First published: June 2nd 2017
Last updated: March 16th 2023
Can I change an employee’s contract of employment?
If you are an employer, you have a legal obligation to provide certain information to your staff in writing.
The best way to comply with your statutory duties in this regard is to provide employees with a written contract before they start work with you.
But what happens if you need to make a change to your employment contracts?
This post examines the rules surrounding changing terms and conditions in the employment contract.
The importance of employee consent
Generally, it’s not legally possible for one party to make changes to a term in the contract of employment without consent from the other party. To add, remove, or make any changes to these terms, both the employer and employee must first be in agreement.
Implied terms in the employment contract
It’s important to note that terms and conditions of employment are not only those included in the contract of employment. Terms may be implied into the employee’s employment contract through custom and practice for instance.
The courts have held that a term will be implied into the employment contract through custom and practice if the practice is “so notorious, well known and acquiesced in that in the absence of agreement in writing it is to be taken as one of the terms of the contract between the parties.”
The consultation process in relation to the changing the employment contract
Let's say you’re an employer who has a legitimate business reason for making a change to the employment contract. In these circumstances, you need to engage in a consultation process with the affected employees. The aim here is to secure the employee’s consent to the proposed changes.
Here are some things to consider during the consultation process:
- It should be open and transparent.
- The rationale for the change should be clearly explained.
The employer should provide as much information as possible to the employees, including:
- Profit etc.
Furthermore, employers should consider alternative benefits or incentives to secure the desired change. For example, consultation on pay cuts might be accompanied by alternative incentives (e.g., a lump sum payment, issue of shares or some other workplace benefit like more generous annual leave).
Changing the employment contract without prior agreement
If you fail to secure employee consent before making a change to the employment contract, you risk suffering claims under the following pieces of employment legislation:
- A claim of constructive dismissal under the Unfair Dismissal Acts 1977-2015.
- A claim for damages for breach of contract.
- A claim in respect of an unlawful deduction under the Payment of Wages Act 1991.
- A trade dispute under the Industrial Relations Acts 1964 -2004.
Need to make a change to your employment contracts?
If you need to make some changes to the terms and conditions of your employment contracts, make sure to consider the implications of failing to first secure employee consent.
For further guidance on this or any employment law issues affecting your business, speak to one of our HR experts on 1800 719 216.