Chris Brunt is a Gibraltar employment lawyer a Barrister and Acting Solicitor who will consider all employment cases on a “no win no fee” basis.
An employment contract in Gibraltar is a binding agreement between the employer and the employee. This means that it cannot normally be amended without the express consent of both parties. However, it is possible for employers to amend terms in the employment contract in particular circumstances, that is even if the employee does not agree.
Obtain consent for the amendment
By far the best way to introduce any changes to the employment contract would be by receiving the consent of the employee. Often if the proposed variation is not controversial then this is easily obtained.
Employers should always seek consent from their employees if they propose to introduce significant changes to the contract. This is because a meaningful consultation on the proposed variation, with explanations for the rationale behind them, will be more likely to increase the likelihood that an employee will agree to the change. Importantly, it also reduces the risks to the employer when forcing through a variation to the employment contract and/or when dismissing and offering re-engagement to employees who did not consent.
Minor changes to contracts.
For minor changes to contracts of employment, it may be possible to rely on implied consent. Employers might decide to inform their employees of the impending change inviting them to express any concerns. In the absence of objections from employees, the variation is likely to be implicitly accepted after they have been working under the new terms for a period of time. However, employers need to be cautious of relying on implied consent, that is particularly in situations where the new term does not have an immediate impact, that is when the employer does not try to rely on it perhaps for several years (such as mobility clauses). In such circumstances, it will be harder to establish implied consent by working to a change that has not yet come into effect.
Unilateral changes to contracts
Where an employer has not managed to agree on a variation of contract with an employee, they might decide to unilaterally alter the employment contract. This constitutes a breach of the employment contract but depending on the nature of the variation it may or may not have legal consequences.
Relatively minor variations of contact which do not go to the heart of the employment relationship (and is fundamental to the employment relationship), and which do not cause, financial loss, maybe impliedly accepted as employees continue to work to the new terms. Such changes are unlikely to constitute a fundamental breach of contract and which might form the basis for an unfair constructive dismissal claim. (More on Constructive Dismissal in later posts).
However, employers should exercise caution when considering unilateral changes to the employment contract as the demarcation between a fundamental breach and which goes to the heart of the employment contract and a breach that is not fundamental is not always obvious. Where a fundamental breach does occur, the employee is entitled to resign and claim constructive dismissal, or they can continue to work under protest and bring an unlawful deduction of wages claim in the Gibraltar Employment Tribunal if the unilateral change has reduced their remuneration or a breach of contract claim in the Supreme Court of Gibraltar.
Dismissal and re-engagement
It is best to seek legal advice in advance of taking such a step, but it is possible for an employer, after a full and meaningful consultation, to elect to dismiss an employee (should they have a “substantial reason” to do so – Compare section 65(1) (b) of the Employment Act), who has not consented to the change and to immediately offer re-engagement on the amended terms.
Clearly, this approach is a difficult one for the employment relationship. The employee may decide to bring a claim for unfair dismissal in the Gibraltar Employment Tribunal in these circumstances, regardless of whether they agree to remain employed and work to the new contractual terms.
It is the case that in such circumstances the employee may have reduced their ability to pursue a full compensatory award for loss of earnings as the employer will have offered an opportunity to the employee to mitigate their losses by re-employment. Employees could nevertheless still pursue a claim in the Employment Tribunal in Gibraltar for a finding of unfair dismissal, and seek to obtain a “Basic Award” and any loss of earnings or other losses arising from the unfair dismissal. (See later posts on calculations of Basic Award for unfair dismissal).
A warning to employers, a non-existent or insufficient consultation process contributes to the risk of the Gibraltar Employment Tribunal finding that such a dismissal is unfair on procedural grounds (More on procedural unfair dismissal in later posts).
What are the choices for an employee when their employment contract is varied?
- Perform existing contractual terms: Employees may refuse to work to the new terms and work to their existing terms i.e. shifts, break times etc. (seek legal advice before you do so).
- Remain employed and sue the employer: Where a breach has caused a financial loss, an employee has the option to remain in employment while pursuing a civil claim for breach of contract. A claim such as this would include all future losses flowing from the employer’s breach.
- Constructive unfair dismissal: An employee who considers the breach of contract to be fundamental to their relationship with their employer may resign from their employment and seek to claim constructive unfair dismissal in the Gibraltar Employment Tribunal.
Summary: – Consideration for Gibraltar employers
Get the contract right from the outset: Take care to consider carefully the terms of your contract of employment from the outset to avoid later disputes over terms that could have been agreed upon before the employment began. Do not rely on simply providing the employee with HM Government of Gibraltar’s Department of Employment’s, Employment Training Board’s (ETB)Terms of Engagement Contract).
Variation of contract should be provided for: If you do not simply rely on an ETB contract you should consider Incorporating a variation clause into your employment contract. While it is the case that such clauses will not cover major changes of terms, they can be helpful for legislation updates and minor variations.
Always consult informally: Give employees notice of any proposed variations and consult informally about the issues first. It may be possible to reach an agreement without the need to commence a formal process.
Consult formally: Any formal consultation process should be meaningful. Consider arranging several meetings, sending invites and always follow up correspondence setting out the issues including what needs to be or was discussed, offering the right to have a companion and the right of appeal.
Chris is an Employment Law Barrister and Acting Solicitor of the Supreme Court of Gibraltar who specialises in Employment Law.
Are you an employer who is looking to vary the terms of their employee’s contracts? Or perhaps an employee whose employer is attempting to change your working conditions? Please contact me to discuss ways in which you, as an employer, can reduce your exposure to employees for breach of contract or constructive unfair dismissal claims.
Or, if you are an employee, concerned with variations to your employment contract, please get in touch to discuss your options. I can be contacted at Phillips Barristers & Solicitors, 292 Main Street, Gibraltar, GX11 1AA. Telephone (+350 200 73900), or email me at chris.brunt@phillips.gi
Contact me for a free 30-minute consultation at Phillips Barristers & Solicitors, 292 Main Street, Gibraltar, GX11 1AA, for advice to employers on reducing your businesses’ exposure to an unfair dismissal claim – Or, if you are an employee to evaluate your prospects for a claim for unfair dismissal?
All Employee cases are considered on a “no win no fee” basis.
Disclaimer
All opinions are my own and are provided for information only and do not constitute legal advice. Please note that the information and any commentary on Gibraltar law contained in this article are provided free of charge for information purposes only. Every reasonable effort is made to make the information and commentary accurate and up to date, but I do not accept responsibility for its accuracy and or for any consequences of relying on it. The information and commentary do not, and are not intended to, amount to legal advice to any person on a specific case or matter. You are strongly advised to obtain specific, personal legal advice about your case or matter and not to rely on the information or comments on this site https://www.employmentlawgibraltar.com/
