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What should an employer do first when looking to change an employee's contract?

The economic climate has changed, you need to reorganise your business, so and you want to change an employee's contract. What's your first step?

The only way to change a contract of employment is by the agreement of both parties. Forcing a change without consent is a breach of contract and could lead to claims against you in a civil court or employment tribunal.

Consult and keep talking

That's why it's crucial to consult and consult early. If the employee understands the reasons, they are much more likely to agree to any changes.

Renegotiating an existing contract is best achieved through discussion with your employees with the aim of reaching a compromise. Keep talking and keep employees informed. They will understand that you have their best interests at heart and will help maintain productivity and engagement while discussions are ongoing. Any agreed changes to the contract should be recorded in writing.

Sometimes these discussions can be done through employee representatives or trade unions. An employer and employee can agree, either expressly or through an implied term in the employee's contract, that changes can be negotiated by representative on the employee's behalf.

This can happen even if the employee is not a member of the relevant recognised trade union that is undertaking the talks.

Other routes

Some contracts include flexibility clauses, in which the employee has already given consent for the employer to change terms. However, these usually can only be applied to a fairly narrow range of matters.

You could offer incentives to help reach an agreement, such as 'buying out' a contractual term in exchange for a new one - or offering extra pay or leave in exchange for, say, new shift patterns.

If you still can't agree, then, as a last resort and following full consultation, you may have to serve notice to terminate the existing contract and offer re-engagement on new terms.

As a dismissal would be involved, you'll need to follow a fair dismissal process - and if you're dismissing 20 or more employees you must consult collectively with any recognised trade unions or workforce representatives.

Acas publications and services

Acas provides detailed information on Changing or varying a contract and has published the pdf icon Advice leaflet - Varying a contract of employment [267kb].

Acas experts can visit your organisation and help you minimise the risk of disputes surrounding changes to terms and conditions. See Contracts and hours: how Acas can help for details.

Practical training is also available on Contracts and terms and conditions, Managing change, Handling difficult conversations, Dispute resolution, Negotiating skills and Employing People - A Practical Introduction.

For free, impartial advice and guidance visit Acas Helpline Online.

Visit the Acas Training Courses, Workshops and Projects area for more information.

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We recommend that you explore further information and advice available on this website, particularly within our Advice A-Z guidance pages. If you have questions about workplace rights and rules visit Helpline Online.
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