Changing the terms of an employment contract

Generally, you can't change terms of employment without first obtaining your employees' agreement. 

But there are some changes you can make if you have built 'flexibility' into your company’s contracts, for example, by stating that 'Employees may be required to work anywhere in the UK' or that 'Employees will work eight hours in 24, day, night or shift work'.

Another way you can put flexibility into an employment contract is by using terms that can be changed or removed. For example, you could say in the firm's employment contracts that an entitlement to a bonus may be payable at your discretion.

Creating flexibility in an employment contract

If you want to be able to change the terms of employment in your company's employment contracts more easily, you can include a statement in the employment contract which says that a Staff Handbook will be 'issued from time to time'. This means that matters dealt with in a Staff Handbook could be changed and that change would be automatically incorporated into the contract, without you having to get your employees’ express consent.

If the employment contract contains such flexibility, then you will be able to change the terms of employment in line with these clauses. But if you don't include such flexibility in your contract, then you must follow the correct procedure if you want to alter an employee's terms of employment, to make sure that you minimise the possibility of claims for damages and/or compensation relating to the change.

Offering new terms of employment

The first step you need to take is offer new terms of employment to your employees and they can either accept or reject them. Your employees must accept them positively, unequivocally and unconditionally.

There is no legal way of accepting the change to the employment contract - it can be oral, written or by conduct. But if your employees do nothing, this doesn't mean that they have accepted the new terms of employment. 

The only time your staff not responding can amount to acceptance is when your contract contains a term making this so. An example of such a term would be, 'If you do not object in writing within 14 days, you will be deemed to have accepted the change'.

Alternatively, employees can accept the new terms of employment by their conduct. If they change their behaviour to comply with a term of employment that you have changed (e.g. they turn up for work at a new time), they will be deemed to have accepted the new terms. 

Dismissal and offering employment on new terms

If your employees don't accept the change in terms to their contracts, you can dismiss them and then offer employment on the new terms. But if this happens, they may have a claim for breach of contract, unfair dismissal or redundancy if you haven’t followed the correct procedures and fair reasons why you dismissed them don't exist.

Termination of employment, unfair dismissal and other employment law issues are dealt with in greater detail in our guide Employment Law Made Easy, written by employment lawyer Melanie Slocombe.

Other information:

  • Disciplinary and Dismissal Procedure
  • Redundancy Procedure

Published on: October 11, 2010

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