Can an employer impose changes to contracts?
The recent difficult negotiations between the Ministry of Health and BMA over the new contract for junior doctors have brought an important area of employment law to the fore: can an employer impose changes to employment contracts without the employees’ consent?
An employer can impose a change without consent in two ways: through unilaterally imposing a change to the contract, or by dismissing the employee and engaging them on a new contract. Each route contains risk.
Imposing a change without consent
Making a unilateral change (unless the contract specifically provides how changes can be made) without consent may allow an employee to:
- Work under the new terms in protest and bring a claim for breach of contract or unlawful deduction of wages;
- If the breach is fundamental, resign and claim constructive dismissal; or
- Simply refuse to work under the new terms, as junior doctors appear to have done.
Often, employers decide against imposing changes unilaterally because of the potential for unrest in the workplace, not least the administrative challenges if some accept the changes and others refuse. Others find it worth the risks, particularly where the changes are central to a change of business direction or essential to keep the business profitable.
Dismissal and re-engagement
Where employees do not consent to a change, and it is not commercially viable to abandon or delay it, an employer’s best option may be to terminate the existing contract and offer continued employment under new terms.
This is a clean and simple way to change terms but it risks unfair dismissal claims (there is a dismissal even if the employee accepts the new contract). To defend an unfair dismissal claim you will need to establish a potentially fair reason for the dismissal and show that you acted reasonably in dismissing for failing to agree to the new terms.
A dismissal following a failure to agree to a change in terms will almost always be unfair where you have failed to follow any consultation procedure, even if the business is faced with financial difficulties. Discussion should take place about the reasons for the change, how it will affect the employees and the consequences of failing to agree to it.
It is also very important to determine how many employees may be affected by the change as if there are twenty or more, this creates an obligation to follow a collective consultation procedure.
We regularly provide advice to employers to ensure that they follow a fair process for both collective and individual processes in this area. If you are an employer and are contemplating using this method, we recommend that you get in touch with us as early as possible.
In the NHS dispute, the Secretary of State has opted to take neither of these routes and proposes to simply make the new contracts effective for only new junior doctors. This option is effective in that circumstance because there is a large turnover of junior doctors but will not be available for the vast majority of employers.
What about the judicial review that has been proposed?
Recent reports have suggested that the BMA believes it has found legal grounds for a challenge under the Equality Act 2010. They allege that the government has not given “due regard” to equalities issues, which is typically achieved through carrying out an equality impact assessment.
The BMA has said that the government has failed to provide evidence such an assessment has been done and so will challenge the government in the courts over it. This obligation will not be relevant for most employers, as it only applies to public authorities, but is a good example of the severe repercussions which can be sparked by changing contractual terms without consent.