During these uncertain and stressful times, a number of businesses will face a significant reduction in revenue and will be looking to reduce costs where possible. One option some will consider is reducing their employees’ hours of work or pay. It is important to remember that even during these unusual times, employment law, and your obligations in employment agreements, have not changed. This article will give a brief overview of what employers need to consider before changing employee terms and conditions and the steps to follow. However, each situation is different and specific legal advice should be obtained before you proceed. RSM Law has an expert team of Employment Law specialists ready to help. Please call us on 0800 RSM LAW (0800 776 529).
Is Employee Agreement Required?
In almost all circumstances, variations to employment terms, including hours and pay, cannot be implemented without the employee’s agreement. Some employment agreements may allow for changes to certain terms without employee agreement, but it is recommended that you always obtain employee agreement before making a change.
It is also important to note that if you applied for the Government wage subsidy scheme after 4pm on 27 March 2020, then you are required to obtain employee’s written agreement to any variations in employment terms for the 12 week subsidy period. However, this is not the case for applications made before 27 March 2020.
Good Faith Bargaining
When attempting to reach agreement with an employee, employers must meet the good faith requirements contained in the Employment Relations Act 2000, regardless of the lockdown level.
This means every affected employee must;
- Be given a copy of the proposed change;
- Be made aware of their right to legal advice;
- Be given an opportunity to seek legal advice;
- Be given an opportunity to provide feedback; and
- Have feedback genuinely considered by the employer.
A failure to meet any of these requirements may be grounds for an employee or group of employees to raise a personal grievance or make allegations of unfair bargaining.
If you have followed these steps and the employee agrees to the changes then it is important that their agreement is recorded in writing. This can be by them signing a record of the changes or by receiving an email from them confirming their agreement.
WHAT IF AN EMPLOYEE DOESN’T AGREE TO THE PROPOSED CHANGES?
If an employee does not agree to proposed changes to their employment terms, and your business needs to implement the change, then you must consider if there are any other options open to you. If there aren’t then you may need to consider making that employee’s position redundant. We have another article on our website that addresses what you need to consider and steps you need to take, before making an employee redundant.