Do all employees have to agree to a change to their contractual terms before the employer can implement the change?
No, it is not necessary for all employees to agree to a change to their contractual terms before the employer can implement it. However, before a change is made to a contractual term, the employer must undertake a period of reasonable consultation, attempt to obtain the employees' agreement to the change and ensure that it has a genuine business need to make the change.
If there is a flexibility clause in the employment contracts allowing the employer to implement the change, it can go ahead without the agreement of the employees, as long as it acts reasonably in doing so.
If there is no clause allowing the variation, the employer may decide to dismiss any employee who refuses to accept the new term or condition and offer to re-engage him or her on revised terms. The employer will have a duty to consult collectively with the employees' representatives if it is proposing to dismiss 20 or more employees within a period of 90 days or less. The employer must give the employees the correct amount of contractual notice. If the employees accept the offer of re-engagement on the revised terms, the new contracts will start the day after the notice expires.
An employee will not have a claim for wrongful dismissal if the employer gives the correct amount of notice. However, he or she may have a claim for unfair dismissal, despite accepting an offer of re-engagement, if he or she has at least two years' continuous service. Where the employer has a genuine business need to make the change, it can rely on the dismissal being for "some other substantial reason" under s.98(1)(b) of the Employment Rights Act 1996, and argue that the dismissal was fair, as long as it followed a fair procedure.