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Employers should be aware that changing an employee’s contract of employment without the employee’s consent could be seen as a termination or breach of the original contract.
How to Change Terms of an Employment Contract
Whether it is the need to reduce levels of contractual benefits, introduce new terms and conditions or modify the employee’s duties, at some stage, an employer may wish to change the employment contract. No matter how valid the reason is, changing terms of an employment contract can be problematic. Without mutual agreement, the variation of an employment contract can result in legal implications hence the matter requires careful thought. This How To sheet will provide you guidance around the right way to change terms of employment contract while minimising the legal risk.
Can the employer unilaterally impose the changes?
Modifying the employment contract unilaterally can be perilous. Hence, careful thought should be given before such decision. Most importantly, you need to discuss the proposed change with the employee otherwise, you may be liable in a breach of contract claim or unfair dismissal (constructive termination) claim.
The safest option to change the employment contract is by obtaining express agreement by with mutual consultation. An employee’s verbal consent is usually enough but having it in writing will help you avoid any potential future dispute. Good communication surrounding the reasons to change the contract may help to make the employees respond positively to the modification. You should inform the employee of the reasons, date of modifications and seek feedback from the employee.
How to implement the changes?
Once you obtain the consent of the employee to the changes to the employment contract, you should send each employee a letter (also known as an addendum to contract). The letter will confirm the changes that will be made to the contact and the date at which the variation will take place. It also includes a request to the employee to confirm their acknowledgment by signing in the document.
Things to consider
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