Most employers operate a set pay date within the month to allow them to plan their finances and to provide certainty for employees. There are, however, changes that may take place which means employers have to consider changing pay dates to ensure better cash flow.
Payment dates will usually be outlined in employees’ contracts of employment, or statement of main terms of employment, meaning they are a contractual term and condition of employment. Your client cannot make unilateral changes to terms and conditions of employment and they will need to get their employees’ agreement in advance of any change. Although it’s tempting to simply move the date, a unilateral change will cause feelings of suspicion and distrust among employees. In some circumstances, employees can resign in response to the change of date and then make a tribunal claim for constructive dismissal.
The easiest way for your client to change the pay date is to get the affected employees’ agreement. They can do this through an informal process where they meet with all the employees and explain the reason why they need to make the change at this time. To seek agreement, your client can consider offering employees an incentive or help during the period of change. As the pay date is being moved back, this could include offering a one-off payment to help employees with their finances or a company loan with low repayment terms to cover any payments which have to be made during the waiting period.
Where agreement from the employees is gained, your client should ensure there is a written, signed and dated notice from each employee agreeing to the change in pay date. If the informal process is not successful, your client will need to consider a formal consultation process to change the terms and conditions. To do so, they will need to create a business case which sets out the need for the change and the proposed effect on the employees. The type of process to be carried out will depend on the number of employees affected, but your client will have to hold formal meetings and discuss the change and any alternatives.
Ultimately, your client has an option to dismiss employees, giving the correct notice, and then offer them employment on a new contract with the amended pay date. This should be seen as a last resort for your client because there are significant unfair dismissal risks associated with this route.
