Contract Variations – Frequently Asked Questions

What is a contract variation?

A contract variation is when an employer makes an alteration to the terms in an employee’s contract.
What are contract terms?

There are different types of terms that make up an employment contract. Any of these can be changed with the agreement of the employee.

• Express terms;
  • Terms that are clearly agreed between the employee and the employer. These can be agreed verbally or in writing. Express terms would include things like pay, hours, and holidays;
• Implied terms;
  • These would not need to be written down but they are obvious to both employee and employer. Implied terms would include things like the employee will not steal;
  • It could also be things that have become custom and practice e.g. if you always allow employees to finish early on a Friday, this could become an implied term;
• Statutory terms;
  • These are terms that are compulsory e.g. employees must be paid National Minimum Wage or given the minimum notice period.

What types of variations can be made to a contract?

There are many different types of variations that could be made, some examples are:

• Change of working hours;
• Change of working days;
• Change of shift pattern;
• Place of work;
• Duties; or
• Supervisory relationships.

Why would I do a contract variation?

There are a few different reasons why we would need to change the terms in someone’s contract. It could be that there have been changes in the business and we need to change an employees’ hours, rate of pay, days worked etc.

Another reason, which is the most common, is that we have received a request from a client to change the services we offer them. An example of this is – the client has reviewed the cleaning contract that we provide, and decided that they need the offices cleaned in the evenings and not the morning. This would be a contract variation.

What should I do if I become aware of a contract variation situation?

If you are instructed that a contract variation needs to take place you should contact MyHR who will help you to put together a detailed timetable and action plan to ensure that all steps in the process are covered.

How do I tell employee(s) about the contract variation?

You will need to make an initial announcement to all the employees that will be affected by the changes. Arrange a meeting with them to explain the situation. This can be either on an individual basis on in a group. You should inform them of the proposed changes, explain the process that will follow, and inform them they will be invited to individual consultation meetings to discuss the changes in more detail.

How many individual consultation meetings should take place?

This will vary depending on the circumstances, however below are steps which a typical consultation process should follow:

• Initial meeting notifying the employees (individual or group);
• First individual consultation meeting;
• Second individual consultation meeting to review objectives; and
• Final individual consultation meeting - dismissal with offer of re-engagement.

What is an individual consultation meeting?

Employees are much more likely to agree to changes if they understand the reasons behind them. The individual consultation meeting will give you and the employee a chance to sit down together and discuss the changes that have been proposed and to see if they can be agreed.

What should be discussed at the individual consultation meetings?

At an individual consultation meeting the following should be discussed:

• The changes and the reasons behind them;
• Any ideas the employee has of how the changes could be avoided;
• If the employee can make the changes;
• Identifying suitable alternatives or vacancies if they cannot agree the changes;
• Tell them that a potential outcome would be dismissal and re-engagement if they can’t agree the changes; and/or
• Answer any questions the employee may have.

What should I do if the employee is happy to accept the changes?

If the employee is happy to accept the changes, you should complete a change and additions form and then follow up with a letter confirming the changes, within one month.

You will not need to have any more consultation meetings with them once they have agreed to the changes. Even though the employee agrees to the changes, they must be given the correct notice period before these changes take place, unless they are happy for them to start sooner.

What should I do if the employee is unable to agree to the changes because of personal circumstances?

If the employee cannot accept the changes, you will then need to write to them to invite them to a second consultation meeting., During this meeting you can discuss the employee’s objectives to the changes, complete the ‘alternative employment opportunities’ form, and advise them how to search for suitable vacancies within the Company. You will need to explain that if they cannot think of any alternatives, and there are no suitable vacancies, we may be forced to serve notice and offer re-engagement on the revised terms.

Arrange a final consultation meeting with the employee and write to them to invite them to the meeting. If, at this point, no suitable alternative has been found and the employee is still unable agree to the changes you will need to serve notice to the employee to terminate their contract with an offer of re-engagement on the revised terms.

If at any point during these consultations, the employee can agree the changes, then please follow the steps in “what should I do if the employee is happy to accept the changes?”

What are alternative employment opportunities?

Alternative employment opportunities are other possible vacancies in the Company which the employee(s) may be able to take instead if they are not able to agree to the changes proposed. You will need to help the employee(s) look for vacancies within the Company for them to consider applying for.

In this situation, employees may be interested in different types of positions. They may be willing to relocate, increase / decrease their salary, increase / decrease the number of hours they work, or work in a different area of the business. It is important that you give the employees access to all vacant positions and not just the ones you think they will be interested in.

How do I look for alternative employment opportunities?

All vacancies can be viewed on the internet. If the employee does not have internet access, then you will need to ensure the employee receives a full list of vacancies.

What happens if someone accepts an alternative employment opportunity?

The employee can move into the new role as soon as reasonably possible. The old position will then need to be recruited for.

The employee can’t make the change and there are no suitable roles. What do I do now?

If the employee is still not able to agree the changes and there are no alternative roles, you will need to dismiss them and offer them re-engagement. This is where the employee has their contract of employment terminated, but is offered a new contract of employment with the new terms that were brought about by the contract variation.

What if an employee is on long term sick?

You must consult with all affected employees; this means that you will need to consult with employees who are on long term sickness when this situation arises. Give them as much notice as possible. This includes employees on fixed term contracts.

You will need to contact the employee and find out the way they would prefer to be consulted. This may be at their home address, in the office, or by telephone. It is important to ensure a witness is always present and notes are taken of the meeting. These employees will be sent details of any alternative jobs.

If you do not consult, even if it because you have a genuine concern about not worrying an employee due them being unwell, this is likely to be discrimination as will make the process unfair. Contact MyHR to help you with this process.

What if an employee is on maternity?

As with long term sick, you will need to consult with an employee if they are on maternity leave. You should contact her and find out which way she would prefer to be consulted. This may be at her home address, in the office, or by telephone. It is important to ensure a witness is always present and notes are taken of the meeting. These employees will be sent details of any alternative jobs.

How long is the notice period for employees?

Employees should be given their full contractual notice. This is usually dependant on the employee’s length of continuous service.

Can the employee appeal against being dismissed?

Yes. Every employee who is dismissed can appeal this decision. This should be put in writing within 5 days of receiving their letter of confirmation of dismissal. An appeal hearing will be conducted as soon as operationally possible.