UK: Changing terms and conditions - need for acceptance and consideration

Employers wishing to change an employee's terms and conditions need to establish both the employee's agreement to the change, and that consideration has been given. These requirements can give rise to practical difficulties for employers seeking to enforce the new terms.

All too often, an employee fails to sign and return the new contract, leaving room for argument as to whether he/she can then be treated as having accepted the terms. Where a change has an immediate impact, the fact that the employee continues to work for a lengthy period without objecting to the change may be sufficient to indicate that the employee has accepted the new terms. This was the case in Wess v Science Museum Group, where the unsigned contract involved a whole new package of terms including a new job description and a reduction to the employee's notice period from 6 to 3 months. The EAT noted that even the reduction to notice had an immediate impact in reducing job security which, in turn, could have a real and practical importance for the employee (for example, in terms of a mortgage application). The employee had continued to work for 9 years subject to that immediate impact, without querying the terms, despite being an active trade unionist comfortable with raising concerns. This amounted to acceptance of the new job on the new contract, including the reduced notice period.

Any agreed variation to terms also has to be supported by consideration. Where the changes include improvements to the employee's position, that will be the consideration. But where the change is to the employee's detriment, such as the introduction of restrictive covenants, it may be harder to establish consideration. Often covenants are introduced at the same time as a salary increase, but the recent case of Re-use Collections Limited v Sendall & May Glass Recycling illustrates that the increase to salary or other benefits needs to be clearly linked to agreement of the new covenants (and not something that would have been awarded anyway) in order to amount to consideration. Here the employer was unable to produce any clear written evidence that the benefits were conditional on acceptance of the covenants.

The employer's argument that its continued employment of the employee amounted to consideration also failed. Again, it had no evidence that it had clearly made agreement to the covenants a condition of continued employment. There was no suggestion that the employer had expressly or implicitly given the employee a deadline to sign, after which consequences such as dismissal might follow for failure to do so.

The cases highlight the importance of chasing up a signed copy of the contract if possible, and ensuring there is clearly designated consideration, particularly for changes which impact only at the end of the contract and which are to the employee's detriment.