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Before you think about altering any staff contracts, make sure you know exactly what is in the original. Every employee has a contract as soon as they start working for you, even if it has never been written down.

In addition, employees who work for you for a month or more must be given a written statement of main employment particulars within two months of joining. It is not itself a contract, but it can provide evidence of the contract's terms if there is a dispute. Read more on the written statement.

An employment contract typically includes various types of terms:

Express terms

These are terms explicitly agreed upon by both the employer and employee. They can be found in writing or verbally agreed upon. Examples include:

• Job title and description
• Pay rate
• Hours of work
• Holiday entitlement
• Notice periods

Implied terms

These are not written in the contract but are assumed to be part of it due to:

• Statutory rights (like minimum wage, working time regulations)
• Custom and practice within the workplace or industry
• Mutual trust and confidence between employer and employee
• The duty to provide a safe working environment

Incorporated terms

These might be included by reference from:

• Company handbooks or policies
• Terms that might be incorporated from collective bargaining agreements between recognised trade unions and employers

The Labour Relations Agency (LRA) provides guidance on these matters including a webinar recording on This webinar focuses on what the terms of an employment contract are and the law around how and when an employer can vary these terms, emphasising the importance of consultation and agreement with employees to avoid breaches of contract or claims of constructive dismissal.

Some contracts may contain terms that allow employers to make changes in working conditions. These should be reasonable, for example, performing additional tasks to reflect seasonal fluctuations in demand. Do not rely on such terms to make more fundamental changes because your employee may then claim the contract has been breached and may make various legal claims against you.

If you impose changes without an agreement, there will be a breach of contract. If the breach is a fundamental one eg a significant change in pay, an employee could resign and regard themselves as having been given no other choice but to do so. If they have more than one year of continuous employment with you, they can claim unfair constructive dismissal in an industrial tribunal. Damages for financial loss, for example, may also be sought in the civil courts if they have under a year of continuous service with you.

If you want to change terms or conditions in a collective agreement with a trade union that you formally recognise, you should always consult with the Trade Union to reach an agreement.

Consultation should be detailed and undertaken with a view to reaching an agreement and you should fully explain the reasons for any changes.

ICE Regulations

give employees in companies with 50 or more employees the right to request to be informed and consulted about significant developments in the workplace. If 10% or more of employees (subject to a minimum of 15 and a maximum of 2,500) make a valid request, businesses are required to negotiate a procedure for informing and consulting with employees.

TICE Regulations

give employees in multinational companies the right to be represented on a European Works Council (EWC).

EWCs are designed to allow employees in different European Economic Area (EEA) states to be informed and consulted on transnational issues affecting the company. If your business has 1,000 or more employees and at least 150 employees in each of two or more EEA states, you may be subject to the legislation on transnational information and consultation.

Following the UK's withdrawal from the EU, the government has amended the TICE Regulations so that:

• No new requests to set up an EWC or Information and Consultation procedure can be made by people employed in the UK.
• Provisions relevant to the ongoing operation of existing EWCs will remain in force.
• Requests for information or to establish EWCs or Information and Consultation procedures made but not completed before the UK's withdrawal from the EU will be allowed to complete.

See how to inform and consult your employees.

Consultation can take place on a one-to-one basis or in the form of group briefings. Whichever method you choose, you should provide an opportunity for employees to ask questions. Be prepared to answer these questions and ensure employees have the relevant information they need to prepare for the meeting. Always consider an individual's particular circumstances.

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

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

As noted in the previous page, if the breach of contract 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 given no other choice than 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 industrial tribunal.

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

Claims and awards

Industrial tribunal claims must normally be made within three months of the employment ending but civil court claims may be made up to six years from the breach of contract.

Awards for damages in industrial tribunals are limited to 拢25,000 for breach of contract claims and 拢115,241 for unfair constructive dismissal 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.

Contracts

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 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 industrial tribunal. It would be up to the tribunal to decide whether the dismissal was fair or unfair.

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 potentially - by rejecting the offer - they have not complied with their duty to lessen the loss. However, it would be sensible to consider seeking legal advice before any potential contract change.

You may have to follow collective redundancy consultation procedures, even when no reduction of the workforce is planned if you intend to impose new terms and conditions on 20 or more employees by terminating their existing contracts. Read more on the redundancy consultation process.

You may want to change an employee's contract of employment for a number of reasons. Often the nature of your business has changed, perhaps through expansion, a change in economic circumstances, or a reorganisation.

Things to consider when making changes to an employment contract

Make sure you:

• Familiarise yourself thoroughly with the details of any existing contracts before considering what alterations you want to make.
• Consult your staff about any changes you wish to introduce and include their trade union or other elected representatives. Simply imposing changes could mean a claim by employees for damages in a civil court, industrial tribunal, or a constructive dismissal claim before an industrial tribunal.
• Discuss any changes with your staff in a thorough and detailed way, fully explaining the reasons for any planned alteration and taking into consideration the impact of the proposed changes in individual circumstances. Agreed changes should be confirmed in writing to the employee within one month.
• Try to negotiate a new contract, if an agreement cannot be reached with an employee on changes.
• Document as much in writing as possible.
• Do not assume an employee's acceptance of changes imposed without agreement. An employee may accept the breach of contract, treat the breach as a termination of the contract, and bring a claim for constructive dismissal or continue working under protest making it clear that the change is being treated as a breach of contract. An employee may complain to an industrial tribunal within three months of the change being imposed. The employee would have to resign and not wait too long before doing so, otherwise, it could be taken as an affirmation of the breach.

Breach of contract cases can only be taken to the industrial tribunal if the employment has been terminated and the claim arises on termination of employment.

If the employee continues to work under protest, they may have to sue in a civil court unless the breach results in loss which can be pursued through as an unlawful deduction from wages claim. Such claims would be made to the Industrial Tribunal.

In order to reduce or eliminate differences between categories of employees, such as manual and non-manual workers, you should consider harmonising terms and conditions of employment across your business.

Harmonisation is more likely to lead to an improvement in terms and conditions rather than reducing them.

This will not only make your pay and benefits seem fairer to your staff but also help to ensure your pay and benefits system is not unlawfully discriminatory.

If you intend to use harmonisation to reduce any benefit or entitlement, it is important that this change is agreed before implementation and that the previous guidance on varying a contract of employment is followed.

What terms and conditions of employment can be harmonised?

There are different terms and conditions of employment where harmonisation can be used to benefit your business, such as:

• pensions
• overtime
• notice periods
• hours of work
• shift premiums
• canteen facilities
• sick pay schemes
• redundancy terms
• layoffs and short-time working
• holiday entitlements and holiday pay
• payment systems and methods of payment
• time-recording procedures, eg clocking on and off
• fringe benefits, eg health insurance, and company cars

Advantages of harmonisation

The benefits of harmonisation will vary from business to business but may include:

• improved productivity
• more efficient administration
• improved recruitment and retention of employees
• better relationships between different grades of staff

Disadvantages of harmonisation

You may encounter certain problems when introducing harmonisation to your business, such as:

• increased wages bill and pension scheme contributions
• manager and employee resistance to changes to their status or working conditions, especially if they feel they won't personally benefit
• employee management problems if traditional controls are removed, such as clocking on and off

Harmonisation following the transfer of employees into your business

If you buy another business, the rights of any employees who transfer as part of the purchase are protected under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE). Employees who transfer to your business do so with their pre-existing terms and conditions intact.

You must not change transferred employees' terms and conditions simply to harmonise them with those of your existing staff.

For more information, see responsibilities to employees if you buy or sell a business.

Introducing harmonisation

For harmonisation to succeed in your business, senior managers must be committed. Involve managers, employees, and - if applicable - workplace representatives both before you finalise any harmonisation programme and during its introduction.

Work out the costs and possible benefits of harmonisation and consider whether any of the costs will be offset by changes in working practices.

You will also need to:

• set a realistic timescale for the introduction of harmonisation
• carry out any necessary training
• monitor and maintain the changes