If a contract of employment contains a flexibility clause, does the employer have to consult with employees before it implements a variation to their terms and conditions?

Yes, even where an employer has flexibility under the contract to vary a term or condition unilaterally, it must act reasonably in doing so and exercise its discretion in a way that does not breach the implied term of mutual trust and confidence between the employer and the employee. This will include consulting the employee.

Employers should consult with employees about the nature and scope of any change, the reason it is required, the proposed timing of the change and the likely outcome if it is not implemented. The employer should also consult with employee representatives where appropriate, although there is no statutory duty to consult collectively in these circumstances. The employer should take representations from employees and employee representatives into account and attempt to resolve any issues before implementing the proposed change.

Failure by the employer to consult could result in an employee resigning and bringing claims for breach of contract, wrongful dismissal and constructive dismissal (subject to the employee having two years of qualifying service with the employer).