Member Article

Take extra care if reducing staff hours

In the present economic climate many businesses are finding that they need to change their employees’ Contracts of Employment. Usually this involves reduced hours of work appropriate to their Company’s changed circumstances.

The golden rule is that employers cannot impose changes on existing employees Contracts of Employment without individual Staff agreement. Any changes made to Contracts must be agreed with the individual Staff member, or their representative.

Once agreed, the changes must be recorded in writing and signed by both parties within one month of the date the changes taking effect.

In the absence of an up-to-date Contract of Employment, {to comply with Employment Law, these must be issued to every employee within two months of starting work with the Company}. implied Terms & Conditions of Employment will apply. This means that it is that which the employee is actually performing, or has performed, during their employment with the Company that counts. It is not what is written into any Contract which applies but that work which is different to the Contract that has, or is being performed by the employee during the course of their employment. That is the Implied Term basis of their Contract with the Company.

Failure to obtain the agreement to vary the individal employee’s Contract of Employment and impose the changes unilaterally may result in a successful claim being brought to the Employment Tribunal for Breach of Contract. If successful, this can attract an award of up to £25,000.

It is unsafe to think that if employees do not agree to any changes to their Contracts of Employment, that 90 days notice can be given to impose the changes.

The safest, and legally correct process to obtain agreement to any changes is to meet, consult and be open, honest and transparent with Staff {or their representative} and let them have sight of any documents, for instance; if appropriate, a set of Accounts showing the Company’s true financial position, or figures showing declining business patterns, which results in a requirement for a corresponding reduction in the hours worked by Staff. Alternatively, you could provide the Staff with details of your proposal for reducing hours and ask them to agree between themselves the required reduction in hours. For financial reasons, some Staff may be able to work less hours than others? This approach, if handled properly, often produces excellent results.

Documents of this type, shown to Staff {or their representative} will greatly assist in obtaining the agreement of Staff; This will plainly describe the valid reasons for the employer needing to make the changes.

This can sometimes be a lengthy process but it is much better to have the Staff “on-side” and fully understand the reasons for making the changes.

The fact that there is a mechanism requiring employers to notify Staff of changes to Particulars of Written Statement {Contract of Employment} does not alter the basic Contractual principle; any changes must be agreed by Staff {or their representative} and cannot be changed unilaterally.

All staff must be issued with written details of their employement within two month’s of starting work.

Contracts of Employment do not have to be in writing but under the 1996 Employment Rights Act {ERA} the most important part of their Contract “The Written Statement of Employment Particulars” must be given to all new staff.

This applies to any Staff member employed for longer than a period of two month’s. Existing Staff are also entitled to a smilar written statement. New legal requirements are frequently enacted, normally each April and October, so it is advisable that an experienced and qualified HR Professional reviews the text of a written Contract and/or of Particulars prior to it being issued.

If the employer fails to provide the written Statement, the employee may make a complaint to the Employment Tribunal within three month’s of the employer failing to provide the Statement. If there is no Statement, or the Statement is found to be inaccurate or incomplete the Tribunal can award compensation of two or four weeks pay capped at the current statutory maximum of £450.00. With effect from; February 2013.

This compensation is, however, only payable when there is a successful claim at the Employment Tribunal, for instance; Unfair dismissal.

This is a complex area in which it is good practice to seek professional advice.

This was posted in Bdaily's Members' News section by Andrew Dane .