Employment Contract – Changing & Terminating a Contract

Last Updated
July 20, 2010
  • An employment contract exists as soon as an employee starts working for you.
  • An employment contract is enforceable by law.
  • It can be a verbal agreement and doesn’t have to be written down.
  • It can include rules which are implied, such as the duty of the employer to provide a safe and healthy work environment.
  • It includes some terms automatically, such as the right to paid holidays and the right not to be unlawfully discriminated against.

Changing an employment contract

  • Changes can only be made to an existing employment contract if both the employer and employee agree to the changes.
  • You must fully consult with an employee over any changes you are proposing to make.
  • Where changes have been agreed that affect the written statement of employment, you must issue a new written statement within one month of the changes.

Terms within a contract which allow changes

  • A contract can be drafted to permit reasonable changes to be made within the terms of the existing agreement.
  • An employer can reserve the right, for example, to alter an employees duties if this is stated in the employment contract

When an employee does not accept changes

  • The easiest way to avoid the courts and tribunals is to dismiss the employee, giving them proper notice, then offer them a new contract.
  • To terminate someone’s contract is to dismiss them. (Find out more about dismissal in our articles on dismissal, which are listed at the bottom of this page.)

Breach of contract

  • A breach of contract is when you change the terms of an employment contract without the agreement of the employee.
  • If an employee continues to work under these changes without objecting, they may be regarded as having accepted the changes.
  • If an employee treats the breach as ending their contract, they could make a claim of constructive dismissal.
  • If an employee continues to work under these changes but does so under protest, making it clear they do not accept the dismissal of the old contract, they could take you to court or a tribunal.
  • Employees who protest could seek: damages for breach of contract or a declaration that you must abide by the old contract; and claim unfair dismissal.

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