We are seeing more and more redundancy announcements in the news and many struggling businesses may be considering taking this action in their business. This is sometimes a knee-jerk reaction to stem expenditure; however, it is not the only option available, and doing so can lead to the business losing talented employees and their skills, experience and expertise.
An alternative is to change employees' contractual terms on either a temporary or permanent basis.
Sometimes there is a contractual right to vary an employee's contract, however, employers should still exercise caution and bear in mind the implied duty of trust and confidence.
I will now tell you a story, there was an employee who worked for a bank. His contract of employment contained a mobility clause which said that he could be required to transfer to any other part of the UK on payment of a relocation allowance, at the discretion of the bank.
The employee was required by the bank to transfer to Birmingham and was given only six days' notice. He asked for some time to make arrangements to transfer and the bank refused this. He then asked for annual leave and the bank ignored his letter and stopped his pay after the annual leave allowance was exhausted.
The Employment Appeal Tribunal held that the employee had been constructively dismissed by the bank. It held that the bank was in breach of the contractual mobility clause in requiring the employee to transfer at such short notice and without financial assistance. Even if that could be held to be within the terms of the mobility clause, that clause had to be interpreted as including an implied requirement that reasonable notice of transfer would be given and that the bank was bound to exercise its discretion under the clause as to payment in such a way as to render it possible for the employee to move.
Employers should not, without reasonable and proper cause, conduct themselves in a manner likely to destroy or seriously damage the relationship of confidence and trust between employer and employee, even where a literal interpretation of the terms of the contract might appear to permit such a course.
If you are considering changing your employee's contractual terms and would like to receive a copy of our #freechecklist or have a confidential discussion, please do not hesitate to contact me.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
