My workers are currently engaged under contracts of employment containing set hours of work which do not best meet the needs of the business.  I would like to move all workers to a new contract and vary their existing contractual hours in order to better meet business needs.  How do I handle it?

The Legal Position

An existing contractual entitlement can only be varied with the agreement of the employee, either on an individual basis or by way of collective agreement. An employee’s terms and conditions of employment may be a mix of those terms that are clearly set out in his/her contract; those implied by custom and practice and the employer’s duty to act reasonably; those which are incorporated through collective agreements, and those which derive from statute (such as the right to minimum wage or annual leave) which apply automatically. Any employer proposing to change an employee’s contract should fully consult with all affected employees or their representatives and explain and discuss the reasons for the change. Variations of a contract can be agreed verbally or in writing, although it is best practice to commit any agreed changes to written form.

Where employees have a contractual entitlement to certain hours, in order to vary those hours, your options are to either:

1. Obtain the employee’s express agreement to the change; or
2. Attempt to impose the change unilaterally.

Terms which are contractual may not be varied unilaterally. Such variation must be agreed between the parties and it would be considered a high risk strategy to unilaterally change or reduce employees’ remuneration, for instance, without any consultation with the employees and the agreement of the employees to accept the change.

Employee’s agreement to these changes may be by express or implied, tacit or by acquiescence agreement.  However if the variation relates to a fundamental contractual term, such as working hours, it is best practice that such a reduction should be by agreement which is express and in writing.

Therefore, option 1 outlined above - consultation and agreement is the least risky approach in relation to the proposal outlined.

Legal risks

Should the employees not agree to the change, your option is to attempt to impose the change unilaterally.

As set out above, as a matter of law, an employer may not, strictly speaking, unilaterally vary an employee’s terms and conditions of employment.  Where a variation to an employee’s terms and conditions of employment is forced through without any consultation or without the employee’s agreement, the employee has a number of potential legal avenues available to them, including:

• Breach of Contract: An employee could also take a case to the civil courts for breach of contract and as part of such claim, could seek injunctive relief to prevent the unilateral variation by his employer. This is a more costly option as there is a risk that an employee would bear the legal costs of the company were they were to lose.
• Claims for Constructive dismissal under the Unfair Dismissals Acts 1977 – 2007: An employee could resign and claim constructive dismissal on the basis of a fundamental change to their working conditions or that the Company acted unreasonably by amending the contract without consent. There is a high onus on an employee in such cases to show that the change made their working conditions intolerable and they must have first dealt with any grievance through the company’s internal procedures. Constructive dismissal claims are brought to the WRC and the maximum compensation that can be awarded in a constructive dismissal case is 2 years gross remuneration; however the award would be based on financial loss and is subject to the employee’s duty to mitigate this loss by finding alternative employment.
• Industrial Relations Acts 1946-2004: This legislation sets out an established procedure to deal with trade disputes in the workplace.  The majority of claims under the Acts relate to unionised employees, however the right of access is not limited to unionised workplaces.  A trade dispute is defined extremely widely and can cover situations where employees are not happy with the procedures followed by a company in varying their conditions of employment benefits.
• Claims under the Payment of Wages Act 1991: Where the change is to their pay, or the change to hours affects their pay negatively, a disgruntled employee could also take a claim to the WRC under the Payment of Wages Act, 1991, claiming that there has been an unlawful deduction made to their remuneration.

A non-legal risk that is also worth mentioning is the effect on employee morale and industrial relations within an organisation if changes are forced through without employee consultation and agreement.

Likelihood of success for employees

Over the past number of years it was undoubtedly the case that employment fora and courts had more sympathy for employers who were effecting changes because of financial imperatives and to avoid substantial job losses.  However, given the improved economic climate, Courts and employment fora will look closely at the business needs for such a change and have tended to have less sympathy where an organisation is simply seeking to harmonise benefits and where there is no cost imperative for so doing.

There are a number of defences an employer can put forward to a claim from employees in circumstances such as are envisaged here.

• Breach of Contract: If a cost and/or organisational imperative is at the root of the harmonisation project – e.g. the aim of increasing efficiencies across the Company, with consequent financial savings, this may be of some assistance in terms of defending breach of contract civil claims.
• Unfair Dismissals Acts 1977 – 2007: In respect of a constructive dismissal claim to the WRC, it is undoubtedly the case that the WRC would consider an employee resigning their position as being quite a nuclear option unless the employee could show that they had tried to have their concerns addressed internally and that the Company was not prepared to address the concerns.
• Payment of Wages Act 1991: In respect of a payment of wages claim, the employee would have to show a reduction to their salary.

Next steps

In order to progress, it is a good option to meet with the employees as a whole initially and communicate the proposed changes; informing employees that the company would welcome any suggestions that they may have, and that a consultation period will be put in place to give employees the opportunity to raise any queries or comments on the proposed harmonisation measures.

This initial meeting could be followed up in writing by a letter to the employees outlining the reasons for the changes and setting out the changes to employees’ working week. It might be of benefit to consider whether the new terms can be imposed in stages as opposed to implementing all variations at once. This may help to ease the transition and allow employees to plan for the change.

Any objections or proposals from employees should be given due and full consideration.

When the changes are agreed, the revised terms and changes could take the form of a separate sheet, to be signed and returned by employees, which would operate as an addendum to the employee’s contract of employment - in the event that you do not wish to issue entirely new contracts.

Of note, employees have a statutory entitlement to one month’s notice of a change to employee’s core terms and conditions under the Terms of Employment (Information) Acts 1994-2001.