Employment relationships are always changing.
Whether it’s due to new laws, new duties, new pay, new direct reports, new hours, a new location… The list goes on.
So why have you not updated your employment agreements for your staff?
As you might imagine, as a lawyer, I like things to be put in writing. It’s a foundation for good communication and shared understanding. It also happens to be the law – the key terms of an employment agreement are meant to be kept in writing.
But I suspect the number one reason why employment agreements are not kept up to date is that it seems like a hassle to change them.
“Won’t I have to re-issue an entire agreement?” you might wonder.
Not necessarily. Changes to employment agreements can be effected in writing as easily with a brief email or a short letter.
WHAT DOES THE EMPLOYMENT AGREEMENT SAY?
The starting point for making any changes is to check what the employment agreement itself says about how it may be modified.
Normally, an agreement may contain a clause like this:
This agreement may be varied by agreement in writing signed by both parties.
If you have a clause along those lines, then you will need to make sure you vary the agreement in accordance with those requirements. An email will not be sufficient – unless you and your employer sign the emails (electronically perhaps?). Instead, you will be better off writing a letter that has room for both you and your employee to sign.
If you don’t have a variation clause like the one above, you are free to vary the agreement even verbally if you wish. But again, I recommend that you make a written record of the agreement you reach with your employee to change their terms of employment. Sending them an email to capture the change, and asking them to reply to confirm their agreement, would usually do the trick.
HOW TO RECORD THE CHANGE IN WRITING
Assuming that you need to put the change in writing, what should the letter or email recording the variation state?
I suggest you cover off the following:
- Identify the original employment agreement that will be changed (usually by its date).
- Explain why the change is needed.
- Identify what clause or clauses will be modified in the original employment agreement.
- Set out the new wording that will replace the previous wording.
- Ask the employee to confirm their agreement.
Here is how it could look if you were to write a letter recording the change that required the employee to confirm their agreement with their signature:
We are writing to advise of a change that we propose to make to the hours of employment that are set out in your employment agreement dated 1 June 2016.
The reason for the change is that we have decided to stay open late on Thursday nights to attract late-night shoppers to our store.
That means clause 3.1 in your agreement will now be replaced with the following wording:
Your guaranteed hours of work will be 10am to 5pm Monday to Wednesday, and 10am to 7pm on Thursday.
Please confirm your agreement to this change by signing in the space below and returning the signed copy to me no later than 5pm, Tuesday, 20 July 2016.
WHAT IF EMPLOYEES DON’T AGREE TO THE CHANGE?
It can be tricky to get employees to agree to changes that they don’t see as necessary.
The best way to encourage them to get those variation letters back to you, or reply to your emails, is to incentivise them to do so by linking it to a pay rise, a one-off bonus, or some other benefit.
So you might add to the letter by giving a deadline for acceptance and advising that the new benefit will not be processed for them until a signed copy has been received.
Keeping employment agreements up to date is important. It means that the written agreements reflect reality. You are required to ensure the terms are accurate as a matter of law, and it’s not so hard to keep them up to date when you know how.
You don’t have to reissue an entirely new agreement – just issue a letter (an email may suffice as a record in some cases) that carefully explains the reason for the change, what it says, and why the employee should agree to it.
That way, everyone stays on the same page.