As a general rule, an employer must get an employee’s consent to vary terms and conditions in the employment contract. However, the employment contract itself may allow certain changes, and in such circumstances, obtaining the employee’s agreement will, therefore, not be necessary.
Employers sometimes include ‘flexibility clauses’ (also known as variation clauses) in their employees’ contracts to give them the right to vary certain terms and conditions, such as relocation, unilaterally. This allows them more flexibility in workforce management.
These clauses can, however, present legal risks for employers and raise significant concerns with affected employees. As a result, such clauses should be approached with caution and must only be used to make reasonable changes.
What are Flexibility Clauses?
As an employer, you are more likely to be able to rely on a specific flexibility clause in an employment contract. Typically, examples include mobility clauses that allow an employer to vary an employee’s place of work or a clause permitting the employer to change the employee’s duties or working hours.
The courts, however, have still tended to interpret these clauses narrowly. As a result, if you do include a flexibility clause in your contract of employment, you should ensure that it is as clear and specific as possible. This should help to avoid misunderstandings and reduce the risk of legal claims.
Specific and General Clauses
Employers sometimes include a clause at the end of the contract that gives them a general right to make changes to the contract. A general flexibility clause might, for example, provide that an employer can amend the terms of a contract, depending on the needs of the business. However, these types of vaguely worded clauses would usually be considered too broad to rely on to the detriment of the employee. This is because the employer is bound by the implied term of trust and confidence in all contracts that oblige them not to act completely unreasonably. Such clauses will, therefore, usually only allow the employer to make minor or administrative changes.
Drafting Flexibility Clauses
Flexible clauses are generally interpreted narrowly by the courts and can only be used to make reasonable changes. Any uncertainty in the wording and reach of a flexibility clause will therefore be concluded in favour of the employee. The more detrimental the change is to the employee, the harder it will be for you to rely on that clause.
When drafting an initial contract of employment, it may be prudent to include flexibility clauses that allow you to amend specific terms of employment such as the place of work or hours of work. The clause will need to be set out in detail:
- the terms the employer can amend
- the circumstances under which it can be altered
- any notice period and the procedure for the variations to be made
Even if you believe that a change is covered by the flexibility clause, it is better to discuss it with your employee before implementing it to prevent any ill feelings.
Adding a Flexibility Clause to a Contract
If you want to add a flexibility clause to an existing employment contract, you will need to change the employment contract. Certain steps should be followed when changing employment contracts.
The preferable way to vary the contract is to obtain your employees’ express agreement to a change. There are various things that an employer can do to encourage employees to consent to the proposed changes, for example, offering an additional benefit as an incentive. This approach will make agreement more likely and reduce the risk of legal issues.
Other Considerations When Using Flexibility Clauses
Even if the flexibility clause written into the employment contract is reasonable in scope, the law may limit an employer’s ability to make amendments using flexibility clauses unilaterally. This is because the clause must still be exercised reasonably, with sufficient notice given to the employee.
For example, an employer could not rely on a flexibility clause to require an employee to move to another part of the country for work on very short notice. If you are considering whether it is reasonable to use a flexibility clause to change an employee’s place of work, you should consider the following:
- whether it is a reasonable commuting distance
- if the employee can drive
- whether there are public transport options available
- whether the employee has caring responsibilities that a longer commute would impact
- if there is any risk of discrimination
Failing to use a flexibility clause reasonably can lead to claims of breach of contract or constructive unfair dismissal.
If you are relying on a flexibility clause to introduce a change in working arrangements, it is best practice that you:
- check the wording of the clause to make sure any proposed changes fall within its scope
- notify employees in writing of the proposed changes, giving adequate notice of when the proposals are due to take effect
- offer to consult with employees and listen to their views on alternative ways to avoid the change
- be mindful of any individual circumstances, especially where an employee’s personal circumstances have altered since they signed the employment contract
- seek expert legal advice before implementing any amendments so that you are satisfied that the flexibility clause relied upon is not unreasonable and the context in which it is being used is fair.
For advice on flexibility clauses and when they can be relied upon to make changes to terms and conditions in an employment contract, contact our expert employment team on 0300 303 2071 or email us.
