Varying the Terms of a Contract

The recent decision of the EAT in Morgan –v- Network Europe Group Limited is a useful case for businesses to take note when trying to vary the terms and conditions of an employee’s contract of employment.

In this case the employer issued a new handbook to its staff, which contained a new “lay-off” clause.  The employee signed a form to acknowledge receipt of the new handbook.

Initially the Tribunal held that the employee was bound by the new “lay-off” clause and by the handbook so far as it amended his contract of employment.  However the EAT reversed this decision.  Since the employee had not signed a new contract with the new “lay-off” clause stated therein, there had been no agreed variation of the contract of employment.  The EAT pointed out that had the handbook been accompanied by a new contract with the new “lay-off” clause and duly signed by the employee, then the variation would have been binding.

Daven Naghen, head of our Employment Team added:-

“The moral of the story is that generally speaking if an employer wants to amend an employee’s contract then the employer should get the employee to sign a new contract with the variation. Failing which there is a real risk that the variation will not be binding, especially if the variation does not necessarily have immediate effect.”

If you want advice on terms and conditions of employment for your staff, and/or amending the same then please contact Daven Naghen on daven.naghen@maplessolicitors.com or 01775 722261.