Amongst a number of legislative bills currently under review in Parliament is a new statutory code on fire and re-hire practices which would require employers to hold “fair, transparent, and meaningful consultations” on proposed changes to employment terms. It’s a change that may have been influenced by cases such as the mass sacking of 800 members of staff by P&O Ferries that you may remember from last year.

A contract of employment determines the terms under which an employee works for their employer in exchange for payment. Therefore any changes to these terms should be reflected in the contract and a new contract issued each time a change is made. If the proposed changes to the contractual terms are significant or fundamental, then a period of consultation should be entered into to give employees the opportunity to object to or influence how the changes are made.

A change of working premises would be considered a fundamental change as would a change in working hours or say a change to a shift pattern. It goes without saying that reductions in pay should always require consultation. Some businesses have used fire and re-hire tactics to avoid entering into a consultation period.

The terms under which a worker is employed fall under two headings; Statutory and contractual.

Statutory terms are those that affect all workers and are set out in law. Some of these are easy to identify, such a statutory maternity pay (SMP) and statutory sick pay (SSP).

We always recommend that statutory terms and those that apply across the entire workforce are included in the company staff handbook. This minimises paperwork when there is a change in statutory law as you don’t have to update individual employee contracts, just the staff handbook.

As well as statutory terms, a staff handbook might include procedures such as disciplinary & grievance and absence, break times and company policies such as Internet policy and Health & Safety policy.

Contractual terms are those that apply to specific employees and may enhance statutory terms, so these are the terms that will differ between employees. These will include the job title, hours of work, remuneration and access to company benefits etc. Although there maybe some statutory requirements that underpin these such as Working Time Directive and Minimum Wage.

A change to contractual terms will mean that the employee is working under new terms and so a new contract reflecting the changes should be issued. Where any changes are deemed to be significant or fundamental, then a period of consultation is required. If you are in any doubt about whether any changes to employee’s terms you are proposing constitute significant changes, you can call us for advice.

How your contracts are worded can help to keep a lid on your administration burden. For example, if you pay minimum wage then using a phrase such as “You will be paid at the prevailing National Minimum Wage rate for your age”, will mean you are not required to issue a new contract every time the NMW rate increases.

We recommend that contracts and handbooks are reviewed regularly to ensure they comply with statutory law and to cater for areas that are subject to frequent change such as Internet and Social Media usage.

If you would like to discuss a contract and handbook review then simply call us on 01452 331331 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it.