As an employer, you need to ensure you have a full understanding of your obligations and responsibilities regarding contracts of employment.
In this guide, we look at the Irish laws surrounding changing terms and conditions of employment contracts. This includes your business’ legal rights, as well as those of your employees.
Can an employer change a contract?
So, can an employer unilaterally change terms of employment? Generally, it’s not legally possible for one party to make changes to a term of employment unilaterally. That means without the prior agreement of the other party.
To legitimately add, remove, or make any changes to these terms, you’ll need to reach an agreement with an employee. Some employment contracts have variation clauses, which is a contractual term, that allows certain terms to be changed unilaterally if the employer has good reason to do so (financial difficulties for instance).
Remember, terms and conditions of employment aren’t only those set out in the contract. It’s also possible that terms may become part of an employee’s terms and conditions through custom and practice.
To establish a custom and practice it must be, “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.” As per O'Reilly -v- Irish Press (1937) 71 ILTR 194.
Employment law and change of contract
Some businesses may want to make a quick change to the terms of an employment contract and move on to other pressing matters.
So, can an employer change contract details without an employee knowing? No, you shouldn’t do this. If you intend to make a change, you have to communicate your plans with the staff member it affects.
Can an employer change a contract without consent?
Under contract law, neither party should unilaterally change an employment contract. The consent of both employer and employee must be secured before making the change.
The notification of any changes is also governed by the Terms of Employment (Information) Acts 1994-2014. Under this law, you must provide the employee with written confirmation of the change within one month of reaching agreement on the new terms.
It’s important to stress you must reach an agreement before you make any changes to a contract.
If you don’t, an unlawful change could result in a complaint from an employee for breach of contract. And this may lead to an employment tribunal.
Examples of common employment contract changes
There are many reasons why you may need to make a change. These include:
- For a change of employment contract notice period.
- To adjust rates of pay.
- To change working hours/their working week.
- To update job titles, duties, and responsibilities.
- For a change of business location (i.e. where the employee will work).
How to make changes to an employment contract
If you’re looking to push through a change, you need to engage in a consultation process with the affected employees. The main objective of this is to secure consent.
Here are a few things to consider during the consultation process:
- It should be open and transparent.
- Clearly explain the reason for the change.
- You should provide as much information as possible to the employees. Such as sales, turnover, profit etc.
You should consider alternative benefits or incentives to secure the change.
For example, accompany consultation on pay cuts with alternative incentives. Or offer a lump sum payment, free shares etc.
If you don’t secure an agreement with employees and make the change to the terms and conditions of employment anyway, this can present a number of risks. An employee can bring a claim to the Workplace Relations Commission, including a:
- Claim of constructive dismissal under the Unfair Dismissal Acts 1977-2007.
- Claim for damages for breach of contract.
- Claim in respect of an unlawful deduction under the Payment of Wages Act 1991.
- A trade dispute under the Industrial Relations Acts 1964 -2004.
So, it’s important to protect your rights and those of your employees. Otherwise you risk serious legal action against your business.
Can an employer change a contract and reduce pay for those on maternity leave?
It is very difficult to do this, not only would an employer risk the above claims, but there would be a risk of discrimination.
Failing to consult employees about changes to key terms of their employment during maternity leave is likely to lead to an allegation of pregnancy-related discrimination.
Types of employment contract
Before an employee starts, you need to complete the first stages of your recruitment process. Namely, advertising a role and interviewing candidates.
You may hire staff who are:
- Agency workers.
And these may call for the following types of contract offers:
- Unconditional: The employee can accept the offer without having to meet any conditions.
- Conditional: The new starter must first meet certain conditions before they can accept the offer.
If making a conditional change in employment contract offers, you should make sure that the conditions are consistent for all applicants to avoid allegations of discrimination.
Can an employer change a contracted role?
If you want to change an employee’s role to another, you can complete this. But, again, only with the individual’s agreement to the change.
You may need to do this if one member of staff leaves your business. Or if you’re looking to promote an employee to a new positon you have.
Either way, you can discuss with them your reasons and then draw up new terms and conditions for them to sign.
Can an employer change a permanent contract?
Yes. You can make an amendment, but you’ll need an employee’s agreement to do so.
Remember, this is a type of contract that is likely to cover a long-term employment relationship and may need to be changed (unlike, for example, a fixed-term contract).
For the duration of the contract, you can make amendments if you have a justifiable reason to do so and secure the agreement of the employee.
You may want to think about the employment relationship here as they are more of a permanent fixture at the workplace. You don’t want to make changes which will damage workplace morale.
Change of employment contract letter template
Make an employee aware of upcoming terms and conditions changes as soon as possible.
Inform them in writing and then, if necessary, have a meeting to discuss the reasoning you outline in your letter.
Below we have a sample contract alteration letter you can refer to.
*Start of template*
[Name of employee]
Dear [employee’s name],
Proposed changes to your contract of employment.
We are writing to propose a change to your current contract of employment dated 26th Augusto 2020 as follows.
A new clause [explain what this is] to be inserted into the existing terms and conditions with the current clauses renumbered.
This new clause will read, “[include the details]”. Please note, the other terms of your contract of employment are not affected due to this amendment. They remain in full effect.
The reasons for this change are [explain your reasoning].
We would like to discuss the proposed changes with you at a meeting on the [time/date].
Please do confirm your availability by contacting [member of management team].
[Appropriate member of management]
*End of template*
Do note, you should amend the above template to suit your business’ requirements. It’s important to explain the specific reasons to an employee in any legal document.
By offering transparency, you’re more likely to receive cooperation and agreement from the staff member facing the contract change.