Altering T&C’s after a Restructure

 

Often Employers are required to change an Employee’s Terms and Conditions of Employment as a result of a restructure within the business.

 

The Employment Relations Act 2000 is established on the principles of Good Faith whereby the parties to the employment relationship must not seek to mislead or deceive each other or do anything that has the potential to mislead or deceive. Therefore, in the case of the Employee’s Terms and Conditions of employment, which should be recorded in writing (although there may be verbal understandings or implied conditions that also need to be considered), any change to the status quo must be through the mutual agreement of the parties.

Obviously where a substantial change to an Employee’s Terms and Conditions is to occur, this would be recorded within a new employment agreement being signed by the parties. However, as a result of restructure of specific duties and responsibilities a change to an Employee’s Terms and Conditions may be required. This may include: a remuneration increase; a change to the Employee’s hours of work; a change to an Employee’s role duties and responsibilities or reporting lines. In such case, any change should be recorded in writing and signed by the employee to confirm their acceptance of the changes.  

With the Employment Relations Authority case Anderson v Blue Star Taxis the obligations to ensure that any variation recorded in writing and agreed between the parties, prior to any changes being implemented were reinforced. Blue Star wished to change the hours of work of Anderson and discussed this with her within a meeting. Although discussed verbally, no agreement was recorded in writing, however Blue Star formed the belief that the change had been verbally agreed. Anderson disputed that she had agreed to a change of hours and reinforced her belief that the hours of work clause in her employment agreement was still applicable. Although Anderson offered some compromise, this was not accepted by Blue Star who continued to state their belief that Anderson had verbally agreed to the variation, and as such advised her of the date her new hours were to take effect.

In reviewing the process engaged by Blue Star, the Authority noted that a ‘proper’ consultation should have occurred including providing a written outline of the proposed changes. Anderson should have been given the opportunity to consider this outline, seek advice, and then discuss this further with the Employer and that any outcome agreement then be recorded in writing and be signed by both parties to confirm their agreement. The Authority concluded that Blue Star’s actions were unfair and ‘did not meet the necessary standard’ and that Blue Star had failed to have a written record of the variation as required under Anderson’s employment agreement – which reinforced that there was no new agreement in place.

The Authority determined that Blue Star had breached Anderson’s employment agreement and caused her to suffer an unjustified disadvantage in her employment. Anderson was awarded $15,000.00 in compensation, and Blue Star were ordered to uphold Anderson’s original hours of work provisions unless agreed otherwise in writing.

This case reinforces the importance of ensuring that any variation to an Employee’s Terms and Conditions is only made ‘with the Employee’s consent’ regardless of what that change might be.

For assistance in implementing or documenting any variation process please feel free to contact us.

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