A contract of employment between an employer and an employee is a legally binding agreement. It can be agreed verbally or in writing and in each case will dictate the rules, rights, and responsibilities of both staff and employers.
From time to time, however, a job contract amendment may be beneficial for one or both parties (employer and employee). But with a legal minefield waiting for anyone looking to change their responsibilities at work, how do you amend a contract of employment without causing upset?
In this guide we will look at what constitutes a contract of employment, as well as discussing how changes can be made from both the employees and employers’ point of view.
What is a contract of employment?
An employment contract is an agreement that covers the working relationship between a company and an employee. It allows both parties to clearly understand their obligations and the terms of employment.
An employment contract can include:
- Details of salary or wages. Contracts will itemize the salary, wage, or commission that has been agreed upon.
- Details of working hours and shifts. In some cases, an employment contract will include the days and hours an employee is expected to work.
- Duration of employment. An employment contract will specify the length of time the employee agrees to work for the company. In some cases, this might be an ongoing period of time. In other cases, it might be for a specific duration.
- General responsibilities of the employee. Contracts can list the various duties and tasks a worker will be expected to fulfil while employed.
- Details of benefits. A contract should lay out all promised benefits the business will provide the employee.
What does the law say about job contract amendments?
Making changes to employment contracts as an employer
As an employer, before you propose an employment contract change, you should consider:
- What problem are you trying to fix?
- Is a contract change definitely needed to solve the problem?
This can help you to be clear about what you want to achieve and the different ways you could achieve it. It may also highlight how problems can be resolved without changing a contract.
When might an employer consider an employment contract change?
Here are a few examples of when employers may need to consider employment contract changes:
- To ensure contracts of employment are up to date with laws and regulations.
- So that contracts better reflect a person’s role. This is especially important if there have been changes.
- To introduce new terms and conditions, for example redundancy pay or enhanced maternity, parental or adoption leave and pay.
- To reflect changes to an organisation, for example if it’s considering moving to a different location.
- To help an organisation better adapt to their customer’s needs.
- For economic reasons, for example if a business needs to restructure to stay competitive in a marketplace.
What issues might changing employee contracts lead to?
While in some circumstances changing an employment contract can bring benefits to an organisation and its employees, it can also bring significant risks. Here are a few risks to consider:
- Changing contracts can cause tensions in an organisation. If changes are not managed well then staff may be unhappy.
- Changing employment contracts can damage working relations with staff.
- Changing contracts can lead to legal claims, for example claims of breach of contract or constructive dismissal.
- Job contract amendments may lead to a decrease in commitment and performance by staff. This is especially true if employees do not support the changes or feel they have not had the opportunity to discuss changes. In some cases, staff may choose to take part in industrial action and strike.
- Changing employee contracts can lead to valued people leaving an organisation.
- Badly handled contract changes can damage the reputation of an organisation or brand, making it difficult to attract new employees
Changing contracts best practice
If you feel you may need to propose a contract change, here are a few things you can do to minimise potential problems:
- If your workplace has a recognised trade union, consult them about any changes and discuss why they need to be made.
- Discuss potential changes with impacted employees as soon as possible. This will prevent claims of going behind employee’s backs.
- Look at ways that you can mitigate some of the upheaval that the contract change may cause.
Making changes to employment contracts as an employee
There are many reasons as to why an employee might want to change their contract of employment, these include:
- Moving onto flexible working hours.
- Going from part time to full time hours or vice versa.
- Change to their role in the business. This may be due to a promotion or other change in responsibilities or tasks.
- Change to their pay and benefits. This might include a pay rise or the business starting to operate a pension scheme.
What do my employers have to do if they want to change my contract?
If your employer is considering changes that may affect your contract, they must:
- Explain the change they’re considering and the reasons why.
- Consult with you. This means they must ask for and genuinely consider your views.
- Consult with trade union or other employee representatives.
Does my employer have to grant me a change to my contract of employment?
As mentioned previously, no they do not. Changes to contracts of employment must be agreed by both parties. If they do not agree, they can refuse your request.
Making job contract amendments is a tricky business, with pitfalls for both staff and their bosses.
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