Rewriting the employment contract

Clients often want to know whether they can alter clauses in employees’ contracts, eg changing their place of work or working hours.

Many contracts have a clause reserving the employer’s right to vary the contract. But is it safe for employers to assume that they can rely on such a clause to make whatever changes they wish?

The courts have said that the clause must be clearly drafted and not so wide as to be unreasonable. They will also look at the parties’ intentions. In one recent case the appeal court said that it would be hard to uphold a clause giving the employer power to change any term if it was used to reduce employees’ working hours, thereby cutting their pay.

So if an employer uses the clause and unilaterally varies the contract what can a disaffected employee do about it? He has four options: he can agree to the variation; he can resign and claim constructive unfair dismissal; he can refuse to work under the new terms – putting the onus on the employer to decide whether to discipline or dismiss him or he can work under the new terms under protest and bring a claim for breach of contract.

Employers are unlikely to want to face any of the last three options. It is therefore worth getting advice before imposing any changes that are not agreed by the employee. Unless a variation clause is clearly and tightly drafted it is unlikely to actually ‘do what it says on the tin’.

As always, if you need commercial and pragmatic legal advice, we’re here to help so please get in touch.

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