Changing an employee’s terms and conditions

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Businesses are organic, and just like animals, need to readily adapt to changes in their environment or face extinction.

One need only look at the way online shopping has changed the face of retail, to recognise that no matter how tried and true your business model may be, it is unlikely to continue unchanged, for long. In the age we live in, technological disruptors can just about be added to death and taxes, as one of life’s certainties.

Uber, has been a major disruptor to the taxi industry, and launched in Hamilton earlier this year. Their pick-up times are quicker and more reliable and the charges cheaper (although we have been charged a “wait time” when there wasn’t one on three out of three bookings, so check your online invoice). It will be difficult to see how taxis plan to out-perform Uber.

The pressure on the taxi industry was at the heart of an Employment Relations Authority (‘Authority’) determination, Anderson v Blue Star Taxis (Christchurch) Society, that came out earlier this month.

Linda Anderson worked as a call centre operator for Blue Star Taxis, Monday to Friday, 7am to 3pm. On March 8, 2017 she was called to a meeting, and once in there, was informed that due to competitive pressure the company was facing, they now needed her to work the 3pm to 11pm shift, and that this change would take effect on March 27, 2017. This was not a small ask, involving as it did, a significant change in lifestyle. Blue Star also referred to the recent death of her father, saying she no longer had care issues, and could do the evening shift.

Ms Anderson’s individual employment agreement (IEA), expressly stated her hours were 7am to 3pm, and given she had not been forewarned about the purpose of the meeting in advance, she was confused as to what her legal rights were and whether she could simply refuse to change.

Blue Star was adamant that she agreed to the changes during the March 8, 2017 meeting, and Ms Anderson was equally adamant that she had not.

Several days after this meeting, Ms Anderson attended work and correctly insisted that Blue Star had no right to unilaterally change the hours set out in her IEA without her consent.

Blue Star stated that she had consented, they would not allow her to withdraw her consent and that the changes would go ahead.

On March 31, 2017, at the end of her shift, Ms Anderson was informed that the roster changes would commence from April 3, 2017. Ms Anderson became very distressed, and was signed off medically unfit for work for two weeks.

When Ms Anderson returned to her first day at work, she found that the roster now had her on the 3pm to 11pm shift, which she flatly refused to do. She stopped going to work and raised a personal grievance for unjustified disadvantage, and pursued reinstatement to her previous hours, along with a claim for compensation and lost remuneration for the period she had remained away from work.

The Authority held that Blue Star’s process was significantly flawed, appearing as it did, to just inform Ms Anderson what would be happening, rather than getting her agreement to the changes. The Authority ordered she be reinstated to her original hours, that she receive $15,000 compensation for hurt and humiliation, but declined her claims for lost remuneration.

The latter was on the basis that Ms Anderson could have worked the evening shift, albeit under protest, while pursuing her grievances, and had therefore failed to mitigate her losses.

The Authority must always consider whether an employee has attempted to mitigate their loss (by, for example, showing rejected applications for other employment) when deciding on lost remuneration as a remedy.

So how does a business go about changing an employee’s terms and conditions, when the business is under pressure and changes need to be made? Firstly, employers need to understand the difference between consultation and agreement.

Consultation is used to make changes outside an individual employee’s IEA, such as when the business decides to restructure or when introducing a new policy, such as random drug testing or personal internet use.

The process involves proposing a course of action and obtaining feedback from employees, before deciding how to proceed. The feedback must be considered with an open mind and employers need to be prepared to modify a proposal, based on the feedback, before deciding how to proceed. Provided the consultation process has been genuine, an employer can still continue with the proposed plan of action, with or without an employee’s agreement. Consultation does not imply agreement.

Making changes to the individual terms and conditions in an employee’s IEA, however, is an entirely different matter. The terms and conditions that the parties sign up to in an IEA, are set out in writing and can only be changed by mutual agreement, usually evidenced in writing. It is a rare IEA that does not expressly state this. Whether an employer is able to change the terms in an IEA, largely comes down to whether they can secure an employee’s agreement, and if they can’t, then their options are limited.

Blue Star would have been on safer ground to propose a restructure, disestablishing one of the day shifts and creating an additional night shift.

If, after consultation, the position had been disestablished and Ms Anderson had fairly been chosen as the person being made redundant, they could then have offered her redeployment to the newly created evening position, which she would have been free to accept or decline.

Even better, there would have been built-in flexibility in the IEA, particularly around clauses such as hours, location and duties, that could be changed in future, following consultation with the employee.

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About Author

Erin Burke

Employment Lawyer and Director at Practica Legal Email: erin@practicalegal.co.nz phone: 027 459 3375