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Terms they are a’changing: How might changes to terms and condition change in a post-covid world?

By Charlie Maples

27 May 2021 | 5 minute read

HR practitioners around the world are familiar with changing terms and conditions within contracts. Sometimes this results in the nuclear option of terminating an individual's contract and offering a re-engagement with new terms where a business has sought, without success, to agree changes to terms and conditions that the business needs, these types of changes are usually detrimental changes. Otherwise there is not usually an issue in gaining agreement.

Refusing a change to terms and conditions can result in a fair dismissal

Dismissals for refusing to accept changes to terms and conditions can be fair, by reason of Some Other Substantial Reason, however, a business will have to demonstrate:

That the changes were imposed for a sound business reason that was neither arbitrary, capricious or trivial; and
Dismissal was within the range of decisions which a reasonable employer could reach in the circumstances. Assessing this usually entails balancing-up the following factors:

Your motives for introducing the changes.
The employees' reasons for rejecting the changes.
Whether the employees were given reasonable warning.
Whether the changes and full effect of those changes were sufficiently and clearly explained.
Whether you assessed the impact of the changes on employees.
Whether you considered alternatives.
Whether you sought to gain the employees' voluntary agreement to any of the changes.
Whether a reasonable and genuine consultation process has taken place, including listening to an employee's reasons for rejecting the changes, responding reasonably to objections and making concessions, where reasonable to do so.
Whether a majority of the employees affected have accepted the changes.
Whether any recognised trade union recommended or objected to the changes.

As an alternative to dismissal and re-engaging, employers will sometimes run a risk of imposing smaller or temporary changes in the hope that employees will simply accept them in practice. This is open to employees to continue to work under duress, effectively reserving their rights in respect of potential claims in some circumstances.

How has the pandemic changed terms and conditions?

The coronavirus pandemic changed the world of work, dramatically. In response, some employers found themselves implementing major changes to employees' terms and conditions, either just to make work possible, to make workplaces safe or to make a business viable and stave off redundancies.

Common changes included amends to place of work, duties, hours of work or pay. The way in which those changes were implemented varied depending on the urgency and basis for the change as well, to some extent, on whether it was intended to be temporary or permanent.

Khatun V Winn Solicitors Ltd

A firm of solicitors recently lost a claim for unfair dismissal after dismissing a solicitor who refused to agree changes to her employment contract that would have given the firm the freedom to unilaterally reduce her pay and hours to 80% or place her on furlough on 5 days’ notice.

The Tribunal found that the firm did have “sound, good business reason” for seeking to implement the contractual variation given the effect of the pandemic on business, so it did meet the test for Some Other Substantial Reason. However, the dismissal was unfair because there was no meaningful consultation entered into at all and the firm had not reasonably explored alternatives to dismissal.

The firm had been clear from the outset about its intention to dismiss anyone who did not agree the contractual changes in order that its COVID plan could be immediately implemented, which may be why the Claimant was the only employee out of 300 who had effused to sign the variation. (Khatun v Winn Solicitors Ltd ET/2501492/2020).

Some commentators are concerned however that the pandemic has served to exacerbate a growing trend for employers to seek to foist downgraded terms and conditions onto employees in a process they have coined "levelling down" (in direct response to the Government's touted intention to set a "levelling-up" agenda).

Impact of fire and re-hire tactics

The Trades Union Congress (TUC) recently reported that, according to a poll they had carried out, since March 2020:

nearly 10% of workers had been told to re-apply for their jobs on worse terms and conditions or be dismissed; and 25% of workers reported that their working terms (such as pay or hours) had been downgraded (something the union referred to as 'levelling down').

The TUC highlighted that the impact of what they termed "fire and re-hire" tactics was disproportionately impacting upon workers who were young, BME and/or working class and they called on the government to outlaw the practice of dismissal and re-engagement on new terms as a tactic used to bring about detrimental changes to employees' terms and conditions.

MPs debated the use of "fire and re-hire" tactics towards the end of April 2021 (in a debate which was oversubscribed). During the debate it was reported that the Business Minister (Paul Scully MP) confirmed that the Government is "fully considering" publishing an ACAS report of fire and re-hire practices that it commissioned in 2020 and received in February 2021 but not yet released (and which ACAS have declined to provide in response to a Freedom of Interest request on public interest grounds).

He also indicated that whilst he considered that fire and re-hire tactics should be an option of last resort, that the Government was minded to "tread carefully" before interfering in commercial contractual matters between employers and employees, and it needs to balance protection from unfair practices with enabling businesses to take decisions to preserve commercial viability.

It remains unclear if, when or how the Government will choose to tackle the fire and re-hire practices (and the negative impact of them that one might surmise is laid out in the ACAS report).

The Government is probably struggling to find the appropriate way to balance a much-needed bounce back for businesses, with their 2019 commitment to improve workers’ rights, promote fairness in the workplace, and establish a new single enforcement body to offer greater protection to workers. There was certainly some anticipation that the promised Employment Bill would feature in the Queen's Speech on 11 May 2021 - and anger from some groups when it became clear there was no mention of improving employment rights in the government's legislative programme.

Conclusion

As an employer, if you are considering dismissal and re-engagement to get terms and conditions:

Bearing in mind the significant strength of feeling from unions and large numbers of MPs on the topic (especially given the strong union reaction to many of the changes that employers introduced to try to manage the potential impact of the pandemic on their business).
Consider the negative PR that has befallen companies like British Gas for deploying such tactics to seek to secure substantial pay and longer hours for employees.
Give careful consideration to the implications of deploying such tactics where they are not genuinely needed as the damage to morale and loyalty of those employees who remain with you is likely to outweigh the gains in the long-run.

In addition, employers should exercise caution around expecting to be able to continue with changes which were introduced temporarily in the pandemic where those changes financially benefit you as a business (with no obvious other advantage).