What Employers Need to Know about Making Changes to Employee Contracts

There could be any number of reasons why you as an employer may need to make changes to an employee’s contractual terms and conditions. But where do you stand with the law and what do you do if your employee refuses to accept those changes?

Let’s take a look.

 

Can you change an employee’s contract?

You can make changes to an employee’s contract as long as you both agree. You can agree to changes:

• In writing
• Verbally

 

Making changes to terms and conditions of employment

To start the process, you should set out what changes you are proposing and why you want to make them, so employees understand why you feel the changes are needed. This may then encourage them to agree.

Employees are also entitled to a reasonable period of time in which to decide whether or not they want to accept the changes you’re proposing. This is regardless of whether the changes have immediate effect. It’s good practice to offer to discuss any concerns, which again might help encourage them to agree to the changes.

 

What are employees’ rights with a change of contract?

What if an employee refuses to sign a new contract? In short, an employee can refuse to accept a change or variation in their contract’s terms and conditions.

The employee could also ask for a trial period, so they can work under their new terms and decide whether or not they are prepared to accept them. If an employee agrees to vary the terms during a trial period, it’s important to remember that this is not the same thing as permanently accepting the terms. It is up to you as an employer to decide whether a trial period would be reasonable and/or whether it is something you can agree to.

If the employee refuses to accept the changes to terms and conditions of employment and carries on working for you, but you make the changes anyway, this is known as working ‘under protest’.

 

What can you do if an employee objects to your proposed changes to terms and conditions of employment?

As an employer, you have three main options:

Press on with the changes regardless.

This can result in a constructive dismissal claim, where the employee states they had no choice but to resign because of the changes made. Therefore you would need a very strong business case for the particular change to defend such a claim. If the employee carries on working but objects to the change, they could also bring a breach of contract claim for their losses resulting from the change, however long they have been employed.

Dismiss the employee and offer to reengage them on the new terms.

This is another situation where you would want to have a very strong business case for the initial dismissal, as once again you could be exposing yourself to the risk of an unfair dismissal claim.

Accept the employee’s refusal and not make changes to their contract.

This is an option, but it’s not necessarily an ideal solution as you risk having different employees on different terms and not achieving your desired outcome.

Remember…

The above applies where you are looking to change the terms of fewer than 20 of your employees:

• There are a different set of procedures for when you want to change the terms of 20 or more employees. In situations such as this, considerations around collective consultation need to be taken into account from the outset, as per the Trade Union and Labour Relations (Consolidation) Act 1992(TULRCA).

• Further, under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), an employee’s terms and conditions of employment are protected when a business is transferred from one owner to another. Therefore, this article does not apply to TUPE situations.

 

Examples of when you might make changes to employee contracts

Here are some examples where you might want to make changes to your employees’ employment contracts:

• Law or regulation updates, e.g. rates of pay
• Employer responsibilities
• Working hours
• Location of work
• Flexible working policies

 

Questions about contracts? Citation can help

If you’ve got questions about anything to do with HR Documentation, like contracts of employment – from types of contracts and what to include through to varying terms and conditions – Citation can be by your side to lend a helping hand and an expert eye. We have a range of Employment Law Services and HR Services to support your business.

When you partner with us our team of HR & Employment Law experts can help you right from the very start. We’ll draft your contracts of employment, making sure everything is legally sound, we’ll keep you up to date with legal changes as and when they happen and we’re only ever a phone call away, 24/7, 365 days a year.

If you think you could use our help, contact us today, or just give one of our team a call today on 0345 844 1111 and we can get the ball rolling.