Employment Law

Headlines abound about redundancies and firms closing but, interspersed among these are stories surrounding other approaches being taken to cope with the economic downturn. This is particularly so in the automotive manufacturing sector where, since the autumn of 2008, a number of strategies have come to light. These include:

• Extended Christmas and New Year shutdowns
• Employees/employee representatives voting to accept pay cuts
• Employees/representatives accepting shorter working weeks for the same or less pay
• Employers encouraging employees to take sabbaticals or engage in training which will make them more effective once recovery begins or more attractive to other employers
• Closures of plants for several months

The approach of workers and employers coming together in a bid to retain jobs, vital skills and the business is in striking contrast to many of the images conjured up of the industrial relations' landscape of the 1970s. It does not absolve employers, however, from having to consider the legal responsibilities and ramifications of changing contracts of employment and associated terms and conditions.

Fergal Dowling, partner and head of employment law at the Midlands' offices of law firm Irwin Mitchell, considers the potential impact and ramifications of these issues.

"It is encouraging to see both sides, if one should consider them in those terms, doing their utmost to preserve jobs and skills," he says. "Where employers and employees are in splendid accord on the introduction of flexible working practices, the transition should be relatively straightforward. It is where one side imposes its decision upon the other that there is the opportunity of disagreement which could lead to tribunal or court proceedings."

Employers must ensure that they are fully aware of the details they and their employees agreed to in their contracts of employment. These details may have been agreed to and recorded in writing, they may have been reached during verbal debate or they may reflect custom and practice within a sector. Should there be a handbook issued to staff upon recruitment, any policies and procedures it contains could be construed as elements of the contract.

There are several means of both parties arriving at changes to the contracts of employment and, while some elements of contracts may on occasion be arrived at verbally or orally as already alluded to, if making changes it is always better to do so in writing, so that there is documentary evidence.

Changes should not be made without reference to employee representatives. It may that the employees are members of a union in which case negotiations could be conducted with representatives who would then submit proposals to the employees. While the paperwork of the individual contracts would still need to be amended if changes are agreed, the process can be more efficient, although employers need to remember that an individual employee may still object to changes.

It is worth noting that some contracts allow an employer to change details without consultation or unilaterally, although taking such action might well give rise to employees feeling aggrieved. Continuing in a similar vein, some employers may feel the urge to make amendments to the contract and simply expect that employees will fall into line with them.

In such an event the employees may well work under the new regime but establish that it is under protest, leaving them the option of suing for breach of contract, a position known as 'stand and sue'. This would be brought in the High Court or county court as an employment tribunal's purview relates only to issues arising from termination of employment. In addition, an employee has up to six years in which to decide to make a claim as opposed to three months in the instance of a tribunal.

Employees would need to recognise that should they continue working, their conduct could be interpreted as an acceptance of the new terms. They could, of course, simply refuse to work in line with the new contractual terms or resign and claim constructive dismissal. The latter option can only apply if the employees can demonstrate that the changes to the contracts are so fundamental that they can regard the contracts as having ended and been breached and that is the catalyst for their resignation.

Some employers may determine to dismiss their employees and then offer them the opportunity of re-employment under new terms. Again, the employers run the risk of ill feeling among the workforce, the possibility of losing skills they need for the business to continue trading in the event that their former employees reject the offer of renewed employment. Any such dismissal, however, would need to be deemed fair and reasonable.

It is to be hoped that phrases such as 'lay-off' and short-time working do not become as common as they were in the last century, even though these strategies may appeal to employers who are facing cash-flow difficulties.