In this article, Trainee Solicitor, Chelsea Jeffs outlines everything you need to know about non-molestation orders.
With the current credit crunch and recession in full swing, we think it is a good time to remind employers of their options when they are considering cutting costs and potentially making redundancies.
Q: We have lost a lot of business, but I am unhappy about making redundancies at the moment. Are there any other options?
A: There are certainly other options you can consider. You can ask the employees to reduce their hours or their rate of pay, in order to cut down on your wage bill. You can also cut down on any bonuses, overtime or other benefits you provide to your workforce.
Q: This seems like drastic action. Are there any potential consequences?
A: You should certainly take your time in making any such decision, as the potential consequences are a workforce suffering from low morale and, if you get it wrong, exposure to claims by employees to an employment tribunal. The crucial aspect is that you should not make any changes to employees’ terms and conditions of employment unilaterally, as this will be a breach of contract. You should consult with employees and ideally seek their agreement to the proposed changes. By explaining the reasons behind the changes you may well find that employees will accept them, particularly in the current climate when the alternative is being out of work.
Q: So what happens if I get the employees to agree to the changes?
A: A verbal agreement is open to dispute on precisely what is agreed. Therefore, the best solution is to get the employees to sign a written document saying they agree to the proposed changes if they are small, or issuing new contracts of employment if the changes are significant.
Q: Alternatively, what can I do if they refuse?
A: You have several options:
- Negotiate further with the employees to try and get them to agree to the changes;
- Dismiss the employees on their old contracts by giving them notice and offering them continued employment on the new contractual terms;
- Change their contractual terms unilaterally.
Options 2 and 3 do, however, have risks associated with them (see below).
Q: What are the risks associated with option 2?
A: If the employees have been employed for more than 1 year, they may make a claim for unfair dismissal, as the termination of the old contract is a dismissal. To defend any such claim, you will have show a potentially fair reason, known as "some other substantial reason." A Tribunal will look at your business reasons for making the changes, the consultation process you went through and the efforts to reach a compromise and the employee’s reasons for objecting to the changes. Therefore you must have very good business reasons for the changes and will have to go through a fair procedure, complying with the ACAS Code of Practice on dismissals. If you are dismissing and re-engaging 20 or more employees you must also comply with the rules on collective consultation.
Q: And option 3?
A: It is true this is more risky than dismissal and re-engagement as it is definitely a breach of contract. However, if the employees continue to work for you without making any objections known to you, after a period of time (a few months usually) they will be deemed to have accepted the changes. Alternatively, they may work under the new terms under protest and then issue a claim in the County Court for the breach of contract (an employment tribunal cannot hear such a claim as there has been no termination of employment). Again the time limit they will have to do this will be decided on the facts of the situation. Finally, if the breach is sufficiently fundamental for any employee with at least a year’s service, they may resign and claim a constructive dismissal. A reduction in wages or hours will normally be sufficiently fundamental for this to happen.