Employment on new terms

Dismissal & re-employment on new terms

As an employer, do you ever find yourself in a position, where, for perfectly sound reasons, you need introduce new employment terms to an employee’s contract? Did you know that it’s possible to terminate their existing contract on notice and then re-employ them on the new terms. Possible … but not always easy.

What if consultation doesn’t work?

Of course, the preferable route the desired outcome is through consultation, followed by agreement. You would hold consultation talks with the employee, in which you’d explain the proposed change, following which they would agree to the new terms. But of course, things don’t always go that smoothly. What if the employee still refuses to consent to the proposed changes? What avenues are left to you to explore?

One option is to proceed with dismissal on notice, before re-engaging the employee on the new terms. But take care. Although this route may be successful, it’s fraught with potential pitfalls. Fail to follow the correct procedure and a future tribunal will not kindly upon your case. These are the steps to take –

Step 1

Hold a final consultation with your employee. Make absolutely sure they don’t want to change their mind.

Step 2

Set a deadline for obtaining their written agreement. Explain that, if by the date of this deadline, they still choose not to agree to the proposed changes, then you plan to dismiss them on the basis of Some Other Substantial Reason (SOSR). Following this, you will offer them re-employment on the revised terms.

Step 3

You write to the employee inviting them to a meeting to discuss the dismiss-and-re-employ proposal.

Step 4

At this meeting, you discuss the employee’s reasons for not accepting the proposed changes, as well as the proposal to dismiss and re-engage.  You must allow them the opportunity to make representations.

Step 5

Assuming the deadline passes with no agreement, you’ve arrived at the position where you can send them written notice of termination. Simultaneously, you would offer re-employment on the revised terms, to start at the end of the notice period.

Beware the charge of ‘unfair dismissal’

But be warned – just taking these five steps doesn’t necessarily mean you’re home and dry. Even if, the employee accepts the offer of re-employment, your approach could still be characterised as an ‘unfair dismissal’. If the employee does bring such a claim against you, you must be 100% sure that you carried out the dismissal on a sound basis. Be sure that the grounds were Some Other Substantial Reason (SOSR). Be prepared to show that your actions were entirely reasonable.

For SOSR to be acceptable to a tribunal, you’ll need to be able to show a sound business reason for the proposed change in employment terms. This doesn’t have to be anything dramatic, such as the survival of your business. All you need to show is that your reasons were for the demonstrable benefit of the business.

In doing this, you’ll give the tribunal the chance to balance your reasoned actions against the employee’s objections.

Help and advice for a range of business issues

We’re well-connected, experienced accountants who pride ourselves in taking the personal approach. We’re always happy to offer guidance on a wide range of business issues. If we can’t give you the appropriate advice, then we’ll know someone who can.

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This legal information is not the same as legal advice and you may not rely on our post as a recommendation of any particular legal understanding. Please, consult an attorney if you’d like to get advice on your interpretation of this article.

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