With pressure on most businesses during the last few months, many are seeking to vary employment contracts to help the business survive and reduce the number of redundancies.

Changing employment contract terms has its benefits but is also fraught with difficulties, not least the risk that an employee can bring claims for breach of contract and constructive unfair dismissal.

Employment Lawyer, Hannah Haywood, explains the process which needs to be followed if a business needs to make changes to employment contracts.

A contract of employment is a legally binding document between an employee and their employer. Therefore, if either party wishes to change the terms within this agreement there are only certain ways in which this can be done. The starting point should always be to seek agreement with employees and unions (where appropriate). Where agreement cannot be reached, the business needs to take advice to see if it has a contractual right to vary terms.

1. Express variation clause – There may be a clause within the contract which allows the employer to change a particular term or condition of the contract without the employee’s consent. This clause provides a contractual right to make the change. This is usually only intended to be minor or administrative and must be a ‘reasonable’ change. Where there is no variation clause and the employer makes a change without the employee’s consent this may amount to a breach of contract.
2. Flexibility clause – A flexibility clause allows an employer to change the duties of the role without the employee’s consent. An example of a flexibility clause maybe ‘you may also be expected to carry out any other duties reasonably asked of you’. Any change brought about as a result of a flexibility clause must be within reason.
3. Mobility clause – There may be a clause that allows the employer to change the location of where an employee is required to work, this may be to a different specified building, town or even country. Again, this change must be reasonable when considering the circumstances.

If there is a change an employer wishes to make that is not permitted within the contract of employment there are ways that this can still be done.

The employee must give express consent to the change. It would be advisable for the employer to invite the employee to a meeting to discuss the proposed changes and if they are happy to agree to these it must be confirmed in writing. A new contract should ideally be given to the employee to reflect the changed terms.

Changes without consent

The employer may choose to unilaterally enforce the change and may rely on the employee’s actions to establish implied agreement to this. If the employee does not wish to consent to the change but has carried on working under the changed terms, they must make it clear that they are working under protest and do not accept the new terms. If not, the employee is at risk of being held to have impliedly agreed. Alternatively, the employee may refuse to work under the new terms, and we would advise that they seek specific advice.

An employer may attempt to terminate the employee’s employment and engage them under newly revised terms. Dependant upon the circumstances this may leave the employer open to claims for unfair dismissal.

If you require any specific advice around this area of law contact us today.