As an employer, you have likely used employment contracts to manage your staff. An employment agreement or contract defines the rights and obligations of each party within the employment relationship. This contract will generally set out an employee's working hours, duties, and entitlements. Likewise, it will classify an employee as full time, part-time or casual. You may sometimes wish to alter your employee's classification or other details contained within their employment agreement. This article will discuss how and when you can change an employee's contract classification from full time to part-time.
Why Change an Employee's Contract
You may wish to change your employee's contract for several reasons. Perhaps there has been a downturn in trade, the role requires greater flexibility, or the business is restructuring. Whatever the reason, make sure you know your obligations as an employer.
The General Rule
Generally, you cannot change an employee's contract without their consent. At the very least, you must provide them with prior notice of the proposed changes. This is particularly true in cases where you are attempting to change a fundamental term of the employment contract, such as the employee's classification from full time to part-time.
Changing a Contract With the Employee's Consent
Changing a fundamental term of the contract effectively creates a new contract between you and your employee. Therefore, it is up to them whether they choose to accept the new contract. If your employee consents to the change in classification from full time to part-time, the transition is simple.
As mentioned, changing an employee's classification from full time to part-time is a change to a fundamental term of the employment agreement. This will result in a termination of the old agreement. Then, you and your employee must enter into a new agreement.
It is recommended that all employment agreements are made in writing and both parties sign it.
Generally, you will need to pay out your employee's accrued entitlements (such as annual or long service leave). However, these entitlements may transfer over to the new agreement by mutual consent. As a part-time employee receives the same entitlements as a full-time employee, your employee will continue to accrue their entitlements on a pro-rata basis.
Changing a Contract Without the Employee's Consent
Your employee might not consent to the change. So, unilaterally altering their contract may result in a breach of the employment contract and leave you open to an unfair dismissal claim.
If you want to unilaterally change the terms and conditions of the employment relationship, you may need to be prepared to make the employee's current role redundant. In doing so, you need to ensure that the redundancy is a 'genuine redundancy', and that you follow the correct process. Again, this is to avoid potential unfair dismissal claims from the employee.
You can then offer the employee the option to take on a new role in a part-time capacity or redeploy them to a different role within the business. Should the employee decide not to accept this, you will be required to make a redundancy payment in addition to paying out the employee's entitlements.
For a redundancy to be genuine, the role must no longer need to be performed. Additionally, you must have followed any consultation requirements contained in the employee's award or enterprise agreement before effecting the redundancy.
Importantly, a court will not find a redundancy to have been genuine if you could have reasonably given your employee another job within the organisation.
When You Cannot Change an Employee's Contract
Under the law, you cannot change an employee's contract:
- for a discriminatory reason;
- because the employee has exercised a workplace right; or
- for another reason protected by law.
Exercising a workplace right includes making a complaint, inquiry or participating in proceedings with a governing body. Under workplace law, these actions are allowed.
Other reasons protected by law include the right to be involved with an industrial association and participate in industrial action. If you change an employee's contract for one of these reasons, you may be liable for unfair dismissal or a general protections claim.
Changing a contract from full time to part-time generally results in a termination of the original contract. Next, the parties enter into a new contract. As an employer, you can only change your employee's contract from full time to part-time, subject to certain conditions.
If the employee does not consent to the change, you cannot change the contract. If you wish to proceed with a unilateral change to the employee's contract, you must be prepared to offer the employee a redundancy package. Notably, the redundancy must be genuine. Otherwise, you may leave yourself open to a potential unfair dismissal claim from the employee.