Guide

Change an employee's terms of employment

Advantages and disadvantages of harmonising terms of employment

In order to reduce or eliminate differences between categories of employees, such as manual and non-manual workers, you should consider harmonising terms and conditions of employment across your business.

Harmonisation is more likely to lead to an improvement in terms and conditions rather than reducing them. 

This will not only make your pay and benefits seem fairer to your staff but also help to ensure your pay and benefits system is not unlawfully discriminatory.

If you intend to use harmonisation to reduce any benefit or entitlement, it is important that this change is agreed prior to implementation and that the previous guidance on varying a contract of employment is followed. 

What terms and conditions of employment can be harmonised?

There are different terms and conditions of employment where harmonisation can be used to benefit your business, such as:

  • pensions
  • overtime
  • notice periods
  • hours of work
  • shift premiums
  • canteen facilities
  • sick pay schemes
  • redundancy terms
  • lay offs and short-time working
  • holiday entitlements and holiday pay
  • payment systems and methods of payment
  • time-recording procedures, eg clocking on and off
  • fringe benefits, eg health insurance and company cars

Advantages of harmonisation

The benefits of harmonisation will vary from business to business, but may include:

  • improved productivity
  • more efficient administration
  • improved recruitment and retention of employees
  • better relationships between different grades of staff

Disadvantages of harmonisation

You may encounter certain problems when introducing harmonisation to your business, such as:

  • increased wages bill and pension scheme contributions
  • manager and employee resistance to changes to their status or working conditions, especially if they feel they won't personally benefit
  • employee management problems if traditional controls are removed, such as clocking on and off

Harmonisation following the transfer of employees into your business

If you buy another business, the rights of any employees who transfer as part of the purchase are protected under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE). Employees who transfer to your business do so with their pre-existing terms and conditions intact.

You must not change transferred employees' terms and conditions simply to harmonise them with those of your existing staff.

For more information, see responsibilities to employees if you buy or sell a business.

Introducing harmonisation

For harmonisation to succeed in your business, senior managers must be committed. Involve managers, employees and - if applicable - workplace representatives both before you finalise any harmonisation programme and during its introduction.

Work out the costs and possible benefits of harmonisation and consider whether any of the costs will be offset by changes in working practices.

You will also need to:

  • set a realistic timescale for the introduction of harmonisation
  • carry out any necessary training
  • monitor and maintain the changes