Employment Contract Review: When Should Employers Update Written Terms?

Employment contract review is important because written terms can quickly become out of date as roles, working patterns, pay arrangements and business needs change.

An employment contract is not just a document produced when someone starts work. It records important terms such as pay, hours, duties, notice, place of work, benefits and other obligations. If those written terms no longer reflect the real working arrangement, the employer may be storing up problems.

For employers, reviewing employment contracts regularly can help reduce disputes, improve clarity and make it easier to manage workplace changes lawfully. It also helps ensure that employees and managers understand what has actually been agreed.

Why employment contract review matters

Employment contracts set out the rights and responsibilities of both employer and employee. Government guidance explains that employees and employers must stick to the contract until it ends or until the terms are changed, usually by agreement.

If the written contract is old, vague or inconsistent with what happens in practice, it may be harder for the employer to rely on it. Problems can arise when the employer wants to change duties, move staff, alter hours, manage notice periods, enforce restrictions or resolve disputes.

An employment contract review helps employers identify gaps before those gaps become serious problems.

When should employers review employment contracts?

Employers should review employment contracts whenever there is a significant change affecting the working relationship. Waiting until a dispute has already started is not ideal.

Common times to review contracts include:

• when a new employee joins the business
• when an employee is promoted
• when duties or responsibilities change
• when pay, commission or bonus arrangements change
• when working hours or shift patterns change
• when remote, hybrid or flexible working arrangements are introduced
• when employees move to a different workplace
• when new benefits are added or removed
• after a business restructure
• after a TUPE transfer or business acquisition
• when employment law changes affect written terms

Employers should also review contracts periodically even if there has not been one obvious change. For many businesses, a review every year or two is sensible, especially if the business has grown or changed quickly.

Reviewing written terms after role changes

One of the most common reasons for employment contract review is a change in role. An employee may have started in one position but gradually taken on different duties, management responsibilities or specialist work.

If the contract still describes the old role, there may be uncertainty about what the employee is required to do. This can make performance management, disciplinary action, redundancy selection and restructuring more difficult.

Employers should check whether the job title, duties, reporting line and place of work remain accurate. Where the role has changed significantly, the employer should confirm the updated terms in writing.

Pay, benefits and bonus arrangements

Pay and benefits should be clear. Disputes often arise where a bonus, commission scheme, overtime arrangement or allowance has been discussed informally but not properly recorded.

An employment contract review should check whether the contract accurately records:

• basic pay
• hours of work
• overtime arrangements
• commission or bonus terms
• pension arrangements
• company car or car allowance terms
• private medical insurance or other benefits
• sick pay terms

If a benefit is discretionary, the contract should say so clearly. Maybe a scheme is subject to separate rules in which case the contract should explain where those rules can be found.

Hybrid working and flexible working arrangements

Many employment contracts were written before hybrid working became common. If employees now work from home regularly, the contract may need to be reviewed.

Employers should check whether the contract deals properly with place of work, homeworking expectations, equipment, confidentiality, data protection, health and safety, expenses and the right to require office attendance.

Where a flexible working request has been accepted and the change is permanent, the employer should consider whether the contract needs updating. This is particularly important where hours, working days or place of work have changed.

Employers may also need a clear employment handbook or workplace policy to support the contract.

Changes to written terms must be recorded

If changes are made to an employee’s main written terms, the employer must put the change in writing within one month of the change. This can be done by letter, email, contract variation letter or updated contract.

This is one reason why employment contract review is so important. A business may have changed the way someone works but failed to record that change properly.

Written confirmation helps avoid uncertainty. It should normally explain what has changed, when the change takes effect, whether it is permanent or temporary, and whether any other terms are affected.

Outdated clauses can create problems

Old employment contracts often contain clauses that are unclear, badly drafted or no longer suitable for the business. They may refer to old policies, old job structures, old offices or benefits that no longer exist.

An employment contract review should check whether the contract still works in practice. Particular attention should be given to:

• probationary periods
• notice clauses
• disciplinary and grievance wording
• holiday provisions
• sickness absence and sick pay terms
• confidentiality clauses
• intellectual property clauses
• restrictive covenants
• mobility clauses
• flexibility clauses

Employers should be especially careful with flexibility clauses. Acas guidance says flexibility clauses should be used reasonably. They should not be treated as a free pass to make any change the employer wants.

Contract review before changing employment terms

Before changing employment terms, employers should review the existing contract carefully. The contract may already allow some flexibility, or it may require employee agreement before changes can be made.

A contract review can help the employer understand the starting position before consulting with employees. It can also help identify whether the proposed change affects contractual terms, workplace policies, or both.

For significant changes, employers should take advice before imposing new terms or asking employees to sign updated contracts.

For more detailed support, see EBS Law’s advice on changing contracts of employment.

Reviewing contracts across the workforce

Some employers have several different versions of employment contracts in use. This often happens where the business has grown over time, acquired another business or copied old contracts for new starters.

This can create inconsistent terms between employees doing similar work. In some cases, the inconsistency may be justified. In others, it may create confusion or employee relations problems.

An employment contract review across the workforce can help identify:

• different notice periods
• inconsistent sick pay terms
• different holiday wording
• unclear bonus arrangements
• missing confidentiality clauses
• outdated place of work clauses
• inconsistent disciplinary wording
• old or unsuitable restrictive covenants

Employers should not simply standardise contracts without proper consultation and agreement where terms are being changed. However, identifying inconsistencies is a useful first step.

Employment contract review and workplace policies

Not everything needs to be in the employment contract itself. Some workplace rules are better placed in an employment handbook or separate policies.

The contract should contain the key contractual terms. Policies can then explain procedures such as sickness absence, disciplinary rules, grievance handling, flexible working, remote working, health and safety and data protection.

Employers should review contracts and policies together. If the contract says one thing and the handbook says another, confusion is likely.

Clear separation between contractual terms and non-contractual policies can make future updates easier, provided the documents are drafted properly.

Practical employment contract review checklist

When reviewing written terms, employers should ask:

• Does the contract match the employee’s current role?
• Are pay, hours and benefits recorded accurately?
• Is the place of work still correct?
• Does the contract deal with hybrid or remote working where needed?
• Are notice periods clear?
• Are sickness, holiday and absence terms accurate?
• Are confidentiality and data protection obligations suitable?
• Are restrictive covenants still appropriate and reasonable?
• Do policies and the handbook match the contract?
• Have recent changes been confirmed in writing?

This checklist can help employers identify whether contracts need updating, whether a variation letter is enough, or whether a wider contract review is needed.

Getting employment contracts right

An employment contract review is a practical way for employers to reduce risk. It helps ensure that written terms reflect the real working arrangement and that employees understand their rights and obligations.

Outdated contracts can create avoidable disputes. Clear, accurate and up-to-date written terms make it easier to manage staff, introduce changes and deal with problems when they arise.

EBS Law advises employers on contracts of employment, changing employment terms, employment handbooks and workplace policies. If your contracts are out of date or no longer match how your business operates, a review can help put the right documents in place.

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