Your Employee Has Rejected Contract Changes. Here's What You Can Do

Contracts are a crucial part of the employer/employee relationship for both parties. They help to ensure that everyone has a clear understanding of their legal rights and obligations, as well as the options available to them if they feel a breach of contract has occurred.

There are times when it may become necessary for an employer to make changes to individual or multiple employees' contracts.

For example, when the COVID-19 pandemic struck, many businesses faced severe challenges and market conditions that forced them to make significant contractual adjustments, such as reducing pay and hours.

This could create disputes between companies and their employees, as was the case in the UK, where an employment tribunal found a solicitor was unfairly dismissed after refusing to agree to changes in her contract.

If you find yourself in a situation where an employee isn't willing to agree to new contract terms, it's important to have a plan that will help you manage the situation in the most constructive way.

Keep talking

The most beneficial thing you can do when the possibility of a contractual dispute arises is to keep talking and maintain open lines of communication with the employee. This increases the likelihood that you'll be able to find a resolution that will stop the issue progressing to a point that will prove costly and stressful for everyone involved.

Consider some of the actions and measures you can put in place to facilitate calm, constructive discussions with the individual. This might include:

• Giving yourself time to plan, research and prepare for key meetings and conversations, to show the employee you understand their perspective and you're committed to reaching a positive resolution
• Going into every engagement with a positive attitude, to avoid the worker feeling like they're being attacked or pushed out
• Making sure an HR representative or another manager is present during the conversation to keep a record of the key points

Have a clear process in place

Business success and efficiency often depend on having clear, carefully planned processes in place that help you make the best possible use of your time and resources. This becomes particularly important at times when the company and its employees are having to deal with stress and adversity - for example, when you're facing economic circumstances that could require you to change your employment contracts.

Be proactive and plan how the company will deal with contractual disagreements if and when they occur. Get the entire HR team and other relevant stakeholders involved in exploring hypothetical scenarios and brainstorming ideas to manage them.

This will reduce the risk of you reaching a point in an actual dispute with an employee where you don't know what to do next and your efforts to resolve the issue lack structure and focus. As well as being inefficient and frustrating for all parties, this could have a damaging impact on your employer brand and sour your employee relationships even further.

Consider dismissal and rehiring

If you've completed exhaustive negotiations and pursued all relevant processes and procedures, but still haven't been able to reach an agreement with the employee, one option you might want to think about is dismissing the worker and rehiring them on a new contract.

This isn't a decision that should be taken lightly, and it should only be considered after in-depth discussions and consultation with the employee.

It's also important to ensure you have satisfactory answers to questions such as:

• Are the contractual changes absolutely necessary?
• Has the business done everything it can to reach an agreement with the employee?
• Could this action have an impact on staff satisfaction, engagement and morale?
• Is the company opening itself up to a risk of legal action?

Furthermore, you need to make sure the dismissal process is properly managed and executed, with the employee given the appropriate notice and permission to appeal against the decision.

Beware breach of contract

Throughout the process of negotiating contractual changes and managing disputes with your employees, it's crucial to be constantly aware of the risk of breach of contract.

If you make a change without confirming the employee's agreement, for example, or if there are no relevant flexibility clauses in the contract, the business could put itself at risk of legal action.

Dismissing and rehiring a worker without notice is another potential breach of contract that could lead to bigger problems in the future.

If a disgruntled employee feels the business has contravened the terms of their contract and decides to pursue legal action, the potential consequences could range from the financial impact of having to pay damages, to broader workforce dissatisfaction and disruption.

When dealing with legal matters and contract disputes that could pose serious risks to the company, make sure you do your research and get expert legal advice before taking any action.