One of the most common questions we get is about changing an employee’s contract of employment. This process is called a contract variation, and it’s important to handle it carefully to avoid legal risks. Here are three key things to consider before making any changes:

1. Contract Terms Go Beyond What’s Written Down

Employment contracts aren’t just about what’s written on paper. Over time, certain terms can become implied through consistent practices. For example, if you’ve given an employee a bonus every year for the past five years—even though it’s not stated in their contract—that bonus could now be seen as an expected part of their employment terms. Changing or removing it without discussion could lead to legal issues.

2. Consultation Is Essential—You Can’t Just Make Changes

You cannot simply change an employee’s contract without their agreement. You must go through a consultation process, where you:

Clearly explain why the change is needed.
Listen to the employee’s concerns.
Explore ways to address those concerns and find a fair solution.

This helps maintain trust and reduces the risk of disputes. In some cases, employees may refuse the change, so negotiation is key.

3. Get It Wrong, and You Risk Serious Legal Consequences

If you don’t follow the proper process, you could face legal claims such as:

Constructive dismissal – If an employee feels forced to resign due to unfair contract changes.
Unfair dismissal – If you dismiss and rehire just to impose new terms (known as “fire and rehire”), you could be taken to an employment tribunal.

The best approach is to communicate openly, consult properly, and document everything. If you’re unsure, seeking professional HR advice can help you navigate the process smoothly.