When identifying the legal issues that arise in implementing a particular change, an important first step is to analyse whether the change in fact involves any alteration to employees' contracts of employment. This in turn involves establishing what the terms of employees' contracts are.
Terms can become part of an employee's contract in many ways, and readers may find it useful to refer to a further section of this Guide ( Contracts ), which explains the way in which employment contracts are formed. Some terms of an employee's contract may be agreed at the recruitment interview, others may be set out in the letter offering the employee the job. Many important terms will be set out in the written statement that the company provides to the employee of the main terms and conditions of his or her employment. Or the employee may have a comprehensive written contract that contains all the terms of his or her employment.
It is important to bear in mind that some of an employee's contractual terms may be found in documents such as the company's statement of its policies and procedures, job descriptions, employee handbooks, and sickness benefit scheme and pension scheme booklets. It may therefore be necessary to explore whether these documents have in fact been expressly or impliedly incorporated into the employee's contract, and whether their wording and all the surrounding circumstances indicate that the company intends to be legally bound by them.
Companies that are unclear whether the change they plan to implement affects employees' contractual rights may wish to contact their Association for advice.
Although contracts of employment define many important aspects of employees' rights, they do not regulate every aspect of employment conditions. Employers still have a large degree of management discretion in how they manage their workforce. In particular, management has the right to set the rules on how employees should behave in the workplace and to prescribe the way in which jobs should be done. This is the case unless its room for manoeuvre is limited in some way by the terms of employees' contracts (although consultation on any change is always advisable (see 'The need for consultation' below)). This is reflected in the fact that employees are under an implied duty to co-operate with their employer and obey its lawful and reasonable instructions, provided those instructions fall broadly within the scope of the employees' duties as defined by the express terms of their contracts.
Companies therefore have the flexibility to meet many of their changing business needs without infringing employees' contractual rights. For example, a company is likely to be at liberty to amend or add to its disciplinary rules, since these rarely form part of employees' contracts. Likewise, it is likely to be free to require its employees to change the way they do their jobs - such as by moving to an upgraded machine or using a computer rather than a paper-based system - because working methods are rarely included in employees' contracts.
Even if the change that is proposed falls within the scope of a company's management prerogative, it is nevertheless advisable for the company to consult with employees about the change before it is introduced. Proper consultation is a central element of good employment relations practice and is likely to be necessary to secure employees' co-operation.
There are also good legal reasons for consulting about change. One is that if an employee refuses to observe a new workplace rule or to follow a new method of working, the company may want to take disciplinary action against the employee, up to and including dismissal. If it has not informed employees clearly about the change and explained the rationale behind it, the company may find itself liable for unfair dismissal. This is on the basis that it is not reasonable to dismiss an employee for failing to observe a rule or reach a standard that he or she did not know about or understand.
Another good legal reason for consulting with employees about change is to ensure that the company meets its implied duty not to act in a way that breaches trust and confidence between itself and its employees. This is particularly relevant where the change involves new rules or working methods that are difficult for certain employees to comply with or require different skills. In order to maintain trust and confidence, it may be necessary to give employees support in meeting the new rule or to provide training in the new working methods.
For example, a company might wish to introduce a no-smoking policy, in order to reduce fire hazards and avoid the discomfort caused by cigarette smoke. This change would not in any way affect employees' express contractual rights. However, in order for the company to meet its implied duty to maintain trust and confidence between itself and its employees who smoke, it would be advisable for the company to consult with the workforce about the new policy and to allow employees an opportunity to comment on it. It would also be advisable for the company to give advance notice of the implementation date, to give employees an opportunity to give up or scale down their smoking.
Although a company has the right to require employees to change their working methods, it also has a duty to support them in making the change, which may involve providing training. It should also be borne in mind that employers are under a specific legal duty, under the Safety Representatives and Safety Committees Regulations 1977 and the Health and Safety (Consultation with Employees) Regulations 1996, to consult with their workforce about the health and safety consequences of the introduction of new technology (consultation with union safety reps ).