Employment Team Hereford Breakfast MeetingThursday 11 September 2014

“All Change” Restructuring, Redundancy and Changing Terms & Conditions

Michael Stokes, Partner andRebecca Kirk, Solicitor

Employment Team

All Change

• Nothing stays the same• The way work is done changes every time

products or services change• Employers have to keep up with those changes

What can Change?

• Management Structures• Allocation of work • Amount of work• Timing of work – working days and hours• Location of work• Type of work• Contracting out

What are you starting with?

• Contracts of employment?• Job descriptions?• Person specifications?• Handbooks?• Management structures – Teams – Departments• Current practice – “the way we do things”

Restructuring

• Can be used to describe a lot of different kinds of change

• Sometimes used as a euphemism for redundancy• Changes to tasks, status, pay, hours ….• Will it end in redundancy?• Is consultation or agreement required?

“Organic” Change

• Possibly the norm• Change can be so gradual that it goes unnoticed• Can work perfectly• But can leave documents out of date• Can create uncertainty• Danger of an employee referring back to old contract

Planning for Change

• Are changes to contracts needed?• Can you get by without changing the contract?• Individual consultation?• Collective consultation?

Changing Terms and Conditions

• Any change requires the agreement of both parties• But agreement can arise in many ways• Explicit agreement• Prior agreement – where the right to vary is in the

contract itself• Collective agreement• Acquiescence – doing nothing after a unilateral

variation• Dismissal and re-engagement

Consultation

• Good practice to talk to your workforce – of course• If you might need to dismiss and re-engage 20 or

more employees, you are required to carry out collective consultation

• Dismissals that are to effect changes to contracts are treated as if they are redundancies for statutory consultation purposes – where 20 or more are involved

• Big penalties for failure to consult

Changing Terms – Agreement or Not?

• Always worth trying to agree changes by way of consultation, explanation, offer and acceptance

• Once signed, the new contract is binding and there is no dismissal – so can’t be unfair

• If they won’t accept, there are a few options but the ultimate option is to give contractual notice and offer to re-engage them on the new terms

Dismissal and Re-engagement

• If you give notice of termination and offer re-engagement, you are still dismissing the employee

• You have to be careful to avoid unfair dismissal claims

• Even if the employee agrees to the new terms, they can still make a claim

• You need to have a compelling reason to make the change and to have followed a fair procedure

Taking a Chance

• Employers sometimes just make changes and either don’t know there might be a problem or are willing to take a chance

• If the employee does nothing, they can be taken to have accepted what would be the breach of contract by the employer in making the change

• The employee can reserve their position by making a protest at the time, or they might resign and claim constructive dismissal

Redundancy

• If your restructure involves less work being done or the closure of part of your organisation, you are considering dismissing one or more of your employees for redundancy

• It is open to you to offer your workforce less favourable terms or fewer hours in order to avoid redundancies

• This will not always solve the problem

Redundancy

• A talk all on its own• Consider who might be at risk of redundancy• Consultation• What is your pool for selection?• Is anyone “self-selecting”?• How are you going to choose who to make redundant?• Selection criteria

Redundancy Consultation

• Collective consultation if 20 or more being dismissed within a period of 90 days

• Collective consultation needs to commence at least 30 days before giving notice if 20-99 employees involved, 45 days before if 100+

• Need to tie in with individual consultation – carried out as part of dismissing employees fairly

• Get advice and have a plan!

Redundancy Selection

• Self-selection of those in unique roles – are you sure?• Include your selection criteria as part of your

redundancy consultation• Think about what you are trying to achieve• What qualities are you looking for?• Formulate criteria accordingly• Try to avoid subjective criteria – where is your

evidence? Keep it objective

Redundancy Selection Criteria• Attendance – but watch out for disability• Service – can be discriminatory on grounds of age but ok

if part of a range of criteria – LIFO is out• Disciplinary record• Skills/Flexibility• Performance – how is it measured?• “Attitude” – be careful!• Are your criteria capable of operating fairly, and are you

applying them fairly?

Contracting Out - TUPE

• Another talk on its own!• If your restructure involves you transferring part

of your business to someone else, or having one of your functions carried out by an outside contractor, you are potentially heading for a relevant transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006

TUPE

• Get some advice!• Consultation obligations• In a relevant transfer, affected employees would

expect to transfer to the new owner/service provider with all their terms and their service intact

• Pensions are dealt with separately in a TUPE transfer

• Employees who do transfer are not dismissed by you – so no unfair dismissal and no redundancy

Tidying Up

• Once you have been through a reorganisation, consider your documents

• Do you need to modernise contracts or make them tally with the new arrangements?

• Does everyone know what the new structure is and what their place in it is?

• If you’ve “gone organic” – think about new job descriptions (if you had them in the first place)

QUESTIONS

Thank You