Understanding the law in relation to
reorganisation and the methods and procedures that need to be applied during
this process can be complicated for all those involved, but must be seen to be
carried out fairly and lawfully.
Varying a contract of employment
In a situation where an organisation may wish
to relocate some of its staff to another site, due to a site closure/
relocation of business then a variation in contract would need to be discussed.
The first step would be to make contact with all employees affected by the
change in the hope to come to an agreement – if all staff are happy to accept
this then a new agreement will be drawn up and the change would be settled.
The Trade Union and Labour Relations
(Consolidation) Act 1992 provides information that representatives should
receive in writing from the employer for consultation to commence. Details of
this will include the reasons for the proposed changes, the total number of
people at risk and the jobs associated with this, proposed method of selection
etc. All of the information provided to employees must be adequate and the
agreed selection process followed objectively and precisely.
Consultation during a varying of contract is
crucial for it to be seen as fair and should last for a specified time,
depending on the amount of employees involved:
or less employees – no time limit
employees – at least 30 days
employees – at least 45 days
Consultation should be carried out within the
above specified times, explaining the reasons for the proposed changes and
address any concerns the employees may have.
If an agreement over the changes cannot be
made, the employer has three options available to them. The first is to go ahead
and make the changes, however this can leave them open to cases of constructive
dismissal if the employee resigns claiming breach of contract. The second is to
dismiss staff and rehire them instantly on the new terms and conditions, but
again this can result in employees bringing unfair dismissal claims against the
employer, or the third would be to discontinue all changes.
To cover themselves when anticipating change,
employers include mobility clauses into contracts of employment. However, if
the change is not seen as ‘reasonable’ then the employee may be able to claim
unlawful variation of the contract. As illustrated with the United Bank v
Akhtar (1989) case, an employee was provided with a 6 day notice period to
relocate from Leeds to Birmingham. This move was protested due to the short
notice and as a result, a claim of constructive dismissal was ruled in his
favour by the courts as a breach of the contract.
Redundancy situations occur when an employer
needs to reduce its staff numbers due to economic reasons and no longer have
the funds to continue employment. Particular procedural requirements must be
followed by the employer to avoid claims of unfair dismissal being brought
against them in these situations. The law protects the rights of all those
employees who have served at least two years’ service, providing them with the
right to receive compensation if a dismissal occurs. The amount will vary depending on various
Criteria used to decide what individuals are
at risk of redundancy must be objective, providing a clear view of a fair
selection process, ideally through using a point scoring system free from any
discriminatory factors. All those individuals considered for redundancy must
then be notified in writing and invited to a meeting to discuss.
The law also permits all employees with at
least two years’ service; time off to look for alternative employment during
their notice period.
The Transfer of Undertaking (Protection of
Employment) Regulations 2006 main requirement is to provide security during the
transfer stage to employees in situations when an organisation sells all or
part of its business. The security applies to the entitlement of employees
transferring over on the same terms and conditions as before and continuing
their employment from one employer to another.
During a TUPE situation employers are again
required to consult with employees regarding the transfer within a reasonable
timeframe and advised on when the transfer is likely to happen and the reasons
for this. Consultation over possible implications for the employee must be
discussed, along with the measures the new employer expects to take in relation
to employees. If the consultation process is insufficient and lacking clarity,
an employee can be granted a protective award by the Employment Tribunal of up
to 13 weeks’ pay.