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Start a free trialAs the employer, you’re responsible if anything needs changing in your employee contracts. But do you know how to do that?
While you can propose a change of employment contract, any and all alterations must be agreed to by your employee before they can happen (otherwise there are steps you legally have to take). As a startup small business, you may not have any prior experience of this, so we’ve put this guide together to help you out.
In consultation with one of our most experienced and qualified HR experts, Alisa Mistry, we’ve collated everything you need to know about a change of employment contract in one place (including all of the legal implications and best practice).
Let’s start with the basics and take it from there…
A change of employment contract is when anything in an employee’s contract is altered. This can include but is not limited to:
For employers, making a formal change of employment contract ensures legal clarity and consistency, and reduces the risk of future misunderstandings or disputes.
For employees, a change of employment contract provides transparency — helping them understand what’s expected of them and what they’re entitled to.
In short, confirming contractual changes in writing protects both parties.
Yes, a change of employment contract is possible.
Legally, it depends on whether the contractual change is agreed to by the employee. For example:
If the employee still doesn’t agree, and the proposed change of employment contract is reasonable and necessary, a ‘fire and rehire’ approach (terminating the existing contract and offering re-employment under the new terms) could be considered. But this is highly controversial, and carries legal and reputational risks (and may soon be outlawed altogether, check our employment law updates blog for 2025 and 2026 for more information).
There are all sorts of reasons why a change of employment contract might be proposed. Here are five questions you might ask yourself as an employer:
Reducing an employee’s hours or salary is considered a detrimental change and requires formal consultation. If the employee doesn’t agree, forcing the change of employment contract can be risky. In cases of financial hardship, you may need to explore alternative options such as redundancies or temporary lay-offs.
If a restructure or redundancy changes roles, responsibilities or lines of reporting, you’ll need to update job descriptions and ensure your employment contracts reflect all new arrangements. Clear documentation is important for protecting your business and your employees.
Minor changes that fall within the scope of the existing contract and its flexibility clauses usually don’t require a full rewrite. But if the role or responsibilities change significantly, a consultation and a formal change to the contractual terms is required.
You should always confirm any new employment terms in writing. A simple change of terms or amendment letter is often sufficient, but it’s practical to issue a new employment contract if multiple terms change.
If an employee continues working under new terms without objecting, it could indicate implied acceptance and the changes may then be enforceable. But to avoid ambiguity, it’s always best practice to get the change of employment contract down in writing.
If you’d like to talk through any of these questions in more depth, check out our HR advice service. It’s for anyone who looks after people at a small company or startup.
If an employee agrees to a change of employment contract, the risk is generally low — especially if everything is clearly documented.
But if an employee does not agree to a change, there are several legal risks all employers should be aware of:
If you impose a change of employment contract without agreement and your employee resigns as a result, they could claim constructive dismissal.
If you pursue a fire and rehire approach to enforce a change of employment contract, your employee could claim unfair dismissal (especially if the process isn’t handled fairly).
If a change of employment contract negatively affects anyone with protected characteristics (part time workers, disabled employees or working parents, for example), you risk a claim of indirect discrimination.
Even where these legal risks are managed, the poor handling of a change of employment contract could permanently damage levels of engagement and trust.
If your employee agrees to a change of employment contract — great! You should confirm the new terms in writing through a change to terms letter or an updated employment contract, and ideally have the employee sign to acknowledge the change.
If your employee disagrees with a change of employment contract, things are more complex. Firstly, you’ll need to follow a formal consultation process to try to reach an agreement. If the employee still doesn’t agree, and the change is essential and reasonable for business needs, you may need to consider:
No matter how your employee reacts to a change of employment contract, it's crucial to handle the process with care and document everything properly — as even with consultation, there’s the risk of constructive or unfair dismissal.
Changing an employee’s contract may be necessary, but it must always be handled professionally and carefully to reduce risk and maintain trust.
Here’s some best practice advice from one of our HR experts at Charlie, Alisa Mistry:
Set out the reason for the change of employment contract — restructuring, financial necessity, or role evolution — and ensure it’s well-documented.
The proposed change of employment contract should be fair, proportionate and justifiable. Take some time to consider how the change could impact your employee and whether there’s an alternative.
Legally and ethically, you should consult with employees before any change of employment contract. Share your rationale, listen to any concerns, and always aim for agreement.
Use clear, open, and timely communication throughout the change of employment contract process. Uncertainty breeds distrust, but clarity will encourage people.
Once agreed, confirm the change of employment contract in writing with a variation letter or updated contract, and have your employee acknowledge and sign it.
Even if a change of employment contract feels urgent, rushing increases the associated risks (employee disengagement, legal challenges etc.). Take the time to do it properly and professionally.
If a change of employment contract is significant or contentious, seeking professional advice can prove invaluable. At Charlie, we have an HR Advice service especially for small businesses and startups — we can talk you through the complexities of any change and help to upgrade your policies and employment contracts.
Yes, an employee can refuse a change of employment contract, especially a significant one. If the change is fairly minor (a change in line manager, for example) you should be able to proceed and simply inform your employee. But it’s always best practice to consult and communicate, so make it a habit for every contractual change — however small.
Absolutely. Employees can request a change of employment contract — most commonly to their working hours or days. Changes are typically through a formal flexible working request, which needs to be submitted in writing to their manager. Employers should then consider the request change of employment contract fairly and follow a proper process.
If you're only changing a few terms, a variation to contract letter is usually sufficient. But if multiple terms are being added or updated, it’s probably clearer and more practical to issue a new employment contract.
How much notice depends on the terms in the existing contract. Legally, any change to the key terms of employment must be confirmed in writing within one month. Best practice is to always provide as much reasonable notice as possible, and consult with your employee before the change of employment contract is made.
This article is for general guidance only and does not constitute legal advice. For specific cases, we recommend consulting a qualified HR expert such as our HR advisors.
