In times of economic shifts, employers may find themselves going through the employment contracts to check their flexibility.
Varying contracts regarding wages, working hours and benefits can be a better solution than opting for redundancy. In a changing economic climate, a variation of contracts can benefit both employer and staff.
But the process is seldom straightforward, and employers need to strike a balance between business needs and the best interests of employees.
The process of varying contracts
When an employer decides to undertake the complicated process of varying employee contractual terms, they should consider the following:
- Mutual agreement: because contracts are binding, both employer and employee must agree to the terms of new employment contracts.
- Without an agreement, the employer would be in breach of contract and the worker can sue. That’s why it’s crucial that employers secure either the employee’s agreement or that of their union.
- Pre-existing flexibility: employment contracts that have flexibility clauses allow employers to make changes necessary for the business without the need for staff approval.
- An example of flexibility would be employers having the right to change worker duties and job descriptions to accommodate business needs.
- Getting agreement: changing the terms of the contract is never a popular move, especially if it will impact pay or working conditions.
- Employers will need to lay down their case for why they need to vary the contract. Listening to worker feedback and trying to reach a middle ground is the best way to secure employee agreement.
- Confirming agreement: once employees agree to new terms, employers should document their agreement in writing. This is followed by notifying them of the changes within one month.
If the employee doesn’t agree
With drastic changes to employment contracts, employers can expect to meet resistance among the employees. If one or more of the staff reject the changes, employers might consider terminating their contracts then rehiring them on new contracts.
This, however, should be an employer’s last resort and should follow extensive consultation with employees to get them to agree to the contractual changes.
Varying a contract is a complex process that requires agreement between employer and employee. Changes to pay and working hours are usually not popular, and employers need to plan well and assess the risks before starting that process.