News & Updates

Changing employees’ contracts of employment

Sky News recently ran an article entitled ‘12,000’ Asda staff currently face sack in bitter contract dispute. It is a complex issue that the company is facing, so we asked our Senior HR Advisor, Ben Crawford, to give us his thoughts and advice on the subject…

Ben Crawford
Senior HR Advisor

From time to time, and for a range of different reasons, employers may be required to make changes to employee’s contracts of employment.  There are three ways in which this can be brought about:

  1. Through a variation term/flexibility clause. This is a clause contained within the contract of employment which allows for specific terms of the contract to be changed, with the employer following the set out process and giving the agreed notice.
  2. Through agreement, either from the employee directly or through an employee’s representative (i.e. trade union). If the employee agrees to the proposed change it is advisable to have the employee give written agreement to this change in contractual terms.
  3. The employer forcing a new contract on employees. It is usually advised that employers seek the agreement of the employees in the first place. However, if this cannot be reached and the company has genuine business reasons for needing to make the change, it can be bought about dismissing the employees under their current contract of employment and rehiring the employees under the new terms and conditions of employment. 

Option number 3 should be used as a last resort as this could lead to Employment Tribunal claims from employees and this is the situation that Asda currently find themselves in following them trying to bring about changes to more than 100,000 of their employees. Whilst the changes will look to increase the basic hourly rate for staff, it is also looks to bring to an end paid breaks, cuts in additional rates for working bank holidays and a reduction in better paid ‘night-shift’ hours. The contractual changes will also require employees to accept more variable shifts between 8am and 10pm as well as being required to work across different departments dependent upon business needs.

Asda has been in consultation with its staff and representatives and, whilst it believes that 95% of the affected staff will be financially better off after the contract changes and the vast majority will agree to the changes, it is quoted that at least 12,000 staff will not agree and therefore could be dismissed at the end of the notice period, which is due to end on the 2nd November. In the latest agreement, Asda have agreed to top up wages until mid-2021 for those who will lose out under the new contract. Despite the number of employees who have yet to agree to the changes, plans continue to enforce them.

This could result in 12,000 staff being dismissed come 2nd November and the company receiving a huge number of tribunal claims for unfair dismissal. This will then be a question for the tribunal as to whether the increase in hourly rate, which Asda has offered in consideration for removing the other benefits is reasonable. Asda may argue that the vast majority of its staff have agreed to the change and that those who will be financially worse off, will have wages topped up for an 18 month period and therefore the contractual changes are reasonable. It will be interesting to see how this pans out.

In conclusion, if an employer is looking to make amendments to an employee’s contract of employment, which is does not have the contractual right to do so, the best way to try and bring this change about is with the employee’s agreement. Where the contractual changes will result in a loss of benefit or a worsening in terms and conditions, a financial inducement may be needed to obtain the employee’s agreement. If an agreement cannot be reached and the employer still needs to impose the change, it can look to do this unilaterally, however this course of action is not without its dangers.

Should you need to amend an employees terms of employment, please feel free to contact #oneoftheteam on 01427 678 660.