Changing Employment Contract Terms
How to legally vary an employment contract. Understand when you need employee consent and the risks of imposing changes.
Employment contracts can only be changed by mutual agreement between employer and employee, with limited exceptions.
Methods of Changing a Contract
1. Mutual Agreement
The safest approach is to:
- Propose the change in writing
- Explain the reasons for the change
- Give employees time to consider
- Obtain written consent
- Issue an updated contract or variation letter
2. Using a Flexibility Clause
Some contracts include clauses allowing certain changes:
- Location clause: "Work at any location within 20 miles"
- Duties clause: "Undertake other reasonable duties as required"
- Hours clause: "Work additional hours as business needs require"
These clauses must be used reasonably and proportionately.
3. Collective Agreement
If there's a recognised trade union, changes can be negotiated through collective bargaining. The collective agreement may allow changes to be applied to all covered employees.
Changes That Typically Require Consent
- Pay reductions or changes to pay structure
- Working hours changes
- Job role or significant duty changes
- Work location changes (beyond any flexibility clause)
- Benefits removal or reduction
- Holiday entitlement changes
Imposing Changes Without Consent
If an employer imposes a change without agreement:
Employee Options
- Work under protest: Continue working but state in writing they don't accept the change
- Resign and claim constructive dismissal: If the change is fundamental
- Refuse to work under new terms: Risk of dismissal
- Bring a breach of contract claim: In county court or tribunal
Employer Risks
- Constructive dismissal claims
- Breach of contract claims
- Unlawful deduction from wages claims (if pay reduced)
- Damage to employee relations
Dismiss and Re-Engage
As a last resort, employers can:
- Give proper notice to terminate the old contract
- Offer re-engagement on new terms
This is high-risk and can lead to unfair dismissal claims. Following the Fire and Rehire Code of Practice is essential.
Consultation Requirements
When proposing changes:
- Consult genuinely and meaningfully
- Explain business reasons
- Consider alternatives
- Allow reasonable time for consideration
- For 20+ employees affected: follow collective consultation rules
Best Practice Process
- Identify the change needed and business justification
- Check existing contract for flexibility clauses
- Consult with affected employees individually or collectively
- Consider alternatives and employee suggestions
- Agree changes in writing and update contracts
- Allow reasonable notice before changes take effect
Related answers
Employment Contract Requirements UK
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Notice Periods UK: Employer's Guide
Statutory and contractual notice periods explained. How much notice to give, payment in lieu, garden leave, and handling notice period issues.
Constructive Dismissal: What Employers Need to Know
Understanding constructive dismissal claims. What triggers them, how to avoid them, and what to do if an employee resigns claiming breach of contract.
Frequently Asked Questions
- Can an employer change an employment contract without consent?
- Generally no. Contract changes require employee agreement unless the contract contains a specific variation clause. Imposing changes without consent can lead to claims for breach of contract or constructive dismissal.
- What is a flexibility clause in an employment contract?
- A flexibility clause allows employers to make certain changes without explicit consent, such as changing work location within a reasonable area or adjusting duties within a defined scope. These clauses must be reasonable and cannot be used for major changes.
- Can an employee refuse a contract change?
- Yes. Employees can refuse changes to their contract. If an employer imposes the change anyway, the employee may have grounds for constructive dismissal or breach of contract claims.