How To Change Terms of an Employment Contract

Did you know that altering an employee's contract of employment without their consent could be deemed a termination or breach of the original agreement? Such actions can lead to significant legal challenges and financial repercussions. Ensure your business stays compliant and maintains strong, positive relationships with your team.

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

• Timing consideration
• Potential knock-on effects of the change
• History of the employee’s employment
• Legal implications

Why Choose HR Expert?

HR Expert offers comprehensive, easy-to-use, legally compliant templates to assist you in your daily HR related activities. Download, edit, customise and implement the templates as per your requirements. Get unlimited access to our template HR documents with a premium membership. HR Expert human resource solutions take the everyday hassle out of managing your human resources, leaving business owners to focus on what they do best; running their business.