Do You Need to Make Changes to Your Employee Contracts?

As an employer, there may be times when you need to make changes to employment contract terms. This could include changes to working hours, pay, job responsibilities, benefits, place of work or other contractual terms and conditions.

However, changing employment contracts as an employer should always be handled carefully. If changes are not managed properly, they can lead to disputes, grievances, breach of contract allegations and, in some cases, claims for constructive dismissal.

Here is a practical guide on how employers should approach changing terms and conditions of employment.

Under UK employment law, an employment contract is an agreement between the employer and employee which sets out the terms and conditions of employment. These terms may be written, verbal or implied, and they are legally binding.

The key point for employers is that they cannot usually change an employee’s contract independently without agreement, unless the contract clearly allows for the proposed change. ACAS guidance is clear that employers and employees should usually agree changes to an employment contract, and employers should consult with staff about proposed changes.

Changes to a contract can arise in a few ways.

The most straightforward way to amend an employment contract is for both parties to agree to the change. 

This is often the safest approach, particularly where the change affects important terms such as pay, working hours, job duties or benefits.

Some contracts include a variation clause, which may allow the employer to make certain changes. However, these clauses must be clear, reasonable and used carefully.

A variation clause should not be treated as a general right to impose any change the employer wants. The proposed change must still be handled fairly and in line with the contract.

In some cases, working arrangements change over time in practice. This is sometimes referred to as an implied variation.

However, relying on implied consent can be risky. For the change to be legally binding, there needs to be clear evidence that the employee has accepted the change, either verbally, in writing or through conduct.

The first step when considering employee contract changes is to explain the proposed changes clearly and consult with affected employees.

Even if the change seems reasonable or is driven by business need, employers should discuss the reasons for the proposal, what it means in practice and whether there are any concerns or alternatives.

This is particularly important where the proposed change involves:

A clear contract change consultation process can help reduce uncertainty and make it more likely that agreement can be reached.

Employers should also remember that, where agreed changes affect the written statement of employment particulars, employees must be told about the change in writing within one month.

If you are proposing a variation of employment contract terms, you should seek the employee’s consent.

It is usually best to record consent in writing, for example through a contract variation letter, a letter confirming contract changes or an updated employment contract. This helps avoid disagreement later about what was agreed.

In some circumstances, consent may be implied, for example where an employee continues working under the new terms without objection. However, this should be approached with caution, particularly where the change is significant.

If an employee refuses a contract change, the employer will need to assess the position carefully. Imposing changes without consent can create legal risk.

Possible consequences include:

If employees are unwilling to accept the proposed changes, and agreement cannot be reached, employers should consider alternatives before taking further action.

Depending on the circumstances, this may include:

Where redundancy is being considered, employers should first ensure there is a genuine redundancy situation. A desire to change contractual terms does not automatically mean redundancy applies.

Where agreement cannot be reached, some employers have historically considered dismissing employees and re-engaging them on new terms, sometimes described as “fire and rehire”. This option is about to become significantly more restricted.

From January 2027, under the Employment Rights Act 2025, it will be automatically unfair to dismiss an employee for refusing certain contractual changes, known as restricted variations. These include:

The same protection applies where an employer dismisses an employee in order to re-engage them, or to replace them with someone else, on terms that include a restricted variation.

There is a narrow exception where the employer can show the change was necessary to address financial difficulties threatening the ability to carry on the business as a going concern, and that the need for the change could not reasonably have been avoided. This is a high threshold, and employers should not assume it will be straightforward to satisfy. It is important to note that the above exception applies to companies who are not local authorities. Local authorities are dealt with separately under the legislation and have their own exceptions.

Contractual changes falling outside the restricted list are not caught by the automatic unfairness provisions, but a dismissal connected to them may still be unfair under ordinary principles, so a fair process remains essential in every case.

The practical effect is that consultation and genuine agreement will matter more than ever. Employers considering significant contract changes, particularly to pay, hours or shift patterns, should plan well ahead of January 2027 and take advice before relying on dismissal and re-engagement as a fallback. For a full overview of the changes, see our guide to the Employment Rights Act 2025.

Throughout the process, it is important to keep a clear written record.

Employers should document:

If changes are agreed, these should be clearly confirmed in writing. This can be done through an updated contract, a written statement of changes to an employment contract letter, or a separate letter of variation employment contract document.

Special care is needed where terms are governed by a collective agreement.

If your business has a recognised trade union, or terms have been negotiated collectively, changes may require consultation or negotiation with trade union representatives. Employers should check what process is required under the terms of the collective agreement before making any unilateral changes.

Failure to follow collective bargaining arrangements may create additional legal and employee relations risk.

Making changes to an employee’s contract should never be taken lightly. While businesses often need to adapt to changing circumstances, employers must ensure that any modifications comply with the law and respect employee rights.

Open communication, proper consultation, employee consent and clear documentation are key to reducing the risk of legal complications.

If you are unsure how to proceed, or if employees are refusing changes to employment contract terms, it is sensible to seek advice from an employment solicitor.

At Franklins Solicitors, our Employment Law team advises employers on amending employment contracts, managing consultation and reducing the legal risks of contract changes. If you are an employer looking to amend employment contracts and need expert advice, please get in touch.

Last reviewed: 29 July 2026. This article reflects the law as at that date, including changes introduced by the Employment Rights Act 2025 that are due to take effect in January 2027. Employment law is subject to ongoing change, and this article is general guidance rather than legal advice. For advice on your circumstances, please contact our Employment Law team.