Changing Employment Contracts: terminations and notice periods

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There are many situations where an employee or employer may want to vary an employment contract or even terminate them altogether, but what are the pitfalls involved?

Changing an employment contract

Any change to an employment contract usually needs to be agreed by both employee and employer, although an employee can insist on a change if it is a legal right (for example, not working on a Sunday).

Employers should consult or negotiate with employees or their representatives and explain the reasons for the change. 

Once a change has been agreed, the employer needs to update the terms of their employees’ written statement of employment conditions and inform the employees in writing within a month of the exact changes made.

If a contract contains a flexibility clause, the employer has a right to change some employment conditions, such as location, but only if the changes are reasonable. 

If an employer changes a contract without agreement employees may have the right to: 

It is important for the employee to say they disagree with new terms and conditions as if they do not, they may be deemed to be agreeing to the changes.

In extreme circumstances, such as where a company need to cut costs, employers may want to end an employee’s employment contract and re-employ them on new terms and conditions. This may be regarded as a fair reason for dismissal as long as the employer can show the reason was genuine and they followed all the required legal procedures for dismissing someone.

However, there is always the possibility that the dismissal will be deemed unfair at employment tribunal and the employer runs the risk of losing the employee altogether or at least irrevocably damaging morale.

Termination of contracts

Both an employee and an employer have a right to terminate an employment contract: the former through resignation or retirement; the latter through dismissal or redundancy.

For a notice of termination to be valid it needs to be in writing and include the date of termination. Employees should be paid their normal pay during the notice period. Both the employee and employer are usually entitled to a minimum period of notice on termination of employment.

A notice period can be statutory or contractual. Statutory notice is the minimum amount of notice that can legally be given, while contractual notice is the amount of notice an employer can set out in the employment contract. 

Statutory notice

Employees must give their employer at least one week’s notice once they have worked continuously for one month. 

Employers should give an employee one week’s notice if they have been employed continuously for between one month and two years. Employees who have worked for two years must be given two weeks’ notice, plus an extra week’s notice for each further complete year of continuous employment, up to a maximum of 12 weeks. 

Contractual notice

Contractual notice as set out in the terms and conditions of employment can be longer than the statutory notice but not shorter. It is common for an employer, for example, to require an employee to give one month’s notice, instead of the statutorily required week.

Dismissal without notice

An employer may dismiss an employee without notice on the grounds of gross misconduct. This would involve an employee committing a serious act such as theft, violence, physical abuse, serious health and safety violations or gross negligence. 

A fair disciplinary procedure must be followed prior to the dismissal and employers should give employees a clear indication of the type of issues that could constitute gross misconduct in the staff handbook.

Fair dismissals

As well as acting reasonably and following procedure during the dismissal and disciplinary process, employers must have a valid reason for dismissing an employee which includes redundancy, their capability or conduct or something that stops them from legally doing their job, for example, a driver losing their driving licence.

Employees can still bring a claim of unfair dismissal if the reason the employer gives for the dismissal was not the real one, the reason was unfair, or they acted unreasonably. Some reasons, such as pregnancy or parental leave are classed as automatically unfair even if the employer acted reasonably.

For further information on changing employment contracts or advice on any other employment law matter, please contact us on 01732 770660 or enquiries@warners.law. Warners Solicitors has offices in Sevenoaks and Tonbridge, Kent.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.

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