Since the onset of Covid-19, employers have been getting to grips with making the necessary changes to maintain their businesses. In many cases, difficult decisions are required to secure competitive advantage, or even just to remain in business.
Employers are having to engage with their employees to seek ways in which could bring savings to the company, but also benefit the employee, e.g. career breaks, additional unpaid annual leave and flexible working arrangements which previously may not have been possible when the business demands were greater. Where sufficient savings can be made with such changes, it avoids the employer making variations to a contract on a compulsory basis.
Unfortunately, given the current economic circumstances, the above solutions may not be enough, and an employer may have no other option but to make a change to their contract. The company may require an employee/s: to work different hours or days, to change their job titles, duties, and responsibilities or even reduce their salary or benefits. These changes might benefit both parties as the employees keep their employment, although on lesser terms and conditions, and employers retain key skills and experience.
For an employer to legitimately add, remove or modify terms to their employee’s contract, they must reach an agreement with the employee and obtain their consent for making such change. An employment contract comprised of the agreed terms and conditions between both parties and therefore a change to these terms must be bilaterally made.
If an employer makes the change to the contract without obtaining the consent of the employee/s, there are possible risks to the employer such as:
- Claim of constructive dismissal under the Unfair Dismissal Acts 1977-2007. (The employee left employment because they were unable to endure a situation at work caused by the company)
- Claim for damages for breach of contract. (Where an employee’s contractual terms were altered without their consent)
- Claim in respect of an unlawful deduction under the Payment of Wages Act 1991. (For an unlawful pay cut)
- A trade dispute under the Industrial Relations Acts 1964 -2004. (The employee’s minimum rates of pay, holidays, working hours, working conditions could be improved upon)
When it comes to changing terms and conditions, much depends on how the issue is communicated. This issue should be announced collectively and discussed in a transparent manner. The employer should encourage employees to come forward with their own suggestions as they have a right to negotiate this change. The employer should provide the employee with as much information as possible (i.e., their purposes for requesting such change, for example, sales, turnover, profit and even a possible reversion to this change).
By starting this process of consultation early, the employer has time to consider options, meet with staff individually and most importantly, listen to the employee’s concerns and preferences. Any change to an employment contract requires mutual consent, therefore consultation on this change is imperative.
As outlined under the Terms of Employment (Information) Act 1994 to 2001, the employer must provide the employee/s with written confirmation giving one months’ notice to the change. It is crucial that an agreement has been reached before the change is made.
Employers should continue to make necessary decisions to secure the future of their companies, but appropriate consideration should be had where changes to employment contracts are essential.
If you have a concern about drafting or amending an employment contract you can contact Emma at SFA on 01 605 1668 or at email@example.com or visit our HR and Employment Law advice section on www.sfa.ie