Contract Variation Letter: What Employers Should Include

A contract variation letter helps employers record agreed changes to an employee’s contract clearly, accurately and in writing.

Employment contracts are legally binding agreements. They set out important terms such as pay, working hours, duties, notice, benefits and place of work. If those terms change, the change should usually be confirmed in writing so that both employer and employee understand what has been agreed.

A contract variation letter is commonly used where the employer and employee have agreed a specific change but the employer does not need to issue a completely new contract. It can be a practical way to update the written record while keeping the existing contract in place.

When should employers use a contract variation letter?

Employers should consider using a contract variation letter when there is a change to the employee’s contractual terms. This may include changes to pay, hours, duties, job title, workplace location, working pattern or benefits.

Common examples include:

• a change to working hours
• a change to pay or salary
• a change to job title or duties
• a move to hybrid or remote working
• a change to place of work
• a change to bonus, commission or overtime arrangements
• a temporary or permanent reduction in hours
• a flexible working arrangement
• a change following promotion or restructure

The letter should not be treated as a shortcut to impose changes without agreement. In most cases, employment contract changes should be agreed between employer and employee before the variation is confirmed.

Why written confirmation matters

Written confirmation matters because disputes often arise when contract changes are discussed informally but not properly recorded.

An employee may later say they agreed only to a temporary change. A manager may believe the change was permanent. There may be disagreement about pay, hours, start date, location or whether other terms were affected.

A clear contract variation letter helps reduce that risk. It creates a written record of the change and gives both sides something definite to refer back to.

Where a change affects the employee’s main written terms, the employer must put the change in writing within one month of the change. Acas also recommends putting contract changes in writing so there is less chance of misunderstandings or disagreements.

What a contract variation letter should include

A contract variation letter should be specific. It should not use vague wording that leaves the employee unsure what has changed.

The letter should usually include:

• the employee’s name and job title
• the date of the letter
• the term being changed
• the previous term, where useful
• the new agreed term
• the date the change takes effect
• whether the change is permanent or temporary
• any review date
• whether any other contract terms are affected
• space for the employee to confirm agreement

The letter should also say that all other terms of employment remain unchanged unless specifically varied by the letter. This helps avoid arguments that other parts of the contract have been altered by implication.

Confirming the reason for the change

It is often helpful to include a short explanation of the reason for the change. This does not need to be long, but it should be accurate.

For example, the letter may explain that the change follows a flexible working request, a promotion, a restructure, a change in working pattern, or agreement reached during consultation.

The reason can be important if the change is later questioned. It helps show that the change was not accidental and that the employer had a clear business or practical reason for updating the contract.

Recording employee agreement

A contract variation letter should normally ask the employee to confirm agreement. This can be done by signing and returning a copy, replying by email, or using another clear written acceptance process.

Employers should not assume that silence always means agreement. In some situations, an employee may continue working but object to the change or work under protest. That can create uncertainty and potential legal risk.

Where the change is significant, employers should make sure the employee has had a proper opportunity to consider the proposal and ask questions before signing.

Temporary and trial changes

Some contract changes are temporary or subject to a trial period. This should be made clear in the contract variation letter.

For example, an employer may agree a temporary change to working hours, a trial period for hybrid working, or a temporary change in duties during a busy period.

The letter should state:

• whether the change is temporary
• when the temporary arrangement starts
• when it ends or will be reviewed
• what happens at the end of the trial period
• whether the employee returns to previous terms if the trial is not extended

Without this detail, a temporary arrangement can become unclear. The employee may later argue that the change became permanent, while the employer may believe it was only a short-term arrangement.

Pay, hours and benefits

Changes to pay, hours and benefits need particular care. They are often central contractual terms and can have a significant effect on the employee.

If pay is changing, the letter should state the new salary or hourly rate, the date it applies from, and whether any other payments are affected. Maybe hours are changing in which case the letter should set out the new working pattern clearly.

If benefits are changing, the employer should explain exactly what is changing and whether the benefit is contractual or discretionary. Vague wording can cause disputes later.

Employers should take extra care before reducing pay, removing benefits or changing hours in a way that disadvantages the employee. These changes should not be imposed without proper consultation and agreement.

Location and hybrid working changes

A contract variation letter can also be useful where an employee’s place of work changes or where hybrid working is agreed.

The letter should explain the employee’s normal place of work and, where relevant, the expected balance between office and homeworking. It may also refer to any remote working or hybrid working policy in the employment handbook.

For hybrid arrangements, the letter may need to cover:

• how many days the employee works from home
• which days are normally office days
• whether the employer can require office attendance
• equipment and expenses
• confidentiality and data security expectations
• whether the arrangement is permanent, temporary or trial-based

Where hybrid working follows a flexible working request, the letter should match the decision given to the employee.

Contract variation letter after consultation

Where changes affect several employees, a contract variation letter may be used after consultation has taken place and agreement has been reached.

The letter should reflect the final agreed position, not just the employer’s original proposal. If the proposal changed during consultation, the letter should record the actual terms being agreed.

Employers should keep records of the consultation process separately. The variation letter is not a substitute for proper consultation where consultation is needed.

What if the employee refuses to sign?

If an employee refuses to sign a contract variation letter, the employer should not ignore the refusal. The next step depends on the nature of the change, the business reason, the employee’s objections and whether further consultation may resolve the issue.

The employer may need to discuss the concerns, consider alternatives, offer a trial period, modify the proposal or take legal advice.

Imposing a contractual change without agreement can create legal risk. The employee may object, work under protest, claim breach of contract, resign and claim constructive dismissal, or bring other claims depending on the circumstances.

Dismissal and re-engagement should be treated as a serious last resort, not a routine way to change terms.

How a contract variation letter links to the employment contract

A contract variation letter should work alongside the existing employment contract. It should not create confusion about which terms still apply.

The letter should usually state that, except for the specific changes set out in the letter, the employee’s existing terms and conditions remain unchanged.

This is important because a badly drafted variation letter can accidentally create uncertainty. For example, if the letter updates pay but says nothing about bonus arrangements, overtime or benefits, the employer should be clear that those other terms remain as they were unless expressly changed.

Employers reviewing wider terms may also need advice on contracts of employment and changing contracts of employment.

Practical checklist for employers

Before issuing a contract variation letter, employers should ask:

• Has the change been properly discussed or consulted on?
• Has the employee agreed to the change?
• Is the change temporary, permanent or trial-based?
• Does the letter clearly identify the term being changed?
• Does the letter say when the change starts?
• Does the letter explain whether other terms remain unchanged?
• Is employee acceptance being recorded clearly?
• Are related policies or handbook provisions also up to date?
• Could the change create discrimination or employee relations risks?
• Should legal advice be taken before the letter is issued?

Getting contract variation letters right

A contract variation letter is a useful document, but only if it accurately records an agreed change. It should not be used to paper over a weak process or impose changes without proper consultation.

For employers, the safest approach is to identify the business reason, consult where needed, seek agreement, and then confirm the agreed change clearly in writing.

EBS Law advises employers on employment contracts, contract variation letters, changing employment terms and workplace documentation. If you need to update employment terms or record agreed changes properly, taking advice early can help reduce the risk of disputes later.

For practical help recording changes to employment terms, visit our changing contracts of employment page. For wider support, EBS Law also provides employment law advice for employers across a full range of workplace issues.