Obliged to sign a new employment contract?
Discussion
A friend of mine (no really, it is a friend!) has been in her job for 5 years, it's a specialist consultative sales role in a niche industry for a small company of 20 employees. The business is doing reasonably well, but the management/directors/owners are bit "wing it" when it comes to things like compliance and GDPR etc.
Today, completely out of the blue, she has been presented with a new employment contract to sign which is significantly different to the one she has been employed under from the start. There are a lot of new clauses around working hours (such as their ability to cut her hours, or temporary lay-offs at will), notice periods have been altered, and a non-competition clause that last for 12 months but across the whole industry, rather than just in a similar employer. It also states that she has to take 3 days off at Christmas when the business is closed, previously these were discretionary days.
There are no obvious incentives in the contract for her, and everything seems geared towards the employer.
There has been no consultation on this with her, or any of her co-workers. There are two other people who do the same role as her who have also been given the new contract.
She is off work next week and is going to check the legal cover on her home insurance to see if employment matters are covered, but in the meantime, are employers allowed to insist on a new contract like this without any notice?
If she refuses to sign it, what are the possible implications?
What is the correct process that a business should follow if they wanted to change the contracts in this way?
Thanks!
Today, completely out of the blue, she has been presented with a new employment contract to sign which is significantly different to the one she has been employed under from the start. There are a lot of new clauses around working hours (such as their ability to cut her hours, or temporary lay-offs at will), notice periods have been altered, and a non-competition clause that last for 12 months but across the whole industry, rather than just in a similar employer. It also states that she has to take 3 days off at Christmas when the business is closed, previously these were discretionary days.
There are no obvious incentives in the contract for her, and everything seems geared towards the employer.
There has been no consultation on this with her, or any of her co-workers. There are two other people who do the same role as her who have also been given the new contract.
She is off work next week and is going to check the legal cover on her home insurance to see if employment matters are covered, but in the meantime, are employers allowed to insist on a new contract like this without any notice?
If she refuses to sign it, what are the possible implications?
What is the correct process that a business should follow if they wanted to change the contracts in this way?
Thanks!
I was told a couple of years ago that I was going to be given a revised contract to make me, from being office based (12 miles from home) to site based (anywhere). I took advice and was told that they couldn’t enforce it unless both parties agreed. I told my boss I didn’t agree and to tell our director that I wasn’t accepting it. He took the directors side so I left. I was encouraged to sue for constructive dismissal but it would have gave me a bad name and I couldn’t be arsed.
She needs to
Decide what we can accept and isn’ worth the fight
Decide what she wants to negotiate either I financial return or a watered down version.
Decide what she can’t accept and ask for it to be excluded.
What is driving these changes ? ‘
In the end they can’t make her sign, but she may find she is leaving one way or another. There probably are grounds for a legal case, but she may only get her notice period anyway.
If she can’t accept the terms she should negotiate a six months pay out and leave.
The 12 month all industry non compete for example, may or may not be enforceable, but what are they offering for her not to work ? usually if the employer is serious they will pay a notice period of similar length...
Decide what we can accept and isn’ worth the fight
Decide what she wants to negotiate either I financial return or a watered down version.
Decide what she can’t accept and ask for it to be excluded.
What is driving these changes ? ‘
In the end they can’t make her sign, but she may find she is leaving one way or another. There probably are grounds for a legal case, but she may only get her notice period anyway.
If she can’t accept the terms she should negotiate a six months pay out and leave.
The 12 month all industry non compete for example, may or may not be enforceable, but what are they offering for her not to work ? usually if the employer is serious they will pay a notice period of similar length...
swerni said:
It would be interesting to hear from a lawyer whether the new term would be enforceable while the old one probably is. Could be very naive move on their part.
Having spent nearly 30 years in sales at varying levels in the IT industry, I’ve only once seen the notice period the same length as the non compete and quite frankly, that was a f
k up, 12 months is pretty standard.
Having spent nearly 30 years in sales at varying levels in the IT industry, I’ve only once seen the notice period the same length as the non compete and quite frankly, that was a f
k up, 12 months is pretty standard.If her role suddenly became more critical or moved to Sales Director, then I could understand it. But if for the last five years three months was deemed ok, and nothing has changed. Then the 12 is difficult to justify.
S11Steve said:
and a non-competition clause that last for 12 months but across the whole industry, rather than just in a similar employer.
My wife had one of these in a contract a couple of jobs back. We read up on them and ones that are too wide ranging appear to be unenforcable.
https://www.jobsite.co.uk/worklife/beware-restrict...
Basically - the employer is only allowed to place restrictions to protect a legitimate business interests - and they must not be any more restrictive than absolutely necessary to achieve this.
Trying to prevent you working for any company in that industry sector in any capacity is far too restrictive and would be very unlikely to be upheld.
There have been a couple of posts on this subject but the search function has failed so I can't link to them. I do recall that one of the (few) reliable posters did say that if she continues to work then that indicates acceptance of the new contract. She would need to specifically reject it & await the company's response. She cannot just carry on working as if nothing has happened, unless she is happy to accept the new terms.
Proper advice from an employment law specialist is needed. Even if the 12 month non-compete clause was ruled defective it could cost thousands to overturn so she needs to get it reduced or removed.
Proper advice from an employment law specialist is needed. Even if the 12 month non-compete clause was ruled defective it could cost thousands to overturn so she needs to get it reduced or removed.
Years ago I was once told by a senior HR bod in the company I used to work for that you couldn't be forced to sign a new contract if the conditions were detrimental when compared to your old contract.
No idea if still holds water or was even correct in the first place! (Company was a bit 'cowboy' in some respects despite employing some 5k people).
Might want to seek some proper legal advise.
No idea if still holds water or was even correct in the first place! (Company was a bit 'cowboy' in some respects despite employing some 5k people).
Might want to seek some proper legal advise.
S11Steve said:
If she refuses to sign it, what are the possible implications?
Redundancy. PossibleSeek proper advice on this one.
I was once involved in a merger where all of middle management got new contracts to sign. Some good points, some bad points. For me the good outweighed the bad so I signed but a friend sought advice and advised the firm he wasn't willing to sign the new contract.
They kept him employed on his old contract whilst they discussed the issue. Within 3 months he left with a very large cheque (He had 30 years service)
You are not "obliged" to sign a new contract. It is a change to an agreement between the parties. At this stage a Unilateral change.
For example, if you were to draft a new contract of employment with favorable terms and a massive pay rise and annual bonus, do you feel your employer is obliged to sign?
For example, if you were to draft a new contract of employment with favorable terms and a massive pay rise and annual bonus, do you feel your employer is obliged to sign?
MitchT said:
What if you refuse to sign because you don't agree with the terms and the employer isn't willing to amend them?
Then ultimately you are leaving. If the employer is holding to everyone moves to a new contract, and you refuse to sign and neither side will compromise then you are leaving. Usually with some financial compensation, from most reasonable employers or an ET for the unreasonable ones
Jasandjules said:
You are not "obliged" to sign a new contract. It is a change to an agreement between the parties. At this stage a Unilateral change.
For example, if you were to draft a new contract of employment with favorable terms and a massive pay rise and annual bonus, do you feel your employer is obliged to sign?
What you say is true...but.....For example, if you were to draft a new contract of employment with favorable terms and a massive pay rise and annual bonus, do you feel your employer is obliged to sign?
if I as an employee prepared a new contract for more money and less hours and handed it to my employer to sign, and they refused, I could say "I no longer want to work for you under the existing contract and I'm leaving." Of course I'd have to work my notice as my existing contract demands.
The same is true in reverse. If my employer gives me a new contract, I can refuse to sign. And they can say " we no longer want you working for us under the existing contract and you're leaving." Of course they'd have to honour notice terms and redundancy payments as required by contract or in law.
eliot said:
^would they have to honour the redundancy terms though? The are not making you redundant, you are refusing to sign a new contract.
The only need to honour your notice period i would suggest.
Assuming the employer is looking to end the existing contract it is unlikely to be by redundancy as one assumes they still need the role. The only need to honour your notice period i would suggest.
However most companies (or at least the larger/better ones) would make an offer for you to voluntarily end your contract (mutual separation)
Offers for you to go this route can vary, some will offer very close to redundancy terms, some only your notice period, there is nothing proscribed and it is usually by individual firms custom and practice.
As I said earlier, usually in these situations (and I have managed several) one way or another you are leaving.
swerni said:
opps sorry, ipad and fat fingers.
Reasonable
Ah, I did wonder but didn't want to speculate.Reasonable
The reasonableness of the terms is irrelevant. The simple fact is the employer wants to unilaterally change the contract. You are not obliged to accept those terms. Not a lot of point in having contracts if one party could simply change the terms at will.. I mean, I'd have written myself some lovely terms into my contracts otherwise, you know, 100% salary bonus for attending at least 10% of the time................ Do you think my employer would be obliged to accept them?
As to the "redundancy" issue posited by others. This is not a redundancy but a constructive dismissal event. Which comes with a potential Tribunal claim for loss of income and benefits etc not just the notice period.
Just as update to this, my friend has spoken to a few of her colleagues over the weekend, and they too are not happy. A few other issues have been pointed out within the wording of the new contract, and employment lawyers are being contacted tomorrow by a couple of people.
I'll update as and when appropriate for those that are interested.
Thank you for the input so far, it's certainly given some food for thought.
I'll update as and when appropriate for those that are interested.
Thank you for the input so far, it's certainly given some food for thought.
My friend finishes her job on Friday - she refused to sign the new contract, got her CV updated and hit all of the local recruiters hard. 5 interviews in 8 days, resulting in 2 job offers with significant increases.
Her notice was handed in, and the reason she gave in writing was that the new contract terms made her position untenable.
It's not all rosy though....
In the 3 weeks that she handed her notice in, she has not been told who to handover to, and she has an active client base that are asking questions and still need ongoing support. The directors have blanked her, her line manager has asked her to ensure all her client notes and billing are up to date which she has done, but then said he wants them in a different format - whcih she has done, and now has said she has to create a manual folder with hard copies of all the documentation which is already duplicated across 2 CRM systems....
Two other people have left since the contracts were presented to them all, both have been stitched up on their last pay packet by a few hundred quid, and are having fun trying to get it rectified.
A few other people have been keeping diaries of various events and issues that have arisen in the last few months, notably bullying and harassment, 2 are currently engaging with ACAS, and my friend has an employment solicitor on stand by for a constructive dismissal claim.
It has been a salient lesson in how not to manage a team.
Her notice was handed in, and the reason she gave in writing was that the new contract terms made her position untenable.
It's not all rosy though....
In the 3 weeks that she handed her notice in, she has not been told who to handover to, and she has an active client base that are asking questions and still need ongoing support. The directors have blanked her, her line manager has asked her to ensure all her client notes and billing are up to date which she has done, but then said he wants them in a different format - whcih she has done, and now has said she has to create a manual folder with hard copies of all the documentation which is already duplicated across 2 CRM systems....
Two other people have left since the contracts were presented to them all, both have been stitched up on their last pay packet by a few hundred quid, and are having fun trying to get it rectified.
A few other people have been keeping diaries of various events and issues that have arisen in the last few months, notably bullying and harassment, 2 are currently engaging with ACAS, and my friend has an employment solicitor on stand by for a constructive dismissal claim.
It has been a salient lesson in how not to manage a team.
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