Amending contracts

SETTING aside important considerations relating to patient care, medical and dental practices are fundamentally businesses with the same budgetary considerations as any other. And as the difficult economic conditions continue to bite, practices are increasingly looking for ways to reduce costs.

While having an efficient and productive workforce is not an area to scrimp on, there are ways of looking at how this can be achieved cost-effectively. One solution is to amend employee contracts and benefits, but is this a straightforward process? The short answer is “no”. And any changes you are considering to employees’ contracts need to be looked at carefully.

The terms of a contract are the rights and obligations which bind the parties together and can be express terms (agreed explicitly and in writing or verbally) or implied terms which have occurred over time through custom and practice.

Let’s take employee sick pay as an example of an express term. In the past, many workers were given very generous sick pay terms, sometimes up to six months at full pay then six months at half pay. Unfortunately there will always be certain members of staff who take advantage of this and have high absence levels. For employers, the first step in dealing with this issue is to proactively manage such absences (although it could be argued that very generous sick pay terms can in themselves encourage higher absence).

Sick pay is classed as a fundamental term and cannot simply be cut in order to reduce costs or as a means of targeting employees with high absence levels. In order to change a term of an existing contract, consultation and agreement are required and it is unlikely that employees would agree to less sick pay (although this may depend on the strength of your negotiation and consultation skills).

What we advise is that when you recruit new staff into the practice you offer them less generous terms and then it is up to the individual, at point of offer, whether they wish to accept those terms. Be aware that although it is not illegal to employ staff on varying terms and conditions, once such a discrepancy becomes known it can create tension between staff members. Adopting this approach means that over time, as employees leave the practice, you will reduce the number on enhanced schemes and therefore cut costs.

Another standard reason for a change in practices is the need to vary staff finishing times, perhaps to open the surgery earlier or later on certain days. The reference to this in the employment contract does not allow for any flexibility so the best approach is to seek agreement from your staff.

The first step is to consult with the employees and let them know what change you are proposing and why, ensuring they have the opportunity to ask questions. It is worth asking staff if anyone would volunteer to have their hours varied as this may suit some people’s work-life balance better. If all employees agree to the change then the practice simply needs to confirm it in writing.

However, if they refuse, one option the practice has is to impose the change. A risk associated with this approach is that it may lead to a breach of contract claim if the change is deemed to be fundamental, or a constructive dismissal claim if staff feel the practice has acted unreasonably and they cannot continue working there.

Another option open to employers where agreement isn’t reached is to terminate the original contract, giving proper notice and offering re-engagement under a new contract on new terms. Again this isn’t without risk because the termination of the old contract will constitute a dismissal, leaving the practice open to an unfair dismissal claim.

If this claim were to reach a tribunal then the panel would look at several factors to ascertain if the practice has acted reasonably. But what exactly does “reasonably” mean? It will likely take into account what the business reasons were for making the change, the employee’s reasons for refusal, if any alternatives were considered prior to dismissal, if a fair procedure had been followed and whether the majority of other employees accepted the change.

In summary, altering employee contracts is an area that can prove problematic and, if in doubt, employment advice should be sought.

Janice Sibbald is an employment law adviser at MDDUS