08 February 2022
Consultation is King: How can Guernsey employers lawfully introduce changes to the contract of employment?
The pandemic has given rise to an increasing number of requests from Guernsey-based organisations for advice on employment contract issues. Common queries include how lawfully to revise or introduce new terms and conditions into employment contracts, how to reflect the upskilling of an employee or a change of role and what action to take following a change of management. Such issues usually call for consideration of whether an employee's employment contract should be amended.
Any changes to a Guernsey employment contract must generally be agreed by both parties and it is unlawful for an employer unilaterally to impose a change which is not expressly authorised by the terms of the contract.
Before introducing any contractual changes, employers are advised to consider the precise issue they are attempting to resolve. They can then assess whether a contract change is in fact required or whether a solution can be achieved in another way.
If contractual amendments prove necessary, consultation must take place, namely, a two-way discussion whereby employers listen openly and genuinely consider any employee concerns. An absence of effective consultation may damage morale, working relations and ultimately productivity, thereby leading to increased levels of stress and absence. Inadequate consultation means employers risk losing valued employees or suffering reputational damage to their organisation or brand. There is of course also the risk of exposure to legal claims.
Employment contracts sometimes contain clauses allowing the employer to change certain terms and conditions (e.g. work location or working days) in particular circumstances (known as 'flexibility' or 'variation' clauses). Such clauses must be clear, allow for reasonable advance notice before any relevant contract change is introduced and must only be used to implement reasonable changes. If a change is not reasonable, implementing it may be regarded as a breach of contract even if there is a flexibility clause that appears to allow it. Equally, imposing changes without providing reasonable notice or consultation may lead to claims of breach of contract or constructive dismissal.
Recent guidance from the UK's Advisory and Conciliation Service (ACAS) on this issue states that all affected employees should be given details of: what the proposed changes involve; the business reasons for the changes; when the proposed changes will be introduced; how the changes might benefit employees; the effect on the organisation if the changes are not made; and a copy of the proposed new or revised contractual terms. All affected employees should be informed including, for instance, employees absent on maternity leave; excluding such employees may amount to unlawful discrimination. Sharing relevant information and attempting to agree one change at a time may promote constructive discussions. If employers are unable to provide any information requested, they must provide a cogent explanation for this. Guidance specific to Guernsey can be found in the Employment Guide: Varying Terms and Conditions of Employment, which can be accessed at www.gov.gg/employmentrelations.
The option of "buying out" a term in a contract may also be considered – i.e. whether a proposal can be made more appealing by, for example, offering some new, more beneficial terms to compensate for a less attractive change to other terms. Once a change is agreed, all details should be made clear and communicated in writing. Where a change to a contract has been agreed and the change concerns clauses that must (by law) be included in the written statement of terms and conditions, local legislation requires the employer to notify the employee in writing of the change, within four weeks of the change taking effect.
Employees are far more inclined to support changes if they understand the reasons behind the proposals, have sufficient time to consider them and provide their views about them. Guernsey employers should be mindful of the fact that proposing amendments to an employment contract can provoke anxiety and apprehension and can impact employees mentally and physically. Differences of opinion are normal and to be expected. Effective consultation can assist employers in collaborating with their employees to reach a suitable solution, while building trust within teams and ensuring a fair and reasonable process and result.
An original version of this article was first published by Business Brief, February 2022.
© Carey Olsen 2022.