Employment Contracts

by Kate Russell

Variation of contract

There are several ways in which an existing contract may be varied.

Note

The most common example of an agreed change is an increase in salary.

Variation by mutual agreement

Most changes take place by mutual consent. It is always sensible to obtain express agreement, in other words documented evidence that the employee has agreed to the change. Where a contract has been varied, confirmation of the varied term or terms must be confirmed in writing within four weeks of the effective date of the variation.

In some cases, agreement can be implied if the employer proposes a change and the employee carries out the job under the changed conditions without complaint. However, there can be problems with this, especially where the terms are not immediately effective. It is still advisable to try and obtain written agreement.

Variation by collective agreement

Where an employer negotiates with a recognised union or other body that represents the interests of the workforce, the variation could become incorporated within the individual contract of employment either by an express provision or by implication or custom and practice.

The outcome of collective agreements should be expressly incorporated into contracts and this can be achieved by inserting wording which indicates that employees are employed on the basis of any national or local agreements currently in force.

Variation by flexibility clause

Some contracts of employment contain a clause giving the employer the right to vary the terms of the contract. They may, for example, relate to an employee’s rate of pay, working hours, place or conditions of employment.

However, this does not give you carte blanche to make any changes you want. Even with such a clause, the changes are confined to those of a minor, non-fundamental type.

Variation by statute

If legislation is passed with requirements that exceed those of the existing contract, the new statutory terms will automatically replace the contractual terms. A topical example is the National Minimum Wage, which gave employees and workers the right to a minimum hourly rate of pay. For current rates see the Statutory rates page.

Variation by dismissal and re-engagement

This operates where there is no consent and change can only be achieved by the employer terminating the existing contract and offering to re-engage the employee on different terms. This is not a course to be recommended as there is the strong possibility of any unfair dismissal claim succeeding.

Example

In the early 1980s, Rupert Murdoch wanted to move his newspaper print works from Fleet Street to Wapping. The workforce was still heavily unionised and they refused to move voluntarily, so he dismissed them and recruited new staff. They picketed the new works for months and it was an acrimonious and highly public dispute.

Variation by custom and practice

Some terms and conditions of employment become established because things have been this way for a period of time. They are often not written down but rapidly become accepted.

Example

Finishing work early on Fridays

Where such customs have grown up and been accepted, employers need to recognise that to change them suddenly, without due notice and consultation, may lead to successful claims for constructive dismissal.

A contractual change must be confirmed in writing within four weeks of the date of variation. You don’t need to reissue the whole set of terms and conditions again, only the part that has been changed.