Updating the Employment Contract


Our employment contracts have not been updated for at least 15 years, should we update our employment contract? If so how do we change them?
It would be sensible to review your employment contract and amend them in light of the changes that have arisen in employment law over the last 15 years, to ensure they are compliant with legislation.

Some terms within the contract can be changed without the agreement of the employee. For example the holiday term in your old contract may not provide minimum holidays. However due to legislation changes all employees are entitled to a minimum holiday entitlement.  

Initially you will be required to read your employment contract and then review the existing contract to identify what changes may need to be made. This can be quite a time consuming exercise and unfortunately if you are not aware of the law surrounding employment rights you are unlikely to know what changes need to be made.

To quote Donald Rumsfeld

There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. But there are also unknown unknowns. There are things we don't know we don't know.

Changes with Agreement
If you decide to press on and you are confident that there are no ‘unknown unknowns’, and having identified the terms you would like to amend, and the reasons for these changes, you should discuss and agree the changes with your employees.

Unilateral Changes
If you are unable to agree the changes with employees you could make changes unilaterally. However even if there is a pressing business need to impose the changes, unilaterally changing the contract is not without risk. The employee’s silence when the ‘new’ contract is issued cannot be taken as acceptance if the term does not affect the employee at the time the contract was changed.

The employee may choose instead to continue to work, but do so under protest and bring an action for breach of the existing employment contract. Where the employee believes the breach of contract is a fundamental breach, he or she may resign and bring a claim for constructive unfair dismissal and/or wrongful dismissal.

Clearly such a situation can lead to breakdown in the working relationship and efficiencies are likely to fall resulting in a reduction in profitability so care should be taken.

Terminate the employee’s contract and offer them re-engagement
If there are sound business reasons, an employer may consider this option where changes cannot be agreed and where it appears too risky to impose the changes unilaterally.

The employer must give the correct notice period to the employees and then offer re-engagement on the new contract terms immediately. Employers should be aware that this may be considered to be a redundancy dismissal, therefore any rules around collective redundancy and consultation time limits should be observed. This course of action is not without risk: the employee may claim breach of contract. And even if the employee does not claim breach of contract, they might still be able to claim unfair dismissal, although any compensation will be limited as the employer is offering re-engagement.

RML Employment Contract Free to Members
This all may sound quite difficult and time consuming however if you subscribe to RML’s Legal Service or the RML HR Service simply request a copy of the RML employment contract. The employment contract has been written specifically for the Motor Industry and can be altered to meet your requirements.

Once you have a copy of the contract ask your employees to read the proposed contract and make any suggestions. These suggestions if reasonable can be incorporated into the contract. Once the contract is agreed, RML will insert all your confidential employee details and email an electronic version of the completed individual contract to you for printing and distribution to your employee