This week Nicholas Snowden, Senior Solicitor at Clarkslegal LLP and Helen Badger, employment law expert, Browne Jacobson present their ideas on how to manage a change in pay frequency.

The question:
We are thinking of changing our payroll from weekly to monthly. I want to know if anyone can help out and tell me if there is a legal period of notice that employees must be given before the change takes place?

Charlotte Hulmes

The answers:
Nicholas Snowden, Senior Solicitor at Clarkslegal LLP

This is a contractual change which can cause some staff practical difficulties if they do not have time to organise their financial affairs to take account of the change. So, whilst a notice period is required from a legal standpoint, it is also desirable from an employee relations point of view. Effecting the change can be approached in one of two ways:

• Impose the change unilaterally and see if anyone resigns and claims constructive unfair dismissal over the issue; or
• Ask for written consent to the change, and for those who refuse to give it, dismiss and offer re-engagement on the new contract terms

If you choose the first option, best practice would be to inform staff of the proposed change and the timetable for implementation and give them the opportunity to make representations about the proposal (i.e consult).

Hopefully, this approach will allow you to take most staff with you. If constructive unfair dismissal claims result, you would probably argue that there was no fundamental breach of contract but, even if there was, the dismissal was fair for some other substantial reason and a fair procedure was followed.

If you choose the second option, you could face unfair dismissal claims but, provided you follow a fair procedure, you would probably be able to defend them successfully on the basis that the dismissals were fair for some other substantial reason. Again, consultation could be a useful tool in reaching your objective.

If you think that you can get the affected employees to agree to the change, the second option may be better. If you fear that asking staff to agree in writing is more likely to encourage certain staff to refuse, you may prefer the first option.

In terms of the notice required, if you have the same notice period across the affected workforce, use that period. If notice periods vary with grade and/or length of service, it will probably be easier to take the longest notice period, which could be in the region of 12 weeks and give that period of notice of the change to all the affected staff.

In relation to option two, you may have to dismiss and offer re-engagement to staff who refuse to agree the change, and that dismissal will have to be with notice, or pay in lieu of notice, to avoid wrongful dismissal claims.

If your preference would be to dismiss with notice being worked, you may be reluctant for the implementation to take a total period of 24 weeks or more (i.e 12 weeks consultation plus 12 weeks notice). In that case, you may prefer to have a shorter consultation period, say 6 weeks.

In practice, introducing a new pay date can usually be done with minimal fuss if employees are informed. If you recognise a trade union or have an employee consultative forum, run your proposal past them first. If you have their support you should be fine.

Helen Badger, employment law expert, Browne Jacobson

Contrary to popular belief, it is not sufficient merely to give due contractual notice when making a variation of an employee’s contract.

In the event of a proposed variation to terms and conditions, an employer should seek the agreement of the affected employees. If this cannot be reached, the employer can impose the variation, but in doing so is open to claims of breach of contract and constructive dismissal.

The alternative is to give due contractual notice of termination of the old contract to all employees who have refused to sign up to the change, together with the offer of a new contract, to start immediately. Naturally, all terms would be the same save for the change in question.

In this instance, however, while there can be no breach of contract claim, unfair dismissal actions could result. The notice constitutes a dismissal irrespective of the new contract on offer, enabling employees to bring unfair dismissal claims.

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HRZone highly recommends that any answers are taken as a starting point for guidance only.

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