This week Helen Badger, employment law expert, Browne Jacobson and Nicholas Snowden, Senior Solicitor at Clarkslegal LLP present their ideas on how to manage a transition of contract from full-time to part-time.
Earlier this year one of our full-time employees made a request to work part time three full days a week. The employee was working Monday to Friday 9-5pm (35 hours) per week, and after some deliberation it was agreed that the employee could work four full days a week, i.e. 28 hours and her salary would be adjusted pro rata which would be effective from 1 April.
The employee was given a new contract to sign for the 28 new hours/salary. Later that same day she received a call advising that the new hours should be based on a 40 hour week as advised by the financial controller in our Dutch office. The employee was not happy to accept that she would now have to start work at 8.30am instead of 9am but was verbally advised by the MD to just carry on opening the office at 9am as normal.
The next contract e mailed to her was for 32 hours, but at the same salary as the one for 28 hours, and she was asked to sign it fast before they changed their minds, the employee signed this in good faith following her verbal agreement with the MD.
This employee is now in a quandary, last week an announcement was made that the MD was no longer with the company. After some thought the employee has contacted the company, explained the situation and has asked for the first contract to be recognised, they have refused to renegotiate the hours. This means the employee is expected to work 32 hours but her salary is based on 28 hours.
Can anyone please give some advice on this situation?
Helen Badger, employment law expert, Browne Jacobson
The situation is obviously complicated by the number of different arrangements that have been discussed and agreed or imposed. The fact that some of these arrangements have been agreed verbally between the employee and the old Managing Director, and not committed to writing, further muddies the waters.
In short, whilst a verbal agreement is as legally binding as a written contract, there are inevitably difficulties for the employee in establishing the nature of the agreement. Whilst this may enable you to argue that the employee is bound by the signed contract requiring her to work 32 hours for 28 hours salary, this may not be the most sensible approach.
If the company maintains this position, the employee will be in a position to raise a formal grievance, which would have to be addressed in accordance with new statutory dispute resolution procedures introduced in October 2004. A grievance meeting would need to be held, after which the employee would have a right of appeal. This all takes a significant amount of management time, and of course does not promote good employee relations.
In order to maintain its position, the company would have to insist that the employee had agreed to work 32 hours per week for 28 hours pay – something it would not seem logical to assume the employee would have done. In the circumstances, the pragmatic and sensible approach would be to aim to reach a compromise with the employee, and make sure that the arrangement agreed upon is put in writing.
Nicholas Snowden, Senior Solicitor at Clarkslegal LLP
This boils down to whether there has been an effective oral variation of the employee's written terms of employment. Subject to the company's arguments set out below, as long as the employee can provide evidence of this (e.g. oral evidence from the former MD), she should be able to prove that an express oral variation of her written contract of employment has taken place.
From the company's point of view, if it wants to contest the assertion that a variation has taken place, it should check the terms of the written contract. Does it contain an entire agreement clause?
As the oral agreement came before the signing of the final contract, the existence of an 'entire agreement' clause (i.e. a clause stating that no terms of the contract exist beyond those in the written agreement) in the final agreement would kill the employee's argument dead.
Other potential arguments for the employer are:
- that there was no intention on the company's part to agree a variation of the written contract and that the arrangement regarding the 9am start was informal and revocable at any time; and
- that the MD lacked the authority to agree the variation on behalf of the company because the authority lay with the Dutch parent company. However, I would expect this argument to fail as one would expect the English MD to have at least ostensible authority to bind the company in this way.
If there is no variation, the employee is bound to work under the terms of the final written agreement. She agreed to work 32 hours at the rate of pay offered and there is little she can do about it now.
If there has been a valid oral variation, the company will be breaching the employee's contract of employment by insisting that she works 32 hours, rather than 28.
The employee can react to this by raising a formal grievance to try to resolve the issue. If this is unsuccessful, ultimately her only real weapon is to resign and claim constructive unfair dismissal on the basis that the breach of contract is fundamental. Constructive unfair dismissal is a very difficult claim to win, so this would be a last resort.
Nothing has been said about the employee's reasons for wanting to work part-time. If the request is connected to childcare responsibilities, the employee could make a formal request to work the more favourable hours and the company would have to provide a good business reason if it wanted to refuse that request.
HRZone highly recommends that any answers are taken as a starting point for guidance only.
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