Changing Terms and Conditions of Employment – Best Practice

By Rachel Davis

Principal Associate

Inevitably during the life of the employment relationship, an employer will want or need to make changes to an employee’s contract of employment. These changes are often uncontroversial and will be agreed by the employee without difficulty.

However, there may be occasions when an employer wishes or needs to make changes which are more likely to be challenged by the employee or even refused. In such cases, care needs to be taken to ensure that the changes are made lawfully and without risk to the employer.

A contract of employment can only be varied by consent or in accordance with the contractual terms. 

Changes permitted by the Contract

A change to the working relationship between the employee and employer will not constitute a contractual variation if:

  • It is possible to interpret the term in such a way to accommodate the change which the employer is seeking to make.
  • There is a specific flexibility clause which provides an express right for the employer to make changes, such as a mobility clause or change to working hours.
  • There is a general flexibility clause which gives the employer a general power to vary the terms of the contract of employment.

Changes to Contractual Terms

These occur in two broad circumstances:

  • Specific – such as changes to pay, benefits and duties
  • General – such as changes associated with wider harmonisation affecting the entire workforce

There are essentially three options for changing the contract of employment:

  • To agree the proposed change with the affected employee(s) by consent (either individually or collectively).
  • To terminate the contract of employment and offer to immediately re-engage the employee on the new proposed terms.
  • To unilaterally impose the change and rely on the employee’s conduct to establish agreement to the change.

Clearly obtaining the employee’s consent is the simplest route and will ensure that the relationship remains on good terms.  However, it is important that the agreement is given freely by the employee and without any undue pressure being exerted by the employer. A verbal agreement to the change will suffice although it is preferable to have written evidence of the agreement to ensure it cannot later be disputed.

If the change results in a detrimental impact on the employee, or if the employee does not agree to the change, the employer may be left open to potential claims such as unfair dismissal, constructive dismissal and unlawful deduction from wages.

Employees who work under protest

An employee may disagree with the changes but continue working under protest.

An employee does not have to dramatically and persistently voice their objection to an imposed change; it is enough that they have made it clear that they are not agreeing to the change notwithstanding their decision to remain in employment. 

It is best practice to implement changes to employment contracts by agreement. If agreement cannot be reached, the employer may need to terminate the existing contract and offer continued employment on the new terms. In any event, it is advisable for the employer to consult and communicate with affected employees to seek a way forward together to protect the employment relationship and avoid potential claims.

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