A contract of employment is a legally binding agreement, which means that the parties are bound by its terms. However, it is likely that over the course of the employment relationship the terms of the contract may need to change.
Employers may want to vary the terms of a contract for various reasons including:
Responding to changes in the market-place
Reorganise the business to make it more efficient or profitable
Pay or benefits
Working hours or shift patterns
Place of work
If the change is favourable the employee is unlikely to resist it. However if it is unfavourable it may be scope for dispute. In such cases, the change will be a breach of contract unless the employer has a contractual right to vary the contract, obtains the employee’s consent, or terminates the existing contract in accordance with its terms and offers a new one containing the variation. Therefore, often the key in these situations is communication and consent action.
Employees may seek to vary the contract, for example by requesting a reduction in working hours or a change from full-time to part-time working or asking for a pay rise. In many cases, the employee’s only recourse is to seek the employer’s agreement. If the employer does not agree, the employee may decide to accept the situation, resign or, where practical, implement the change, in which case the employee will be in breach of contract and depending on the seriousness of the breach, the employer may be justified in dismissing the employee.
Legislation can also impose changes to contract terms such as the right to maternity leave and pay and redundancy payments.
The variation may have several legal implications. For example, it may infringe legislation on discrimination or equal pay, constitute an unlawful deduction from wages, or give rise to a claim of unfair dismissal. The employer must take into care to observe the working time regulations, restrictions on Sunday working and take into account any health & safety considerations when varying any terms.
The means of variation will depend on whether the change relates to a non-contractual provision or a contractual term.
Non-contractual provision can be varied by the employer at any time, without the need for employee consent. In addition to variations following changes in the law or an applicable collective agreement, contractual terms can be varied by any of the following means:
Virtue of a contractual right
Agreement (either express or implied)
The employer unilaterally imposing a change.
It is important to consider the requirement to consult with the employees regarding the change and, where necessary and appropriate, issue contractual notice. It is advisable to seek professional employment law advice when considering enforcing a contractual change.
If contractual terms have effectively been varied and the variation relates to any of the written particulars that the employer is obliged to provide, the employer must within one month of the change, issue a new statement of particulars giving details of the change. A failure to do so will not affect the variation, but will entitle the employee to a remedy for failure to provide the statutory statement of particulars.
The employer cannot vary contractual terms merely by amending the statement of written particulars, as it is usually only evidence of the terms of the contract, rather than the contract itself. However, if the employee continues to work without protest after receiving the amended statement, this may provide evidence that the employee has implied that they have agreed to the new terms.