Changes to Employment Contracts

Employers will regularly need to change a contract of employment. The reasons for this are various, and could be changes to the business (the way work is done, the place of work, the responsibilities of employees, etc), economic issues (the pay bill may no longer be sustainable, or a pay rise is being offered), or occasionally because the employer discovered an unintentional effect of a clause or policy in their employment contracts.

For small businesses, the instinctive reaction is often to advise the employees they are no longer able to rely on this clause, so attempting to change the contract. This approach can lead to even more difficult consequences for the employer, as amending a contract requires negotiation & agreement. Like any contract, an employment contract is an agreement; as such, it is not within the gift of one party to amend or otherwise alter a contract without the consent of the other parties.

Regardless of how the agreement was formed, whether verbally, in writing, from a letter of offer, an implied term, custom & practice, or any other means, once a clause has been formed, this cannot be changed on the whim of the employer. Employers must always consult & negotiate with employees (either directly, or with a trade union, staff association, or works council) before making changes.

In some instances (such as a pay rise), the employee will very happily accept a change, even if they were not consulted beforehand. In other situations though, attempts to make a change may be a fundamental breach of the contract, and this could result in an unfair dismissal claim against the employer.

Employers have to be particularly careful where a change to the employment conditions is imposed on staff, and while protesting the employees continue to work under the new terms: the possibility of a claim for unfair dismissal or breach of contract remains, even when the employee continues working.

When negotiation fails

If the employer has attempted to get agreement on changes to the contract, but fails to secure this in negotiation, they may be able to impose the changes. This will normally involve a termination of the contract, replaced by a new contract, with the standard obligations & expectations placed on the employer for ending a contract – including redundancy, and fair dismissal procedures – to avoid a unfair dismissal claim.

Contracts allowing for amendments

Some contracts will include clauses that allow the employer to make changes without consultation. These clauses have to be exercised with caution, as otherwise a fundamental change may still be found to be unfair, again leaving the employer open to a claim for unfair dismissal.

How to make changes properly

Employers should always plan ahead, informing & consulting staff as soon as it becomes clear that changes to a contract may be necessary. Where circumstances change suddenly and could not be foreseen, employers should still ensure they advise staff of the situation at the earliest possibility, and should make no assumptions about getting agreement.

If it remains necessary for the business to make changes without any agreement, there are limited circumstances in which this can be done, but as this is a complicated area of law, it is strongly advisable to seek professional assistance beforehand.

Need to change a contract, or want further information?

Any employer looking to change a contract of employment should ensure they know the limitations they have to work within, and get assistance that can include experienced negotiators to act on your behalf if required. Employment Law Clinic can assist in this, so call us now on 020 3397 2979 or complete the form below to get the professional help that could ensure your business is protected.