Changing an employee’s terms and conditions of employment is a common issue for businesses. Whether it involves changing working hours, introducing new responsibilities, altering pay structures or implementing new workplace policies, employers often need flexibility to adapt to changing business needs.
However, many employers assume they can simply notify employees of contractual changes and implement them immediately. In reality, employment contracts are legally binding agreements, and changing them without following the correct process can expose employers to grievances, disputes and potential employment tribunal claims.
Understanding when contractual changes can be made and the steps employers should take is essential for reducing legal risk and maintaining positive employee relations.
Can Employers Change Employment Contracts?
In most cases, employers cannot unilaterally change an employee’s contract without agreement.
An employment contract is a legally binding agreement between employer and employee. Just as employees cannot normally change their obligations without agreement, employers are generally expected to obtain consent before making significant changes to contractual terms.
Examples of contractual changes may include:
- Changes to working hours
- Changes to salary or benefits
- Changes to job duties
- Changes to workplace location
- Changes to holiday entitlement
Whether consent is required will often depend on the nature of the term being changed and whether the contract already contains provisions allowing certain changes.
Some employment contracts contain flexibility clauses that permit employers to make limited changes in specific circumstances. However, these clauses are not unlimited and must be exercised reasonably.
Employers should be cautious about relying solely on flexibility clauses, as courts and tribunals will often scrutinise how such provisions have been used.
Before implementing any change, employers should review the contract carefully and assess whether employee agreement is required.
What Happens if an Employee Refuses to Agree?
Employees are not obliged to accept every proposed contractual change.
If an employee refuses to agree, employers should first seek to understand the reasons for the objection and explore whether a compromise can be reached.
Consultation is often the most effective way of resolving concerns and maintaining positive working relationships.
Where changes are necessary for business reasons, employers should explain:
- Why the change is required
- The impact on the business
- The benefits of the proposed change
- Any alternatives that have been considered
Open communication can often result in agreement being reached without formal disputes arising.
If agreement cannot be obtained, employers face a more difficult decision.
Simply imposing changes without consent may amount to a breach of contract. In some circumstances, employees may continue working under protest, raise grievances or potentially bring claims.
In more serious cases, an employee may resign and argue that the employer’s actions amounted to constructive dismissal.
For this reason, employers should carefully consider their legal position before implementing changes unilaterally.
Can Employers Dismiss and Re-Engage Employees?
Where agreement cannot be reached, some employers consider a process commonly referred to as “dismissal and re-engagement” or “fire and rehire”.
This involves terminating the existing employment contract and offering re-employment on revised terms.
While this approach remains lawful in certain circumstances, it is generally regarded as a measure of last resort.
Employers considering this option must ensure that:
- There is a genuine business reason for the change
- Meaningful consultation has taken place
- Alternative solutions have been considered
- Proper notice is given
- The process is conducted fairly
Failure to follow a fair process may result in claims for unfair dismissal, particularly where employees have the qualifying period of continuous service.
Recent developments in employment law and government guidance have also increased scrutiny of dismissal and re-engagement practices.
As a result, employers should obtain specialist legal advice before pursuing this approach.
How Can Employers Reduce Legal Risk?
The best way to reduce risk is to approach contractual changes carefully and transparently.
Employers should begin by identifying exactly which contractual terms require amendment and whether the proposed changes are genuinely necessary.
Early communication is often key to achieving agreement. Employees are generally more receptive to changes when they understand the reasons behind them and feel their views have been considered.
Employers should also ensure that all discussions and agreements are properly documented.
Legal technology can also help employers better understand their obligations before implementing workplace changes. Platforms such as NakdLaw allow employers to explore common employment law questions and gain an understanding of key legal principles before seeking professional advice.
However, while legal technology can be a useful starting point, complex contractual changes should always be supported by tailored legal advice.
Employment law is highly fact-specific, and the risks associated with contractual changes can vary significantly depending on the circumstances.
Conclusion
Employers cannot usually change an employee’s contract without consent. While some contracts contain flexibility clauses, significant changes will often require agreement and consultation.
Where employees refuse proposed changes, employers should carefully consider their options and avoid taking action that could expose the business to legal claims.
By communicating openly, consulting meaningfully and obtaining appropriate legal advice, employers can often implement necessary changes while maintaining positive workplace relationships and minimising legal risk.
Need Employment Law Advice?
If your business is considering changes to employment contracts, workplace policies or terms and conditions, Penerley can help. Our experienced employment law solicitors provide practical and commercially focused advice to employers across England and Wales. Contact Penerley today to discuss your situation and ensure your business remains compliant with employment law.
