Q&A: Peter Done

Q: Can I change the terms and conditions for new employees only, keeping existing employees as they were? Do I need to reissue a new/changed employment handbook if the new terms differ slightly (that is, do the terms override the handbook)?

A: The terms and conditions under which an employer takes on staff are down to the employer and how he wishes to treat his staff. This is clearly subject to certain statutory minimums in areas such as national minimum wage and annual leave entitlement.

However, where entitlements exceed the minimum set by the government, an employer is free to offer the terms he wishes. An employer is also free to offer entitlements in areas where there is no legislation – for example, bonuses or contractual sick pay.

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Therefore, if he wishes to amend the terms and conditions on which he offers a job, he is free to do so. Many organisations take the decision that they need to remove an entitlement for staff who begin employment from a certain date and there is nothing stopping them from doing this. It is up to the prospective employee whether to accept these terms and consequently take the job.

It is not the same as when an employer wants to amend the terms of existing staff. This is because it is against common law to change the terms and conditions of existing staff, which were agreed at the start of employment, without their consent. Consent is particularly important where the amendment to the terms is to the employee’s detriment.

This situation does not arise when the employer is determining terms for new staff. But, where terms are changed for new starters, it will mean the employer is running a two-tier workforce – having different employees, who may be working in the same department or on the same team, who have different benefits, for example, written into their contracts. This may cause some questions to be asked by staff who feel they have less favourable terms.

It will also increase administration because a particular employee’s contract will constantly have to be referred to in order to see what their exact terms are.

Employers should also be careful not to breach employment legislation when they offer amended terms to new starters – for example, ensuring men and women who do the same work are paid the same.

Employment documentation should always reflect an individual’s current terms and conditions, so it is advisable to issue an amended handbook to new starters who are under the new terms. What happens in practice is that the working relationship can sometimes override written provisions, so to avoid all doubt from both the employer and employee, the handbooks should reflect what happens in reality.