Changing an Employment Contract: Employer Responsibilities

A contract between an employer and an employee or worker is a legally binding agreement. A contract can be agreed verbally or in writing.
Any changes to the contract must be agreed by both the employer and employee or worker, or in some circumstances with a trade union or other employee representatives.

Find out more about employment contracts here:
https://www.acas.org.uk/what-an-employment-contract-is

What to consider first

Before an employer proposes an employment contract change, they should consider:

  • What issue they’re trying to solve
  • If a contract change is definitely needed to solve it

This can help clarify what they want to achieve and the different ways they could achieve it.

Exploring options and being clear about why a contract change may be needed will help when it comes to informing and consulting with employees and representatives about potential contract changes.

When an employer might consider employment contract changes

Examples of when employers may need to consider employment contract changes include:

  • To make sure contracts are up to date with new laws or regulations
  • To better reflect someone’s job role, if it has changed
  • To introduce new terms and conditions, for example contractual redundancy pay or enhanced maternity, paternity, parental, shared parental, or adoption leave and pay
  • To reflect changes to the employers life, for example if they are considering moving home

While in some circumstances changing an employment contract can bring benefits to an employer and their employees, it can also bring significant risks. Employers should think carefully about the best way to address the issue you’re trying to solve.

Risks to consider

Changing contracts can sometimes cause tensions between an employer and employee. If changes are not managed well then risks may include:

  • Damaging working relations
  • Legal claims, for example claims of breach of contract or constructive dismissal here: https://www.acas.org.uk/dismissals/constructive-dismissal
  • A decrease in commitment and performance, if employees do not support the changes, or feel they have not had the opportunity to inform decisions
  • Increased levels of stress or absence
  • Unlawful discrimination for example if changes are introduced that apply to a group of employees (or workers) but put employees with a certain ‘protected characteristics’ ( for example, age, disability, sexual orientation¬† and race, to name a few) at a particular disadvantage. Find more details here: https://www.acas.org.uk/discrimination-and-the-law
  • Valued people leaving an your employment, if you propose a change they do not support or agree to
  • Reputational damage, making it difficult to attract new employees

Understanding the employers options for making a change

If the employer feels they may need to propose a contract change, their approach to exploring the change may depend on the number of employees or workers affected. For example, if the change the employers considering is specific to a certain employee, they should discuss and try to agree the change with them directly, including their representative if they have one.

If the change affects a number of employees’ contracts, it may be more appropriate and effective to discuss this with any employee representatives as well as individual employees. For example, if any employee is a member of a trade union. (In some situations, where changes affect 20 or more employees, there is a legal obligation to consult with staff representatives).

If the employer is considering changes to terms and conditions covered by an agreement with a recognised trade union (a ‘collective agreement’), then by law they must always consult with that union.

Next steps

Take a look at the resources available from ACAS to guide you in more detail.

Part of
Last Updated
28 September 2022
First Published
01 April 2022
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Disclaimer

Please note that the information contained in this Handbook is provided for guidance purposes only. Every reasonable effort is made to make the information accurate and up to date, but no responsibility for its accuracy and correctness, or for any consequences of relying on it, is assumed by Self Directed Support Scotland or any other contributing party.

The information does not, and is not intended to, amount to legal advice. You are strongly advised to obtain specific, personal and professional advice from a lawyer about employment law matters, or an accountant/ tax specialist about taxation matters, and from HMRC and your insurers. You should not rely solely on the information in this Handbook. Support organisations listed in this Handbook can help you find appropriate sources of advice.