business reason: low threshold of proof Reasonableness of dismissal focus on procedure adopted 9

10 UNFAIR DISMISSAL CLAIM REASONABLENESS OF DISMISSAL Common factors taken into account: - employer s motives for introducing the change - employees reasons for refusal to agree - whether employees given reasonable notice of intended changes - whether the full effect of changes have been sufficiently explained to employees - whether impact of change on employees has been considered - whether the employer has considered alternatives to the change - whether the employer has attempted to obtain the voluntary agreement of employees - whether a reasonable consultation exercise has taken place - whether a majority of employees have accepted the change - whether a recognised trade union has recommended or objected to the change EXAMPLE PROCEDURE Twilight Care has 2 nursing homes 58 staff Contracts of employment Sunset home has 19 staff Sunset staff get paid triple time for Bank Holidays Other staff get 1.5 time for Bank Holidays Judith Winchester, owner of Twilight Care, wants to reduce costs by putting all staff on 1.5 time for Bank Holidays Sunset was acquired 8 years ago Change proposed to take effect from 1 August

11 TWILIGHT CARE Spot the potential problem? STAGE 1 (As soon as possible) meeting to be held with the 19 staff to announce proposal At meeting, proposed change and reason for it explained Employees asked to consider the proposal and told individual consultation will follow 11

12 STAGE 2 Hold individual consultation meetings with the affected staff Purpose of meetings: obtain feedback, note any objections and the reasons for objections No legal requirement for employees to be offered companion at meetings STAGE 3 Judith Winchester to consider the outcome of the consultation meetings Should proposal be varied to address concerns? 12

13 STAGE 4 Further individual consultation meetings with staff who had objections Respond to concerns raised Employees warned that if agreement cannot be reached, then it is open to Twilight Care to terminate employment contracts on notice with offer of re-engagement on new T&Cs Stress that this is a last resort and it is hoped voluntary agreement of all staff will be obtained STAGE 5 Consider any further verbal/written representations from staff Consider whether any further consultation meetings are necessary 13

14 STAGE 6 Write to all affected staff confirming intention to implement proposed change State deadline by which staff must agree failing which notice of termination with offers of re-engagement on new terms will be issued STAGE 7 Deal with any employees who have not agreed by the deadline or indicated their refusal to agree Hold individual meetings to discuss refusal to agree and proposed termination of employment Allow employees to make representations Right to be accompanied 14

15 STAGE 8 Issue notice of termination and offer of re-engagement on new terms to those remaining staff refusing to agree Contractual/statutory notice to be given Right of appeal stated STAGE 9 Hold appeal meetings (if appropriate) Right to be accompanied Notify employees of appeal outcome 15

16 TWILIGHT CARE Potential problem COMPLICATIONS Collective redundancies (20+ dismissals) TUPE (business transfer) Information and Consultation Regulations 2004 Pensions Act 2004 Indirect discrimination (Equality Act 2010) Working Time Regulations

17 MATTHEW KILGANNON DAVID SEALS NICOLA O DWYER PARTNER PARTNER ASSOCIATE T: T: T: F: F: F: E: m.kilgannon@downslaw.co.uk E: d.seals@downslaw.co.uk E: n.odwyer@downslaw.co.uk Downs Solicitors LLP, 156 High Street, Dorking, Surrey, RH4 1BQ and The Tanners, 75 Meadrow, Godalming, Surrey, GU7 3HU T: F: E: enquiries@downslaw.co.uk 17