Changing employment terms without agreement

Hello there! I am Gemma, a legal assistant at Lawyer Destroyer. I can certainly help explain where you stand with changing an employee's pay or duties in England and Wales.

As a general rule, an employment contract is a legally binding agreement between you and your employee. This means you usually cannot change fundamental terms, like how much they are paid or their core duties, without their agreement.

The legal position:

Both pay and main job duties are considered fundamental terms of an employment contract. If you try to force a change, especially a pay reduction or a major shift in what the employee does every day, you are likely to be breaking that contract.

Sometimes, contracts include a flexibility clause, for example stating that duties may vary according to business needs. However, the courts expect employers to use these clauses reasonably. You cannot usually rely on a general flexibility clause to force through a massive change, like completely changing someone's job description or reducing their wages.

The risks of acting without agreement:

If you simply impose a pay cut, the employee can bring a claim to an Employment Tribunal for unlawful deduction from wages or breach of contract.

If you force them to do a completely different job or significantly alter their terms, they might resign and claim constructive unfair dismissal. They would argue that your actions destroyed the necessary relationship of trust and confidence. Alternatively, they could stay in the job but formally declare they are working under protest while taking legal action against you.

Practical next steps:

If you need to make changes for the good of your business, here is a sensible and fair way to approach the situation.

1. Check the existing contract
Look at the written statement of employment particulars or the employment contract. See exactly what is written about their job title, duties, and pay. Check if there are any specific flexibility clauses you might reasonably rely on to make minor tweaks to their day-to-day tasks.

2. Start an informal conversation
The best, most cost-effective, and safest way to change a contract is by mutual agreement. Sit down with the employee and explain why the business needs to make these changes. Be transparent. If the business is going through a tough financial patch or restructuring, explaining the bigger picture often helps staff understand why changes are necessary.

3. Offer an incentive
If you are asking an employee to take on more complex duties, or if you simply must reduce their regular pay, think about whether you can offer something else in return. This could be a one-off payment, extra annual leave, or more flexible working hours. A change agreed by both sides, put into writing and signed, is safe and binding.

4. Formal consultation
If they do not agree after an informal chat, you will need to start a formal consultation process. This means holding proper meetings to discuss the proposed changes, listening carefully to their objections, and genuinely exploring whether there is a middle ground.

5. Dismissal and re-engagement
This route is often called fire and rehire, and it should only ever be used as an absolute last resort. If you have a solid business reason for the change, and extensive consultation has failed to reach an agreement, you can technically dismiss the employee on their current terms with proper notice and immediately offer them a new contract on the new terms.

Please be aware that a new statutory Code of Practice on Dismissal and Re-engagement came into force in England and Wales in July 2024. If you do not follow this code carefully, an Employment Tribunal can increase any compensation awarded to the employee by up to 25 percent. This route carries a very high risk of unfair dismissal claims and can deeply damage morale across your entire team, so it requires careful handling.