I have advised staff that we need to reduce contractual hours in order for our business to make money. Can I force this change?

Reducing employees’ contractual hours seems like a fairly simple and practical way to improve business efficiency. However, even if you think that changing employee contracts is imperative to your business’s needs, this cannot be done simply based on your decision alone. If you just go ahead and make a contractual change, your employees may be entitled to sue for breach of contract, or they could potentially resign and claim constructive dismissal. If you want to make a contractual change, ideally your employees will agree to it, and you are more likely to achieve this through openly discussing the change first. The first step in changing the contract terms is to take the time to thoroughly consult your employees about the change.

You are looking to reduce contractual hours, which is likely to be unpopular with some members of staff, so when letting your employees know that you are considering making a change like this, you will need to explain your reasons for reducing the hours and why it is important. It may also be worthwhile considering offering some kind of incentive to your employees in order to make the change seem more favourable.

You will need to give consideration to employee concerns and their suggestions of alternative ways to improve business. Are there other ways your business could make more money that you have not yet considered? Perhaps you could explore the idea of a temporary period of short-time working or lay-offs; these are other potential ways of reducing employee hours temporarily, without having to pay more than the statutory guarantee pay for each full day that an employee is laid off. Liability to pay statutory guarantee pay is only for one full working week in each 3 month period.

Hopefully there will be agreement directly between yourself and your employees, or through a ‘collective agreement’ between yourself and a trade union. Ultimately, however, if you have a pressing business need to make this change for all employees and you cannot get their agreement, you may have to enforce the change. If there is a variation clause in the employees’ contracts, you can use it. If not, your only other option will be to dismiss the employees and offer re-engagement on the new terms. However, this is risky and you could end up with tribunal claims for unfair dismissal, so it is extremely important to tread carefully and follow the correct procedure.

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