Can You Vary An Employment Contract?

In challenging economic times employers often consider changing their employment contracts as an alternative to making redundancies. Decreasing existing employees’ hours of work and/or reducing costly benefits such as health insurance may make the difference between having to lay off staff and being able to maintain your existing workforce. However, any moves to force variations to an existing employment contract without careful planning and obtaining legal advice are virtually guaranteed to result in costly and stressful Employment Tribunal claims.

What are my options for varying an employment contract?

There are four ways to change the existing terms of an employment contract:

1. Obtain the agreement of your employees to all the changes you propose.
2. Try and obtain an agreement but if this fails, dismiss the employees that refuse to consent.
3. Terminate your current employment contracts and tell existing employees they have the option to be re-employed under new terms.
4. Change the contracts and leave it up to your employees to respond.

An employment contract is a contract, therefore, all options other than number one will leave you exposed to claims of unfair dismissal, breach of contract, and/or constructive dismissal. These three strategies are also likely to lead to a collapse in staff morale and productivity.

How can I mitigate the risks of Employment Tribunal claims when varying an employment contract?

The first step to amending your employment contracts is to inform your employees of the proposed changes. If you have a collective contract in place, the employees’ representative will need to be notified.

You must set out:

• What the proposed changes are and who will be affected.
• The reason for the proposed changes.
• When the proposed changes will be implemented.
• What other options have been considered.

Part of this process involves listening to your employees or their representative and considering any options they propose.

Wrapping up

No doubt varying your employment contracts comes with risk, however, if the alternative is to impose redundancies, your employees may be willing to consent. Our employment law solicitors can advise you of your statutory duties and options concerning changing the terms and conditions of your employment contracts. To find out more about our services, including Ask HR and HR Genie, please call us on 02476 231000 or email enquiries@askewslegal.co

Please note that this article is for information purposes only and does not constitute legal advice.