Employee Refuses Contract Changes: What Can an Employer Do?

Employee refuses contract changes is a difficult situation for any employer, especially where the proposed change is important for the business.

Employment contracts are legally binding agreements. In most cases, an employer cannot simply change contractual terms because it would be more convenient for the business. Changes usually need agreement between employer and employee.

That does not mean an employer has no options if an employee refuses a proposed change. It does mean the employer needs to handle the situation carefully, consult properly and consider the legal risks before deciding what to do next.

Why might an employee refuse contract changes?

An employee may refuse contract changes for many reasons. The proposed change may affect their pay, hours, duties, place of work, benefits, seniority or working pattern.

Common examples include:

• a reduction in pay or benefits
• a change to working hours
• a change to shift patterns
• a move to a different workplace
• a change to duties or reporting lines
• new flexibility or mobility clauses
• a change to bonus or commission terms
• changes linked to hybrid or remote working

Employers should avoid assuming that the employee is simply being difficult. The objection may reveal a practical problem, a family issue, a disability concern, a childcare problem, or a misunderstanding about what the change actually means.

Start by checking the existing contract

Before responding, the employer should check the current contract carefully. The contract may contain clauses about duties, working hours, location, flexibility, mobility or business reorganisation.

However, flexibility clauses should be treated with care. A clause that appears to allow some flexibility does not give the employer unlimited power to change terms. Acas guidance says employers should use flexibility clauses reasonably and follow proper steps when changing employment contracts.

If the existing wording is unclear or outdated, the employer should be cautious before relying on it.

Employers reviewing the starting position may need advice on contracts of employment.

Consult before making decisions

If an employee refuses contract changes, consultation should usually continue. Government guidance says employers should consult or negotiate with employees or their representatives, explain the reasons for the changes and listen to alternative ideas.

Consultation should be genuine. The employee should understand what change is proposed, why it is being proposed, when it would take effect and what the business impact is if agreement cannot be reached.

The employer should listen to the employee’s concerns and consider whether there is another way to solve the problem. A rushed or predetermined process can increase the risk of grievances or claims.

Consider alternatives and compromises

Where agreement is difficult, employers should consider alternatives before taking more serious steps. This can help resolve the issue and show that the employer acted reasonably.

Possible alternatives may include:

• a phased introduction of the change
• a trial period
• a temporary arrangement
• a different working pattern
• adjusted duties
• additional support or training
• a longer notice period before the change starts
• a different solution for employees with specific difficulties

Employers should keep written records of the proposals, discussions and reasons for rejecting or accepting alternatives.

Can an employer impose contract changes?

Imposing contract changes without agreement is risky. The employee may object, continue working under protest, raise a grievance, claim breach of contract, claim unlawful deductions from wages, or resign and claim constructive dismissal.

The risk is higher where the change affects important terms such as pay, hours, location, duties or benefits.

If an employer decides to impose a change, it should understand the legal and practical consequences first. It should also be able to show a clear business reason, proper consultation and consideration of alternatives.

What about dismissal and re-engagement?

If agreement cannot be reached, some employers consider ending the existing contract and offering re-engagement on new terms. This is often called dismissal and re-engagement, or “fire and rehire”.

This should be treated as a serious last resort. Acas says employers should avoid fire and rehire and must consult before dismissal. Government guidance also warns that employees may be able to bring claims such as breach of contract or unfair dismissal if they are dismissed and re-employed on new terms.

Before considering this route, employers should take legal advice. The process, business reason, consultation, notice, fairness and potential collective consultation issues all need careful consideration.

Watch for discrimination risks when employee refuses contract changes

Contract changes can affect employees differently. A change to working hours, location or shift patterns may create particular problems for employees with childcare responsibilities, disabled employees, pregnant employees, older workers or employees with religious commitments.

That does not mean changes can never be made. It does mean employers should consider whether the change creates a particular disadvantage for some employees and whether adjustments or alternatives should be considered.

A failure to consider these issues can increase the risk of discrimination complaints as well as contract-related claims.

Put any agreed change in writing

If agreement is reached, the change should be confirmed clearly in writing. Where a change affects the employee’s main written terms, it should be put in writing within one month of the change.

The written confirmation should usually explain:

• what term is changing
• when the change starts
• whether the change is permanent or temporary
• any review date
• any effect on pay, hours, duties or benefits
• that other terms remain unchanged unless varied

A contract variation letter or updated contract can help avoid later disputes about what was agreed.

Practical steps for employers when employee refuses contract changes

If an employee refuses contract changes, employers should usually:

• check the existing contract
• identify the business reason for the change
• consult properly with the employee
• listen to objections and alternative suggestions
• consider compromises or trial arrangements
• keep written records
• consider discrimination and employee relations risks
• confirm any agreed change in writing
• take advice before imposing changes or considering dismissal and re-engagement

Getting the next step right

When an employee refuses contract changes, the worst response is to rush. A careful process can often lead to agreement or a workable compromise. Even where agreement cannot be reached, consultation and proper records can put the employer in a stronger position.

EBS Law advises employers on changing contracts, contract variation letters, employee objections and practical steps to reduce legal risk. If you are dealing with resistance to proposed contract changes, taking advice early can help avoid costly disputes.

For practical help with employee contract changes, 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.