Varying contracts of employment: risks?

Here are some key points employers should be aware of when varying contracts of employment:

• Contracts of employment cannot be varied without agreement from both the employer and the employee. If an employer without the employees consent makes unilateral changes, the employer will have breached the contract in which case the employee may be able to claim damages, constructive dismissal, unlawful deductions of wages etc.
• It is important to ensure that when an employer is drawing up a contract of employment, there is an element of flexibility, which gives the employer discretion to make certain changes without the employees consent. However, it is important to ensure that such clauses are drafted clearly.
• Where an employer wishes to make a minute change in the contract, and the employer has no flexibility under a contract, the usual step is for the employer to ask an employee to consent to the change. However, where the proposed change is quite substantial, the employer will be required to commence a consultation process to discuss the change and reach an agreement. It is important to ensure that any changes are recorded in writing in order to avoid ambiguity.
• If the employee does not agree to the proposed changes, the employer can still lawfully make them but will need to follow a careful procedure (with legal guidance) culminating in the termination of the old contract on notice and an offer of the new contract with the revised terms. There is the risk that the employee will refuse to sign the new contract and bring an unfair dismissal claim. The employer would however be in a position to demonstrate the constructive dismissal was fair; they had a fair reason for the dismissal (Some Other Substantial Reason- SOSR) and that they acted reasonably.

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