SmithKline Beecham plc v Johnston, EAT/559/96 (7 February 1997)
National Semiconductor (UK) Limited v Church, EAT/252/97 (Scotland) (1July 1997)
Hussman Manufacturing Limited v Weir, EAT/309/97 (Scotland) (30 July 1997)
IDS Brief 599, October 1997

The current debate on employment law centres on "flexibility" versus "regulation". This can be stylised as the American unregulated model as against the social protection laws of the European Union.

There are those who advocate a "third way", notably the former US Labour Secretary Robert Reich who advocates managed change in working conditions in return for greater job security, an approach which has its attractions for the UK Labour government.

The greatest legal obstacle in the face of this approach in UK employment law is the contract of employment. The contract is inherently inflexible.

It is presented as an agreement between the employer and the individual employee which can only be changed by mutual agreement. It does not evolve with changed circumstances.

If agreement cannot be reached, the only legally effective way that the employer can insist on change is by dismissal of the workforce with an offer to employ on the new terms. This is a confrontational approach, not likely to promote industrial harmony, damaging for the employees and leaves the employer open to Industrial Tribunal claims.

Some employers try to allow themselves the right to make unilateral changes to contracts. They do this by including in the contract a mechanism for making changes.

In some circumstances this may succeed, for example the right to terminate a bonus scheme in Airlie v Edinburgh DC [1996] IRLR 516(EAT). The cases considered in this article concern clauses where employers tried to give themselves the right to make changes to hours of work.

Increased hours

In one case (SmithKline Beecham) the contracts contained a clause allowing a change to a "continental shift system" and required employees to be "flexible across all shifts" and stated that "should production requirements change you will be expected to work any pattern needed to meet those requirements." The continental shift system was introduced leading to a working week of 43 hours.

The employers unilaterally introduced a new system in 1995 which involved a reduction to a 40 hour week. The employees did not agree.

The Employment Appeal Tribunal said that the "flexibility clause" allowed the employer to organise the working hours as it saw fit, but that did not entitle it to vary the number of hours constituting the normal working week, which would have the effect of reducing basic pay. The employee was entitled to a basic weekly wage based on a fixed number of hours and the flexibility clause did not override that contractual right.

Decreased hours

In National Semiconductors the employers reorganised the workforce so that their hours increased from 25 to 42 per week, and changed from working at weekends to working throughout the week. The employees rejected this change and resigned.

The contract of employment said "production requirements may change from time to time and it is a condition of employment that you should be able, with due notice, to change to other shifts/positions."

The EAT in Scotland decided that this allowed a change in the time of shifts, but not an extension of hours. The EAT considered that an employer is only entitled unilaterally to increase working hours if there is an express term in the contract permitting him to do so.

The message

The message from the two cases - one concerning a reduction in hours, the other an increase - is clear: an employer will only be able to make a unilateral change in the number of hours worked if the contract expressly permits him to do so. Clauses allowing variations in hours will not be enough - they permit a reorganisation of existing hours, not an increase or decrease.

The position may be contrasted with a case where the terms of a collective agreement allowed the employers unilaterally to move an employee from one shift to another (Hussman). The EAT in Scotland said that as the contract permitted this change, the employee could not claim that the consequent reduction in pay through loss of unsocial hours payments amounted to an unlawful deduction from wages.

Discrimination and reasonableness

Even where there is an express clause it may be discriminatory if it has a disproportionately adverse impact on women who cannot comply for childcare reasons (see for comparison Meade-Hill v British Council. A flexibility clause may also be subject to an obligation on the employer to act reasonably, as with a mobility clause.

These cases illustrate the uncertain and unsatisfactory position where an employer attempts to draft a contract allowing for future changes. It is quite right that the Tribunals should restrict employers from adopting contracts which allow them unilaterally to to re-write major terms such as hours or pay. The proper approach for securing change to meet changed circumstances is through consultation and negotiation.

This in turn is best achieved at collective level, rather than seeking the agreement of each individual employee. Recognition and collective bargaining with trade unions is the most appropriate method of securing flexibility whilst protecting the interests of the workforce.