Changing an Employment Contract

What is the best practice for changing the terms and conditions of employment?

An employment contract is an enduring living relationship arrangement between an employer and its employee. It is a legally binding agreement with a combination of express and implied terms. Express terms are recorded in either the employment contract or staff handbook complying with any minimum legal standards whereas implied terms (custom and practice) are presumed to be agreed to and although these terms are non-verbal and unwritten, they too are legally binding.

When the existing contractual terms need to be altered, then it normally requires agreement from the employee. If an employer wishes or needs to make changes to an employment contract and the employee does not agree therewith, the employer must handle the issue carefully to ensure that the employee stays on board and does not resort to ACAS or Employment Tribunal. Changes are made with legal risk.  It is thus important to note that employment contracts (a bilateral agreement) cannot be changed unilaterally. If changes are made to the employment contract by the employer without the employee’s agreement, it would be breach of contract.

To bring changes to an employment contract, the employer needs to consult (talk and listen) with the employee to advise of the proposed changes and the reason/s for wanting to make changes to the contract. Depending on whether there is one or several employees affected, both 1-2-1 and team meetings is crucial. 

If the organisation is unionised, the trade union must also be informed, consulted, and negotiated with, if required.

Once the change to the employment contract has been agreed to, the employee should receive notification within one month thereof.

Some changes can however be made without the employee’s consent: when changes are made to policies that do not confer employee rights or where the employment contract provide for such a change (provision for change must be reasonable and there is a limited to them) i.e., flexibility / mobility clause - employers should pay attention to how they try to implement these clauses.

Changes to job titles and duties should sit in a reasonable interpretation of an employee’s existing job titles or duties. Employers to take heed here as courts jealously guard them (case: Haden Limited v Cowan [1982] IRLR 314).

If agreement cannot be reached, it is advisable to consult those affected and if consultation does not result in agreement on changes, the employer may consider dismissal and possibly re-employment of the employee, but employers are to take heed of risk factors such as discrimination or TUPE.

Employers should be aware of the potential consequences of an employee approaching the employment tribunal claiming unfair dismissal, constructive unfair dismissal, or discrimination (discrimination cases have no cap to the damages which the employer may have to pay).

When amendments need to be made to employment contracts, first contact Biscoes’ employment law specialists to obtain invaluable advice and guidance (and so avoid possible costly claims to the ET).  Contact us on 02392 660261, or at info@biscoes-law.co.uk.