Changing Business Contract Terms
Can I change my employees’ contract terms?
Varying contracts of employment and the terms in them is not straightforward.
Some terms can be changed by an employer without the agreement of employees and these include non-contractual policies and procedures and working practices. However, this is not the case with contracts of employment and it is therefore important to take advice regarding any proposed variation of a contract.
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Why change contract terms?
There are lots of reasons why either an employer or employee may wish to vary a contract of employment.
An employer may need to change contractual terms because of economic circumstances or because they are undertaking a reorganisation of their business, whilst an employee may seek to amend the contract so that the terms are more favourable or better suited to their individual circumstances.
How can contracts be varied?
A contract of employment can be varied in the following ways:
- By agreement following consultation
- Unilaterally by one party
- By termination and re-engagement on new terms
- Any variation to a contract will be a permanent change unless agreed otherwise
Given the permanency of a change, employers and employees should consider any approach to varying contracts of employment cautiously. In particular, employers need to be aware that some changes, if made without consent, may entitle an employee to resign and bring a claim for unfair constructive dismissal.
Employers can also build some flexibility into a contract of employment to help them in varying contracts more easily by using an express term in the contract stating that a particular term can be varied by them. For example, duties which the employee undertakes or the place at which the employee is employed.
Should contract changes be recorded in writing?
All variations should be recorded in writing and should be signed by both parties. This can, therefore, be used as evidence of the agreement reached between the employer and employee.
Certain clauses such as mobility clauses or restrictive covenants need to be drawn up with particular care to ensure they can be relied upon in the future. You should seek specialist advice on the nature, implications and enforceability of such clauses.
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