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Ask the Expert: How do I end non-contractual arrangements?

15th Jun 2012
Thomas Eggar
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I’m looking for advice on the steps to go through when ending non-contractual arrangements.   I'm working on the basis that, for expediency’s sake, the safest approach is to follow the same process as for contractual terms, but any advice would be much appreciated.    Esther Smith, partner at Thomas Eggar   Without sounding like I am stating the glaringly obvious, the first thing that you really need to do is to make sure you are completely comfortable that the arrangements you want to change are non-contractual.   While they may be labelled as such (or conversely, not labelled as contractual), they may well have become contractual as a matter of custom and practice. So it is worth checking this point out to make sure that you are not opening a can of worms in trying to change things.   If the arrangements are genuinely non contractual, however, there is no legal obligation to consult about any changes – you could simply make the changes instantaneously and inform staff of what has happened. But this situation may give rise to practical problems and, more likely, employee relations issues.   Therefore, if you are happy to consult about changes to non-contractual arrangements in the same way that you would about contractual ones, there seems to be absolutely nothing to loose in proceeding with this approach. Esther Smith is a partner in Thomas Eggar's Employment Law Unit.    Martin Brewer, partner at Mills & Reeve   The first thing to say is refrain from doing what you would normally do to change contractual terms as it negates the benefit of having non-contractual 'arrangements' in situ in the first place. But to be more specific, the answer to your question is highly fact-based and very much turns on what 'arrangements' that you are thinking of altering. The important thing to keep in mind here is that, just because an arrangement isn't written down in a document called 'contract of employment', doesn’t mean that it isn't a contractual term. Contractual terms can be written or oral, be expressed or implied through various means and be incorporated into a contract of employment by various means (custom and practice, for example) too.   Unlike most other contracts, employment contracts also have terms imposed into them by law (equal pay, minimum wage, working time, annual leave, trust and confidence, good faith, co-operation, obeying lawful and reasonable instructions to name but a few).   So if you are unsure whether the arrangements that you want to change are or are not contractual, check with a lawyer first as this situation will affect how you proceed. Taking it as read that the arrangements you have in mind are not contractual, then as I say, what you do depends on what you want to change and who is affected in what ways.  Giving notice  Firstly, there is no particular legal process to follow. An employer can, in principle, change anything that is not contractual. However, what you cannot do is behave in a way that destroys or seriously damages employees' trust and confidence in you as employer.   So you cannot irrationally or unreasonably favour one employee or a particular group. You also cannot behave capriciously or discriminate, so check that the changes can be justified if they have an adverse impact on someone because of a 'protected characteristic' (age, sex[***], race, disability etc.).   Secondly, despite there being no particular required process, it is nevertheless good practice to consult with affected staff about changes to their working arrangements.   Moreover, if the changed arrangements could have an adverse effect on those employees, it may be wise to provide them with notice and to deal with any representations made by individual staff members.   This period of notice need not be extensive, but it is always sensible to try to take staff with you. Merely imposing a change without discussion, providing notice or listening to concerns is not good for staff relations and can, in some cases, lead to resignation and claims of constructive dismissal, which could have been avoided relatively easily.   So, in summary, decide if you can make the changes and establish whether they are truly contractual. Ensure that you know why you want to make the changes, tell staff what is going to happen and why and give a date for the new arrangements to come into effect.   Be available if anyone wants to discuss them or has any particular concerns and, if possible, deal with them. If anyone raises potential discrimination as an issue, seek further advice.

Martin Brewer is a partner at law firm, Mills & Reeve LLP.

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