Changing a contract of employment lawfully

Contracts of employment help the business world go round. They make sure your employees are aware of their responsibilities and protect your staff’s contractual legal rights.

But it’s still a tricky area when it comes to changing a contract. You may need, or want, to do this for a number of reasons.

If this change is because of the coronavirus, for example, you can check our back to work navigator tool to help you out.

However, you can read the finer details of making a change in the rest of this guide. Let’s take a look.

Can you make changes to employment contracts?

So, can an employer change contract details? Yes, you can. But you need to consider your employees’ rights. There are only three ways to make this change:

1. You speak to your employee and ask them to make a change--and they have to agree.
2. Ask the employee’s representative about a change--and they also have to agree.
3. If you have a clause in their contract that allows you to make changes.

Once you agree on the change, and put that in writing, then you can go ahead. Let’s take a look at that side in more detail.

Can an employer change a contract without an agreement?

Not in most circumstances. If you don’t do that and go ahead anyway, that can lead to a breach in contract. Which can have legal consequences.

A major issue here is if an employee thinks, “Can my employer change my contract without consent?” Again, no. You can’t. Even if you have the clause in their contract, you must still talk about the changes you plan to make with the employee in question.

And if they ask, “Can an employer change your contracted hours?” Yes, you can. But you need to get the employee’s consent before going ahead.

So, making any change in a contract is about checking existing contracts and seeing what was signed by the employee.

Then you can take steps to try to make changes, but only if staff agree. So, how can you go about all of this?

Changing terms and conditions of employment

Okay, with the above all in mind what do you need to consider if you want to go about changing contract terms?

It’s a complex process and you do need to remember the needs of your employees, as well as those of your business.

Under current employment law, change of contract can go ahead if you need to make any alterations. But there can be legal and HR consequences if you don’t handle the changes appropriately.

For example, if you’re planning on changing contracted hours then you do have the right to do so. Other common amends can include:

• Salary changes (either raises or reductions).
• Relocation requirements for the business.
• Job duty changes.
• Fringe benefits.
• Maternity or paternity rights.
• Updates due to changes in British laws.

But there are laws you’ll need to follow to make a change of contract at work.

First, remember that varying a contract of employment can’t happen unless the employee consents to it—you must provide a good business reason for making any adjustments and explain these to the staff member clearly.

Providing your reasons in writing is good business practice. But there are still a number of ways you can vary your contracts:

• Collective agreement between you and your employee.
• Variations already established in the contract.
• Through independent decision of the new terms (a unilateral imposition).
• Through dismissal or re-engagement of the changes.

For the final point, if employees don’t agree to the amends then you can dismiss them and try to re-engage them under new terms and conditions. Consider that option carefully, however, as it can create legal problems.

And there are some updates you can make without getting your employee’s agreement. For example, as a business you can improve your bonuses and perks as you see fit.

Also, changing contracts of employment is suitable if you’re promoting a member of your staff. You’ll need to do this, for example, to update their responsibilities and wage.

An employee will agree to these changes when they sign their new agreement with you.

The contract change process to follow

Before changing other details in your employment contracts, you should do the following:

• Have a discussion with the employee or their representative.
• Provide details about why the change is necessary.
• Take into account ideas about how you can do things differently.

You can adapt a contract by:

• Reaching an agreement with your staff member or trade union.
• Using a flexibility clause in the employment contract.

But once you have agreed to these changes, you can send the staff member a change of contract letter that explains the discussions held and what is being adjusted in their contract.

You’ll need to do this within one month of the changes taking effect.

How to change employment contracts due to coronavirus

As an employer, you may ask yourself, “Do I need to make changes to employment contracts due to COVID-19?” There’s a possibility you may have to make some changes to the:

• Hours staff work.
• Duties they complete.
• Pay they receive.
• Benefits they receive.

So, if you’re thinking, “I want to change employment contracts for my employees due to COVID-19 what are my options?”

You can’t just change them as and when you feel like it. You still need to get the consent of each employee before making any change.

That’s unless you have a clause in their contract that allows you to make a change.

This means you’ll need to approach staff and discuss options with them. They have the legal right to accept or reject what you’re planning. But if you highlight that it’ll help the business through the pandemic, they’ll likely want to help you.

And that’s especially the case if you tell them the changes will only be temporary.

For example, if you choose to furlough an employee (the UK government’s Job Retention Scheme runs until the end of October 2021).

We have a furlough navigator tool you can use to help you out there.

So, to summarise the above, changes to employment contract due to coronavirus are okay, as long as you receive agreement from staff.

How much notice is required to change a contract of employment?

A change of employment contract notice period needs a “reasonable” amount of time.

For example, if you’re moving location as a business you’ll need to provide plenty of time for them to relocate.

However, if you’re making an update such as a change in hours then this will need much less time to manage.

But you should always check your employee’s contract anyway, just to make sure if there’s a specific amount of notice you must provide.

After you make a change to a contract, you need to provide written notification within four weeks.

Changes to employment contracts without notice can lead to a breach of contract claim. You should always push to get your employee's consent for any amends.