When an employee doesn’t accept contract variations
If you vary an employee’s contract and they don’t accept the changes, what can they do about it and how will it affect your business? Our article has the details on a legal case and its implications.
The world of work is a fluid one, with changes in the status of both the employer and employee. These changes are sometimes reflected in altered contracts of employment and for the most part, those alterations cause no problems whatsoever. The employer issues the contract, the employee signs it to say that they accept it and life continues.
But what happens if the employee doesn’t sign the contract? Can the employer nevertheless treat them as having accepted the new arrangements? That’s what the case of Wess v Science Museum Group [UKEAT/0120/14/DM] went some way to determining.
Ms Wess had worked for her employer, the Science Museum Group, as a senior curator since 1979 and under the terms of her original contract, was entitled to six months’ notice of termination from her employer.
However, in 2003, her employer issued a new contract of employment which made variations in her job description and terms and conditions of employment, one of which was to reduce the notice entitlement to 12 weeks. Ms Wess didn’t sign the new contract, but – significantly – raised no objection to any of the new terms in it.
She was eventually dismissed by reason of redundancy nine years later. When this happened, she said that she was entitled to six months’ notice under the terms of her original contract, dating from 1979 and she took her employer to an Employment Tribunal for what she claimed was the outstanding notice pay.
The Employment Tribunal, whose decision was backed up by the Employment Appeal Tribunal, ruled that Wess had implicitly accepted a variation to her employment contract by continuing to work without raising any objections to the variation of the contract by her employer.
Generally speaking, if an employee fails to object to a new or varied term in their contract, this does not mean that they have accepted it. This is all the more so when the change has no immediate effect on the employee. It is not often that tribunals will find that their acceptance of it is implicit.
However, in this case, the Science Museum had made it clear that future employment was on the basis of an entirely new contract. It was not just the notice provisions that had been amended. The employer provided Wess with a completely new package, including a new job description and handbook and made it clear that her continuing employment depended on her accepting those terms. There was no option for her to pick the terms with which she agreed and dispense with the ones she did not accept.
Some of the terms in the new package affected her immediately and she raised objections to these, but there was no objection to the changes to her terms and conditions, including the new reduced notice period.
It was also noted by the Tribunal that as Wess was an intelligent and well-educated worker holding the position of trade union representative, she could have been expected to have noticed and taken account of the detail of the terms and conditions and to object if she was in any way unhappy with them.
Since she had continued to work for nine years under the new contract, knowing that the notice period had changed, she could be held to have accepted the variations.
It was also stated that it is not always the case that a change in notice period would not have an immediate effect on the employee. It could reduce job security which, in turn, could have a real effect for the employee.
Having heard the facts of the case, both the Employment Tribunal and the Employment Appeal Tribunal found that Wess had implicitly consented to the revised terms of her contract.
What does the law say?
Contract law says that any agreed variation to a contract has to be supported by “consideration”. This is one of the three main building blocks of a contract (the other two being offer and acceptance). It can be anything of value which each party to a legally binding contract must agree to exchange if that contract is to be valid. If only one party offers consideration, the agreement is not legally a binding contract.
If a change to a contract of employment has elements that are to the employee’s advantage – such as a pay rise or promotion – that will be the consideration.
Variations to the contract can either be written, verbal or implicit, the latter being when a change is made and by their actions, an employee is taken to have agreed with it.
Employers have successfully argued that the employee’s continued employment provides the necessary consideration in the absence of a signed contract. This is however only likely to be the case where the changes to the contract have an immediate effect on the employee’s employment and the employee has not clearly objected to the terms of the new contract.
However, should a completely new contract be introduced, an employee will be deemed to accept the changes if they work for a period of time without protest.
Implications for employers
Employers should not assume that an employee’s silence on the matter of contract changes is indicative of their implied agreement to it. They need to make sure that they have the employee’s agreement to the changes, in writing if possible.
They should also be careful when it comes to relying on a contractual term which has been unilaterally imposed on an employee, particularly where those terms do not immediately affect the employee; examples of these might be sickness or redundancy policy.
To ensure that the change is covered by contract law, employers should also allocate some sort of consideration to the change – this could include things such as a pay increase, a bonus or other fringe benefit.
Finally it should be noted that an employee always has the option of working under new terms but at the same time making it clear that they are not accepting the changes. This is known as working under protest.
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