Variation of Contract

There are many reasons why an employer may change the way his/her staff work, or their working conditions, or their workplace. This may include the need to make cost savings, respond to changes in technology, changes in the market place, or increased competition. In order to deal with these changes an employer may want to change the working hours of the staff, alter the job duties, alter the pay or benefits of staff, or relocating their work.

In many instances an employee’s contract of employment will effectively change over time, such as when there is an increase in the employee’s pay, increase in holiday entitlement with increased length of service, and increased levels of responsibility. As often as not these changes are not confirmed in formal amendments to the contract of employment. This may become problematic when a dispute arises between the employer and employee and there is a disagreement over the exact rights and responsibilities between them. It is therefore sensible for both the employer and employee to have all variations of contract agreed and confirmed in writing.

There are a number of ways in which an employer might try to alter the terms of the contract of employment of their staff:-

a) A general power to change the contract

Some contracts of employment contain a clause that states that the employer is entitled to vary any of the terms contained in it (see PAYG contract term). The Employment Appeals Tribunal has ruled that this type of clause would only be capable of being used to produce minor changes. In any event a contractual power to vary the terms of employment cannot be exercised arbitrarily or inequitably.

b) A right to alter a specific provision in the contract

Employers may wish to reserve the right to alter a particular clause in the contract of employment. A common clause that an employer may wish to vary is the clause specifying place of work. The employer may want to ensure the mobility of their staff. The courts have ruled that there may be implied restrictions on this; that tan employer has to give reasonable notice of exercising the right to require the employee to move work location, and to ensure that it is exercised in a way that is possible for the employee. (see PAYG contract clause)

c) Working rules and procedures

Employers are entitled to make rules that deal with the conduct of its employees, and their work practices. This includes the introduction of policies such as email and internet use (see PAYG email policy), non smoking (see PAYG non smoking policy), attendance policy (PAYG attendance policy). It is particularly beneficial for employers to use policies and procedural documents to address varies statutory right, such as protection from discrimination in an Equal Opportunities Policy (see PAYG Equal Opps Policy)

Employers may require employees to comply with policies and procedures, and discipline (and even dismiss) employees for the breach of such policies without them having to be contractually binding. Naturally employers must go through the correct procedure in dealing with any dismissal in order to reduce the risk of claims of unfair dismissal against them.

The practical advantage of the case of working rules and procedures is that they may be changed without every change involving the need to consult and negotiate over the terms of a new contract.

d) Variation by agreement

Employers are entitled to make significant or substantial changes to their work or work practices it should try to achieve this through agreeing the changes with the employees. This should be done through a process of consultation, and the changes (and steps in the consultation process) confirmed in writing. (see PAYG documents)

e) Implied Agreement

It might be possible to imply agreement to changes in the contract. This may happen if a change is implemented, and the employee(s) continue to provide their work for some time afterwards without objection. However, employers must only consider implied agreement with caution, particularly in relation to changes that do not have an immediate impact.

Employers have many reasons for wishing to vary the terms of the contracts, but it is clear that this always needs to be addressed with caution, and detailed advice should be taken on achieving such changes legally and fairly.