Variation to contract clause

It is normal for the written statement of the main terms and conditions to be varied from time to time.

Sometimes a variation of terms is clear and non-contentious (i.e. a pay increase, a change to working hours, job promotion etc).

Terms and conditions may also be varied through consultation, or custom and practice.

It is important to remember that if an employee has been transferred into an organisation under the Transfer of Undertakings (Protection of Employment) Regulations, the employer will only be able to vary the terms and conditions if there is an ‘economic, technical or organisational’ reason.

Variation by consultation

Occasionally it might be necessary for the employer to consult over changes to terms and conditions.

All contracts should include a 'Variation to Contract' clause stipulating the terms under which the contract can be altered. It should reserve the right of the employer to vary the contract, following consultation, for business or other substantial reasons (for example to avoid staff redundancy or assure financial viability).

Employers should be aware however, that it is unlawful to make a unilateral change to an employee’s contract of employment.

Therefore, a variation to a contract without an employee's consent may constitute a breach of contract, and should be introduced only after consultation and contractual notice has been given.

In the event an employee does not agree to the change following consultation, an employer will need to follow a process of ending the employee’s current contract of employment and offering immediate re-engagement on the new terms.

Care should be taken as the employee with the requisite continuous service, may have grounds for an unfair dismissal claim in these circumstances.

Variation by custom and practice

Over the course of the working relationship, terms and conditions might be made to the contract by a process called ‘custom and practice’. This is where the written statement may state one thing, but the reality, established over time, demonstrates a different situation.

An example would be where the written statement of particulars states that there is no entitlement to sick pay (beyond any statutory sick pay) but the reality is that the employee has received full pay for periods of sickness over the previous two years.