Variations to contracts
General:
An employer cannot change or vary the terms of an employee’s contract unless there is agreement to the changes
between both parties.
Other elements of a valid contract must also be present.
Is it a contractual term? (Employer may try argue it is not a contractual term therefore it can be varied and do not need
employees consent to do so)
However, an employer can potentially change/vary by:
1. Mutual agreement
2. If there is a pre-existing flexibility clause in the employee’s contract
3. Dismiss the employee and re-engage them on new terms (complying with notice period/ not dismissing
unfairly/wrongfully)
4. Enforcing the change / variation
Is there mutual agreement?
Is there contractual flexibility?
Could employer dismiss and re-engage? Potentially – but risk of unfair dismissal or wrongful dismissal claims.
Enforce the change? An option – but will give rise to claims (WD / UD?)
Contractual flexibility:
Flexibility clauses purport to allow the employer to vary some terms of the employment contract without needing the
consent of the employee.
However, the court apply this rule narrowly and apply the case of D’Silva – the flexibility clause must be clear and
unambiguous to be relied on. It must also be fair and not oppressive.
Is there a flexibility clause?
Is it clear and unambiguous?
Is it fair?
However, even if there is a flexibility clause, changing the contract without consulting the employee first may result in a
breach of duty of mutual trust and confidence (WD).
Was there a breach of trust and confidence? = repudiatory breach = WD.
If there is no flexibility clause then changing the contract will = breach of employment contract = repudiatory = WD.
Options for the employee when variation occurs:
1. Agree to variation – either expressly or continue working without protest (affirming the ‘new’ contract)
2. Resign – state employee is constructively dismissed = Unfair dismissal and Wrongful dismissal claims would
arise.
3. Refuse the changes and work under protest to not affirm the changes – see if employer moves / begin a claim.
NOTE: if a new contract is made / variations are made – a new contract is effectively made
and so the employer will need to comply with s1 EA and be given to the employee in writing
within one month.
1
General:
An employer cannot change or vary the terms of an employee’s contract unless there is agreement to the changes
between both parties.
Other elements of a valid contract must also be present.
Is it a contractual term? (Employer may try argue it is not a contractual term therefore it can be varied and do not need
employees consent to do so)
However, an employer can potentially change/vary by:
1. Mutual agreement
2. If there is a pre-existing flexibility clause in the employee’s contract
3. Dismiss the employee and re-engage them on new terms (complying with notice period/ not dismissing
unfairly/wrongfully)
4. Enforcing the change / variation
Is there mutual agreement?
Is there contractual flexibility?
Could employer dismiss and re-engage? Potentially – but risk of unfair dismissal or wrongful dismissal claims.
Enforce the change? An option – but will give rise to claims (WD / UD?)
Contractual flexibility:
Flexibility clauses purport to allow the employer to vary some terms of the employment contract without needing the
consent of the employee.
However, the court apply this rule narrowly and apply the case of D’Silva – the flexibility clause must be clear and
unambiguous to be relied on. It must also be fair and not oppressive.
Is there a flexibility clause?
Is it clear and unambiguous?
Is it fair?
However, even if there is a flexibility clause, changing the contract without consulting the employee first may result in a
breach of duty of mutual trust and confidence (WD).
Was there a breach of trust and confidence? = repudiatory breach = WD.
If there is no flexibility clause then changing the contract will = breach of employment contract = repudiatory = WD.
Options for the employee when variation occurs:
1. Agree to variation – either expressly or continue working without protest (affirming the ‘new’ contract)
2. Resign – state employee is constructively dismissed = Unfair dismissal and Wrongful dismissal claims would
arise.
3. Refuse the changes and work under protest to not affirm the changes – see if employer moves / begin a claim.
NOTE: if a new contract is made / variations are made – a new contract is effectively made
and so the employer will need to comply with s1 EA and be given to the employee in writing
within one month.
1
