Changing Contract of Employment Lawfully

By Dally Rai
24 Apr 2020

When you plan to make changes to an employment contract, you must consider a number of elements. But is what you’re doing, legal?

If you’re unsure of the answer, stop and reassess, or risk facing an employment tribunal.

What might seem like a small change can result in a big pay-out if handled incorrectly. Never be too cautious. In this guide we’ll outline everything you need to know.

Changing a contract of employment lawfully

There are three ways to officially begin a change of employment contract:

  1. Getting the employees consent.
  2. Getting the employee’s representative to consent to the change.
  3. Their existing contract allows a change (sometimes known as a flexibility clause).

We’ll talk about changes to contract without consent a little bit later, for now let’s focus on the flexibility clause.

Just because you have this clause in the contract, doesn’t mean you can suddenly impose completely different terms. There are two reasons why:

  1. First, there is a minimum obligation you have to meet as an employer. For example, you always have to pay at least the national minimum wage (NMW).
  2. Second, the clause should be specific about what can be changed. For example, working hours or place of work.

If the clause states that only hours of work can be varied, you can’t use this to make changes to the employee’s place of work.

That doesn’t mean you can’t change the employee’s place of work if needed—you’ll just have to get their consent first.

Can employers change contracts without agreement?

So, you haven’t got a variation clause, and the employee hasn’t agreed to the changes. Can an employer change a contract anyway?

Yes, you do have one option—dismissing and rehiring.

Before you do this, it’s worth spending as much time as possible discussing and negotiating with the employee.

Reaching an agreement is far less risky than a dismissal and rehire. But, if you just can’t reach a middle-ground, then this might be your only option.

Forced change of employment contract (employee rights)

Here’s what you need to know. First, you need to consult the employee about the dismissal and rehire.

This might be the push they need to agree to new terms without dismissal. If it’s not, you continue on to the dismissal.

Follow fair dismissal procedure, including giving them the correct amount of notice. You must also inform the employee of their right to appeal the dismissal.

As with any dismissal, there’s a risk the employee might claim unfair dismissal. There’s a heightened risk of this if you are disagreeing on terms of employment. This is why it’s vitally important to follow fair procedure.

Remember, an employee has the right to refuse a change when it’s presented to them. They can also continue working even after refusing the change if they ‘work under protest’

If you’re struggling to agree changes to an employment contract and are considering a dismissal and rehire, contact one of advisers for expert legal advice today on 01455 858 132.

How much notice do I give to change a contract of employment?

If you have an employee’s consent, or you’re utilising a flexibility clause, things are a little simpler.

That doesn’t mean it’s without complication. For example, how long is a change of employment contract notice period? This depends on the circumstances. There’s not set notice period because each change is different.

A small reduction to working hours will need less notice than a change of workplace.

Consult with the employee and get their input on what they feel is adequate time to adjust to the change. Provide it to them, if reasonable.

Can employers make changes to employment contracts without notice?

No. Failing to consult or give notice is a quick and easy way to end up with a tribunal claim.

Change of contract under TUPE

A common scenario where changes to a contract might occur is a company transfer or merger. It’s important to consider a full breakdown of what you need to consider when it comes to TUPE.

A business transfer is a complex process that requires significant negotiation and consultation.

However, if you’re considering changing terms and conditions of employment you need to have one of three reasons for making it:

These are commonly known as ‘ETO’ reasons. Harmonising terms between new employees and old is not a legitimate reason for changing a contract of employment.

Expert support

If you still have questions around changes to contracts or any other HR issues, speak to a Croner expert today on 01455 858 132.

About the Author

Dally Rai

An experienced HR Consultant / Employment Solicitor - providing practical and pragmatic advice on all aspects of employment law including unfair dismissal, redundancy, TUPE and discrimination.