Change an employee's terms of employment

What if we can't agree?

Sometimes, despite negotiation, you may not be able to reach agreement with an employee over changes to a contract.

But if you impose changes without agreement, there will be a breach of contract.

If the breach is a fundamental one - for instance, if it involves a significant change in pay or working hours - an employee could resign and regard themselves as having been forced to do so ("constructively dismissed"). If they have one year or more of continuous employment with you, they will be able to claim unfair constructive dismissal in an employment tribunal.

If the breach of contract has caused them a measurable financial loss, employees can also sue for damages, either in employment tribunals or in the ordinary courts.

Employment tribunal claims must normally be made within three months of the employment ending but court claims may be made up to six years from the breach of contract. Awards for damages in employment tribunals are limited to £25,000 but there is no limit in the ordinary courts.

If employees are unable to seek damages because they have not suffered financial loss, the court may require the employer to abide by the original contract.

You can consider terminating the original contract (dismissing the employee), provided you give the required notice. You should provide the minimum statutory notice period, or the notice specified in the employment contract, whichever is longer. See our guide on how to issue the correct periods of notice.

You can offer a new, revised contract to the dismissed employee. If the employee believes the dismissal was unfair, and they have one year or more of continuous employment with you, they may complain to an employment tribunal. It would be up to the tribunal to decide whether the dismissal was fair or unfair. Overriding business considerations, for example, might make the dismissal a fair one, provided you followed a fair procedure.

The offer of a new contract could reduce the amount of a tribunal award because the employee's financial loss has been lessened by accepting the revised terms or because - by rejecting the offer - they have not complied with their duty to lessen the loss.

Subjects covered in this guide

• Introduction
• Check what the existing contract covers
• Consult employees
• What if we can't agree?
• Checklist: changing an employee's terms of employment