Changing a Contract

If an employer wants to make changes to an employee’s employment contract then they are effectively changing the terms and conditions that were originally agreed. There are some legal considerations and guidelines to changing a contract and it is important that both employee and employer are aware of these.

Consulting Employees

Before making any changes to an employment contract the original contract should be consulted by both employer and employee. Many employers will not consult the employee but it does maintain a good working relationship to keep the employee informed at the earliest possible stage of any changes that are to take place.

If the employment company has more than 100 employees then staff will have the right to be informed and consulted on matters such as changing a contract. This rule will apply to companies with over 50 staff from April 2008. Consultations with employees can be undertaken on a one to one basis or they may take place as a staff meeting. If the company has a union organisation then they should also be consulted on the changes.

Areas of Consultation

There are a few employment areas where staff will legally need to be consulted with if change is to occur. These areas will include:

• Redundancy
• Health and safety issues
• Transfers of business
• Pension schemes
• Works councils
• Changes to pay rates
• Changes to hours of employment

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Employment Contract Terms and Conditions

There may be terms and conditions written into the employment contract that allows employers to change certain working conditions. These will usually be minor changes and will not usually be major changes to the employee’s existing terms and conditions. If fundamental changes are made to the existing contract without consultation or agreement with the employee then he or she can claim breach of contract.

Breach of Contract

If an employer is changing a contract and consultations have been made but an agreement still cannot be reached, the employer should not simply make the changes. The employee can claim that the employment contract has been broken and take the matter to the civil courts or an industrial tribunal. These changes will usually be major ones towards the terms and conditions of the contract such as cutting pay rates or changing hours of work.

In some cases the employee can claim that these changes have been unfair and have forced him or her to resign. They can then claim unfair dismissal and take the matter into the legal arena and sue for damages. An employer and employee agreement should always be reached if the changes to contract are fundamental ones. This will save any conflict between the two and avoid any legal issues.

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Verbal Contract Changes

In many cases an employee may not have a written contract; the employment contract may just be a verbal one. However a verbal contract of employment is a legally binding agreement and verbal changes to the contract should be agreed between employer and employee and adhered to.

Signed Employment Contracts

Once all consultations have been made and agreements reached then the amended contracts will need to be signed by the employee. If the changes apply to all staff then an identical letter will usually be sent to all explaining the changes and why they are required. The employees will then need to sign and date the letter and hand them back to managers. An employer should be aware that making exceptions for some staff regarding changes could lead to other disgruntled staff using these exceptions as a way to claim a grievance. Employers should ask that all signed and dated letters are returned within three days.

For some employees change will always be a stressful time but in most companies it is needed to stay competitive in the business market place. The best option is for employers to maintain good working relationships with employees by keeping them well informed of any change at the earliest possible time.

The Next Step

Now that you have read through the advice above, you might want to put it into practice. Our Contract Red Flag Checker lets you describe a contract you are about to sign and get a plain English summary of the clauses that could hurt you. Takes about 2 minutes. Try it now →