Do companies have any obligations when changing your employment contract?

Over the past week, Asda has been hitting headlines for its introduction of ‘Contract 6’. The new contract will see employees’ base pay increased, however it will also introduce unpaid breaks and force staff to work on bank holidays. Since the changes were announced, staff have shown their anger, taking part in GMB Union protests outside Asda stores.

Asda responded to protests by saying the move was a positive one, increasing hourly pay for more than 100,000 staff and improving consistency by ensuring everyone would have the same contract, instead of the six different contracts that are currently in place.

However, these good intentions seem to have been overshadowed by the fact that Asda has apparently failed to give its staff a choice. Employees have reportedly been told to agree to the new contract, or they will be dismissed on 12 weeks’ notice.

So, in situations like these, it’s important to revisit what obligations employers have towards their employees. Can staff really be forced to move onto a new contract?

An employer can change a contract of employment without consent in two ways. The first is where the employer varies the terms of the existing contract, relying on a contractual power to do so, and usually after consultation and after giving notice of such changes. The other, more extreme method (which might be used where an employee has rejected suggested amendments to their contract) is to terminate the current contract and offer an entirely new one on different terms.

In terms of the changes which Asda is proposing, there is no legal requirement to allow staff paid breaks of more than 20 minutes for every 6 hours they work. While making employees take unpaid breaks in excess of this may sound unfair, Asda is not necessarily breaking any laws (depending on what the contract of employment says). Likewise, an employment contract requiring staff to work on bank holidays will not in itself break the law, provided that doing so does not have the effect of reducing an employee’s holiday allowance (which is often stated to be inclusive of bank holidays) to below the statutory minimum.

So, the new terms that Asda is reportedly proposing are legally sound (albeit not very popular amongst some staff), but what about the method of terminating (or threatening to terminate) existing contracts in order to impose the new terms? Without full details on Asda’s exact plans, it is impossible to comment in detail, however in any case where a contract is terminated without good reason and/or without a proper process being followed, or where new terms are imposed unlawfully, the employer is in danger of exposing itself to breach of contract and unfair dismissal claims.

Assuming that such terminations do not constitute breach of contract or unfair dismissal, businesses must also consider the impact such methods might have on their public image. Asda’s plans have drawn harsh criticism from employees, union representatives and several MPs, which in turn has attracted a great deal of bad press. Employers must remember that complying with their legal obligations is only one part of the puzzle, the impact their actions have on the brand is another key consideration.

Jennifer Maxwell-Harris, Joelson

Jennifer Maxwell-Harris

Partner – Employment & Immigration

+44 (0) 20 7580 5721

This article is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action.