HRM in a Legal Context

Seminar 4

Variations to a contract of employment

The employment relationship is an ever-changing one. This can cause problems for
the contract of employment – the terms of the contract do need some flexibility.

Under s 4 of the Employment Rights Act (ERA) 1996 an employer is obliged to

inform employees of any changes in their terms and conditions of employment,
within a month of the change. The purpose of this obligation is to ensure that the
statutory statement of terms and conditions of employment, required under s 1of the
ERA, is kept up to date. However, it is a mistake to thing that this means that the
employer is entitled to change the terms of a contract of employment, with four
weeks notice.

Under normal contractual principles any changes in the terms of the contract must
be mutually agreed, and the employer who attempts to a unilateral variation may find
himself liable for constructive dismissal.

In some situations the court may be prepared to accept that the employee’s conduct
shows that he has accepted the variation- if, for example, he has continued to work
without protest after the change has been made. In all cases, however, it is a
question of fact as to whether the employee’s conduct does indicate his acceptance
of the change.

In Jones v Associated Tunnelling Co Ltd [1981] IRLR 477 it was held that continuing
to work is not necessarily an implied assent to a unilateral variation, especially where
the variation does not have immediate effect.

In Marriott v Oxford & District Co-Operative Society Ltd [1970] 1 QB 186 the fact that
the employee worked for 3 weeks under protest, after the unilateral variation, in no
way constituted implied consent to the variation.

However, some degree of change may be possible within the original contract. An
example of the considerable flexibility that can be expected in a contract of
employment can be seen in Creswell v Board of Inland Revenue [1984] IRLR 190.
Flexibility in the contract stems from the implied duty of cooperation and the need for
employees to adapt to new methods of doing their job. Employers can also use
other express or implied terms in areas like mobility to get a considerable degree of
flexibility in the contract.

Can there be a flexibility clause in a contract of employment? What would be the

consequence of such a clause?

A contract of employment can have a term which reserves the right of the employer
to vary the terms of the contract without the employee’s agreement. However, such
a term will be interpreted strictly by the courts, see Birmingham City Council v
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Wetherill [2007] IRLR781. However, see the recent decision of the EAT on this
point, Bateman & Others v Asda Stores Ltd [2010] UKEAT/0221/09.

Consequences of a breach of contract

If the employer breaches a contract of employment the employee will have a number
of options. What are they?

Clearly, if the employee breaches the contract, the employer will have the ultimate
sanction of dismissal. Of course, not every breach of contract will justify a dismissal
and normally an employer will have disciplinary procedures in place.

What other options might an employer have for a breach of contract? Look at the
following cases and think about why the employer was allowed to impose the
sanction in each case. Are there any important differences?

Sim v Rotherham MBC [1986] IRLR 391

Miles v Wakefield MDC [1987] IRLR 193
Wiluszynski v London Borough of Tower Hamlets [1989] IRLR 259

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 Case Study on Breach of Contract

Toys Ltd are experiencing some HR problems. You have been brought in to sort out
the problems.

Harpreet is a manager in the company. A mobility clause in her contract states that
she can be required to move to any of the company’s factories within a 100-mile
radius of Leicester. Yesterday she was told that from Monday she would be required
to work in the company’s factory, 98 miles away. She is not prepared to move at
such short notice, and asks for time to make suitable arrangements for her elderly
mother, who lives with her.

Jenna is a machinist. She has been told that she must stay behind after hours one
evening each month in order to meet a full order book. She does not think she can
be required to do this, as her contractual hours are 9am to 5.30pm with one hour for
lunch. However, she has been told that the works rules require employees ‘to carry
out such extra duties as may be required from time to time’.

Recently the company and the recognised union negotiated a new productivity
bonus scheme. Previously a bonus was given based on length of service. The
company informed all of the staff about the new scheme by letter. The new scheme
is to operate from 1 December 2006.

Ben is a member of the union. He participated in a pilot productivity bonus scheme

but he did not like it. Ben informed the union representative that he did not think the
scheme would work due to hostile attitudes in the work force. As a result, the union
agreed the new scheme with the company without balloting their members. On the
receipt of the letter Ben informed his manger that he would not accept the new
scheme. The manger told him that as he had worked to the scheme in the pilot he
had varied his contract of employment. The manger also informed Ben that he was
bound to accept the scheme as a union member.

Applying legal principles, how would you resolve these disputes?

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 Employment protection for ‘atypical’ workers

The modern workforce is changing. It is much less common today for a person to
stay with one employer for the whole of their working life. There is a demand for a
flexible workforce on the part of employers and many people want to be able to work
flexibly. Temporary, fixed term and part time contracts have become much more
common. Home working, historically common, has once again become prominent.
The use of agency workers has greatly increased and having on workers on a
‘casual as required basis’ is not at all uncommon.

What has driven the demand for flexibility?

Are there any disadvantages of these changes for the workforce?

Employment protection for ‘atypical’ workers is limited. As we have seen, if a worker

is not classified as an ‘employee’ many employment protection rights, such as the
right not to be unfairly dismissed and the right to redundancy pay, are out of reach.
Even, if the worker is classed as an employee, these rights are dependent on
continuous service with the employer of 12 moths in the case of unfair dismissal and
two years for redundancy purposes.

Employment status of home workers

Airfix Footwear Ltd v Cope [1978] IRLR 396

Nethermere (St Neots) Ltd v Taverna [1984] IRLR 240

Employment status of casual workers

O’Kelly v Trusthouse Forte plc [1983] IRLR 369

Carmichael v National Powers plc [2000] IRLR 43
Stevedoring & Haulage Services Ltd v Fuller [2001] IRLR 627

Employment status of agency workers

The status of agency workers and the triangular relationship between worker,
agency and end user has caused considerable legal debate in recent years.

The following cases help to show the development of the law and the problems in
this area:

Wickens v Champion Employment [1984] ICR 365

McMeechan v Secretary of State for Employment [1997] IRLR 353
Montgomery v Johnson Underwood Ltd [2001] IRLR 269
Dacas v Brook Street Bureau (UK) Ltd [2004] IRLR 358
Cable & Wireless plc v Muscat [2006] IRLR 354
James v Greenwich LBC [2008] IRLR 302

At an EU level the Agency Workers Directive (Directive 2008/104/EC) has resulted in

the Agency Workers Regulations 2010 (SI 2010/13) being passed. The Regulations

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come into force on 1st October 2011. What do the Directive and Regulations do?
What is the impact on employment status?

Employment protection rights for ‘atypical’ workers

Where a person is not classified as an employee but can be classified as a ‘worker’

some employment protection rights are granted see Working Time Regulations
1998, National Minimum Wages Act 1998, anti discrimination legislation, Part Time
Workers (Prevention of Less Favourable Treatment) Regulations 2000. How is the
term ‘worker’ defined?

It should be noted that s 23 ERA grants the Secretary of State the right to extend
may employment protection rights to ‘workers’. This power has never been
exercised.

Fixed term contracts

Why do some employers use fixed term contracts? In what way are fixed term
contracts open to abuse? What protection do the Fixed-term Employees (Prevention
of Less Favourable Treatment) Regulations 2002 offer?