The terms of employment contracts set out what employers and employees can legally expect from one other.
Once agreed, these terms form part of a binding contract which remains valid for as long as the employment contract remains in place. However, sometimes circumstances change and the original terms may need to be varied, particularly when economic conditions are challenging.
These changes will dictate which terms of the original employment contract will need to be amended or updated.
For clarity, it should be stressed that these ‘changes’ can be instigated by either party, and that contractual variations to an existing employment contract are only legally binding with the agreement of both parties.
Why vary the original terms of an employment contract?
An employer may wish to vary the terms of the contract because of changed economic circumstances or due to a reorganisation of the business. There are numerous possible areas of change, but the most common revolve around rates of pay, hours or days worked, duties, supervisory relationships or place of work. An employee may seek to vary the terms of the employment contract to bring about improvements in pay or working conditions: they may request additional holidays, or to change the conditions so that they are more suitable for their particular circumstances, such as requesting a change from full-time to part-time working because of increased domestic responsibilities.
How can employment contracts be varied?
- An existing employment contract can only be varied with the agreement of both parties. Changes may be agreed on an individual basis, or through a collective agreement: in other words, an agreement between the employer and employee or their representative.
- An employer who is proposing to change an employee’s employment contract should fully
consult with the employee or his/her representative, and explain and discuss the reasons for change.
- Variations of contract can be agreed verbally or in writing, however in ideal circumstances it is preferable for any agreed changes to be recorded in writing.
- Where a variation in the employment contract has been agreed and the changes concern particulars which must be included in the written statement of terms and conditions, the employer should give written notification of these changes to the employee, within a month of the changes taking effect.
- A contract may contain express terms which allow an employer to make changes in working conditions. Through flexibility clauses, for example, an employer may expressly reserve the right to alter the employee’s duties. The contract may therefore be drafted to permit reasonable changes to be made within the terms of the existing agreement.
- Sometimes tribunals and courts may consider that the contract contains implied terms which may authorise or prevent alterations of working conditions. For instance, it would be usual for an employee to be expected to work within reasonable daily travelling distance of his or her home.
Can individual employment contracts be varied by a collective agreement?
A contract of employment is in law an agreement between an employer and an individual employee. Therefore, any variations in the contract will need that individual’s express agreement. However, an employer and employee can agree, either expressly through a clause or reference in the employee’s contract, or through an implied term, that relevant changes in terms and conditions negotiated by a trade union(s) are incorporated into individual employees’ contracts. This may still be the case whether or not the employee is an active member of the relevant trade union(s).
Employment law disputes can be extremely complex matters. These issues are best dealt with by specialists solicitors like Harold Stock & Co Solicitors who have a comprehensive understanding of the field. Harold Stock’s solicitors have considerable experience in dealing with contract disputes and resolution and can offer expert and personable advice. We are also able to assist you with drafting any type of contract, varying the terms and conditions of contracts and wording the clauses to your best advantage.
If you would like further advice or assistance on employment law issues or business contract disputes and resolution, then please contact Harold Stock on 01457 835597 or email email@example.com