Employment law

What You Need to Consider When Changing An Employee’s Contract

Bryan Brown | 4 March 2022 | 2 years ago

can i change employee contracts

The business landscape is continuously changing, and companies must keep up with those changes in order to remain profitable. Sometimes this may mean that you need to change your employees’ contracts to meet the evolving requirements of your business. This might leave you asking the question ‘can I change employee contracts?’

In the majority of circumstances, both the employer and the employee will need to agree on any changes that will be made to the contract of employment. However, there are always exceptions to the rule, so it’s important that you are aware of what changes are allowed and which will need to be agreed.

In this article, we’ll explain the legalities around changing employee contracts in the UK, including the circumstances under which you can change an employee’s contract and how much notice you need to give before doing so. We’ll also answer some of the most commonly asked questions regarding contract changes.

Can I Change Employee Contracts?

If a change in circumstances has left you needing to change an employee’s contract, you might be wondering how you can go about doing this. Typically, you’ll need to agree any contract changes with the employee. This means consulting with your employees and negotiating changes.

You’ll need to fully explain the reasoning for the change in order to get the agreement of the employee. You may also need to be prepared to compromise if the employee doesn’t agree with the proposed changes.

So, whilst it is possible to change an employee’s contract, you’ll usually need their agreement to be able to do so, and it might not always be easy to gain this consent. Having a sound reason for making the change and being open and honest with the employee can help to keep the channels of communication open so that you can reach an agreement that you are both happy with.

Is it legal to change a contract of employment?

A contract of employment is two way. It sets out the responsibilities of both the employer and employee, and both parties must agree to it. This means that a contract of employment can only be legally changed with the consent of both parties.

In some cases, the contract changes may be negotiated through a trade union. This is known as collective bargaining.

Employees can choose to accept a change. In fact, in the majority of cases the contract is being altered by mutual agreement. For example, a contract would be altered in mutual agreement when an employee receives a pay increase.

contract of employment

Contract changes – What are the employer responsibilities

If you’re considering negotiating a contract change with an employee, it’s important that you understand your responsibilities as an employer.

Firstly, you have an implied contractual duty to clearly explain any the impact that any changes to the contract will have. So, if the contract change will involve changes to salary, working hours or terms and conditions, you have a duty to clearly explain these to the employee so that they can make an informed decision as to whether or not to accept the changes.

Employers have a duty to act reasonably when it comes to making changes to the terms of an employment contract. This means that the employer should not leave an employee unable to fulfil the terms of their contract, for example dictating that the employee must relocate at short notice, without any expenses being paid.

Written notice of the contract change should be provided within four weeks. However, providing notice does not negate the need to mutually agree the contract change with the employee.

Finally, it’s also essential to ensure that equality laws are not breached when a contract change is requested. For example, it would be unlawful to reduce the hours of a pregnant woman as a result of her maternity status.

What constitutes a change in working conditions?

There are many different changes that might be made to working conditions. These can be requested by either the employer or the employee. Let’s take a look at some of the different changes in working conditions that may be requested by either the employer or the employee.

Contract changes requested by employer

There are many different types of contract changes that may be requested by an employer. These include:

  • Working hours (number of contracted hours or when those hours are worked)
  • Rate of pay
  • Location of work
  • Duties and responsibilities
It’s important to remember that these changes will need to be agreed with the employee before they can be added to the contract of employment.

Contract changes requested by employee

It’s not just the employer that can request a contract change; the employee can also request changes to their working conditions. Changes that an employee may request regarding their contract include:

  • Flexible working hours
  • Part time working hours
  • Different working hours
  • Improved working conditions
  • Increased pay
  • Increased holiday entitlement
It’s important to note that none of these changes are an automatic entitlement, unless the right is detailed in the employee’s contract. However, certain changes such as a flexible working request, must be considered by the business if requested by the employee, and should only be declined if there is a genuine business reason.

When do businesses need to make contract changes

When do businesses need to make contract changes?

There are many different occasions that may arise where a business finds itself needing to make changes to employees’ contracts of employment. These include:

  • To ensure that employment contracts comply with new legislation
  • To reflect a change in terms and conditions, such as enhanced maternity or paternity pay
  • To enable the organisation to adapt to the evolving business landscape and the needs of its customers
  • To enable the organisation to remain competitive in an evolving market
  • To reflect changes to the organisation, such as the business’ relocation

Can I change my employee’s hours of work?

A situation may arise where you need to change your employee’s hours of work. For example, if you work in retail and the store’s opening hours change, you need your employees’ working hours to reflect this.

However, it is essential that you properly consult with your employees before changing their contract of employment. During this process, you should give your employees the opportunity to raise any concerns that they might have with the changes and to find ways to mitigate these concerns.

If your employees refuse the proposed changes, it’s important that you seek legal advice before going ahead and making the changes. This is because the employee could bring a case at the employment tribunal for breach of contract if the correct process is not followed.

What if an employee refuses a contract change?

When an employer wishes to make a change to an employee’s contract of employment, the first thing to do is to consult with the employee. This means clearly explaining the change that is needed, as well as the reasoning behind the change. However, if the employee disagrees with the proposed changes, you might be wondering what to do next.

Whilst negotiation is always the preferred route to take in this situation, sometimes the situation cannot be resolved in a way that both parties are happy with. In this case, the only way forward may be to give notice to the employee to terminate their contract, and then to offer to rehire the employee on the new terms. You might hear of this practice being referred to as ‘fire and rehire’ or ‘dismissal and re-engagement’.

You’ll need to have a sound business reason for doing this, and you’ll need to ensure that you have exhausted all other possible options before resorting to this option. It’s always best to seek specialist advice from a specialist in employment law before making the decision to terminate an employee’s contract. This is because you could find yourself facing a claim at an employment tribunal for breach of contract if there is not a justifiable reason for the contract to be terminated, or if the process is carried out in the wrong way.

Risks of changing an employment contract

Risks of changing an employment contract

There are some risks that you need to be aware of when you’re changing an employee’s contract. This is because altering a worker’s contract can cause tensions within the organisation, especially if the process is not managed carefully.

The risks of changing a contract of employment can include:

  • Increased staff absence
  • Decreased employee motivation
  • Damaged working relationships
  • Decreased performance
  • Legal claims such as constructive dismissal, discrimination or breach of contract
  • Losing valued members of the workforce
  • Damage to the reputation of the business
  • Strikes or industrial action
These risks highlight the importance of carefully managing any proposed changes to an employee’s contract of employment. Engaging the affected employees at the earliest possible opportunity and providing them with the chance to give input into the proposed changes will help to minimise the risk of any negative effects of the contract change.

Can an employee request a contract change?

A contract of employment is between an employee and their employer. This means that either party is entitled to request changes to the contract of employment. So, an employee is entitled to request changes to their employment contract, but this does not mean that the employer is obliged to agree to the change.

One example of a change that an employee might request to their employment contract is flexible working, such as part time hours. This is common after a period of maternity or paternity leave, when a new parent may wish to spend more time at home with their new child, balancing their career with their new family. Requests for flexible working must legally be considered by the employer, and should only be refused if there is a justifiable business reason for doing so.

Related questions

Can an employer change company policy without notice UK?

If an employer changes a policy, it has a duty to inform its employees as soon as possible. An employee cannot be expected to follow a new policy if they have not been informed of the changes that have been made. Whilst there is no set notice period for policy change in UK law, it is best practice that employees should be informed of the changes as soon as practically possible and asked to acknowledge the changes in writing to confirm their understanding.

Can an employee refuse to change contract?

A contract of employment is an agreement between an employer and their employee. For this reason, any changes to the employment contract must be agreed by both the employer and the employee. If a change in contract is required by the business and cannot be avoided, the employer may decide to give notice to terminate the contract of employment, and then offer to rehire the employee on the new terms. However, this should only be done with a solid business reason.

In summary

A contract of employment is between an employer and an employee and sets out the terms of their relationship. This typically includes duties, responsibilities, hours of work, place of work and salary. There are some occasions where it becomes necessary to alter the contract of employment, whether that’s a change in salary, altered hours of work or relocation.

In the first instance, the employer and employee should work together to negotiate new terms of employment that are mutually beneficial. However, where new terms cannot be agreed upon, the employer may decide to give notice to terminate the contract of employment and offer to rehire the employee on the new terms. This should only be done with sound justification, after consulting with an employment law specialist, to avoid potential claims at an employment tribunal.

So, if you’re asking the question ‘can I change employee contracts?’, the answer is yes – but it’s best to seek specialist advice and carefully manage the process to avoid falling foul of employment law and any potential claims later down the line.

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