Making changes to employment contracts

Can my employer make changes to my employment contract?

It is not uncommon for employers to want to change contract terms during the course of employment. With the recent rise of national minimum wage and national insurance we are seeing more employers trying to manage their costs by making adjustments to contract terms.

Whether it be reducing hours, reducing pay or assigning extra responsibilities, these are all changes that an employer will need to follow correct processes to implement. Failure to do so can result in claims for breach of contract or constructive unfair dismissal.

Usually, a change to an employment contract will require the agreement of the employee, however the flexible nature of some contracts can mean that changes can be made as required to support the needs of the business or there may be a clause in the contract that allows for the change (variation clause).

Variation clauses

A variation clause, also known as a flexibility clause, is what some employers will include in employment contracts to enable them to make legally enforceable changes to contracts by only providing their staff with reasonable notice. 

However, that is not to say that a blanket variation clause is sufficient for your employer to rely on if the change will be to your detriment. The reasonableness of the variation clause will depend on how it is used in practice and the significance of the change your employer tries to make.

Even where the clause exists, it is generally good practice for employers to consult with employees and seek their agreement before they try and make fundamental changes to their employment terms. 

If there is no variation clause in your contract or the wording of the clause is relatively vague, there is scope to challenge the changes your employer tries to impose, and they will be required to consult with you and reasonably explore alternatives before you agree to any terms.

Consultation

The best way for an employer to make the changes will be with the express agreement from the employee. An employer should clearly set out the changes which it is seeking to make and an estimated timescale in which they will seek to implement this change.

During this interim period before the changes are made your employer should meet with you and listen to any genuine concerns and explore any reasonable alternatives.

What if I refuse to agree the changes?

1. Working under protest

In the event that an agreement cannot be reached between the parties you may consider working under protest. This is where you make it clear to your employer that you do not agree to the change and take steps to challenge it.  

Provided that you make it clear you do not agree to the changes, you may be able to pursue a claim for breach of contract either in the Employment Tribunal or County Court. It is however important to note that if you do not have written communication clearly demonstrating you disagree with the new terms, you may be seen as “affirming” the change.

2. Breach of contract

Your employer may seek to formalise any changes without your consent. In the absence of a valid variation clause this can amount to a fundamental breach of contract and as a result you may be able to resign and pursue a claim in the Employment Tribunal for constructive unfair dismissal. We would always recommend that you seek advice on the merits of this claim before resigning from your role.

3. Fire and Re-hire

Your employer may look to dismiss you with notice and re-engage you on new terms. This is known as “fire and re-hire” and is an area that employers will need to be extremely mindful of due to the changes being introduced with the Employment Rights Bill 2025.

If you have only been employed for a short period (less than 2 years currently) then your rights for any recourse will be limited.

Relevant changes to the law

The Employment Rights Bill will introduce a significant change for employers in that any dismissal as a result of refusing a contractual variation will soon be automatically unfair. The impact of which is that employees do not have to have 2 years’ service to pursue a claim like they do for ordinary unfair dismissal.

As a result, employers will need to ensure that they are carrying out a thorough assessment to identify the exact terms to be changed, the reason for this required change and the impact on the employees. The only defence to this dismissal will be if the employer can show they were in extreme financial distress with no other options.

Summary

In summary it is important to remember that you do not have to agree to changes to your contract just because your employer says so. If you are not happy with the changes being made and feel they are a fundamental part of your contract terms, I would recommend you raise your concerns formally with your employer and seek legal advice on what your options are.

Our team are able to assist with a range of enquiries and HR support. If you would like any support in respect of changes that your employer is trying to make to your contract, please contact us on 01983 897003.