11 Jan Amending an Employment Contract
Amending Contracts: In a recent post, we looked at employees’ options when they are confronted with changes to the nature of their employment. As discussed, there are many reasons why an employer may need to modify the terms of an employee’s contract or make changes to various aspects of their day-to-day work such as changes in the economy, employees going on leave etc.
However, just because an employer wishes to make changes to one of their employee’s contracts does not mean they can do so on a whim. Indeed, if an employer fails to properly implement changes to an employee’s contract, they risk being sued for constructive dismissal and liable for damages.
How to make amendments to an employee’s contract
There are two proper ways in which to make changes to your employee’s contract:
- Work with your employee
Come together with your employee to reach an agreement to amend their employment contract. Working with your employee to amend their employment contract will require that you give them due consideration – something of value – for these changes. This may, for example, take the form of a raise or a signing bonus.
You should obtain your employee’s written consent to all changes. What’s more, your employee should be given adequate opportunity to review (and seek legal counsel on) the new contract.
- Terminate your employee with proper notice and then offer them the revised contract
As demonstrated by the landmark case of Wronko v. Western Inventory, this approach can be risky. If you choose this approach you must inform your employee that the changes to their employment contract are mandatory and that their current employment will not continue at the end of the notice period. If your employee rejects these changes you may terminate them after appropriate notice and then offer them reemployment under the new contract terms.
It is then absolutely essential that you provide reasonable notice (equivalent to their common law entitlements were they to be terminated). You may not make any fundamental changes to their employment during their notice period.
Adjusting Employment Duties
Sometimes, the changes you need to make to an employee’s duties may not require a complete overhaul of their employment contract. Some minor adjustments to an employee’s duties can be made without their consultation or an amendment to their employment contract.
Below are some things to consider when adjusting an employee’s duties without amending their contract:
- Why you are making the change? Are there legitimate business concerns?
- What are the terms of their employment contract in terms of its actual words as well as the purpose of their employment?
- Never set your employee up for failure or embarrassment. Do not set them up to feel demeaned or incapable based on unreasonable or too simple requirements
Consult with an expert
You should always consult with an employment lawyer before making any changes to the nature of an employee’s work or contract. Overstepping is easy to do and can result in substantial expenses to you and your business should your employee sue for constructive dismissal.