An employee has every right to refuse to sign a new or varied employment contract. A contract is a two-way agreement, and changes require the consent of both parties. The employer's response to a refusal must be handled carefully to avoid claims for breach of contract, constructive dismissal, or unfair dismissal.
Why Employees Refuse
Common reasons include:
- Reduction in pay or benefits
- Changes to working hours or shift patterns
- Relocation requirements
- Introduction of restrictive covenants
- Changes to job role or responsibilities
- Removal of contractual benefits such as bonuses or commission structures
What Employers Should Do
1. Consult Properly
Before issuing a new contract, explain the business reasons for the change. Genuine consultation means listening to the employee's concerns and considering alternatives — it is not simply informing them of a decision already made.
2. Negotiate
Explore compromises. Could the change be phased in? Could the employee receive compensation for the loss? Could certain terms be preserved while others change?
3. Allow Time
Give the employee reasonable time to consider the proposal and take independent advice if they wish.
4. Document Everything
Keep written records of all consultation meetings, proposals, and the employee's responses.
If Agreement Cannot Be Reached
If the employee continues to refuse after genuine consultation, the employer has limited options:
- Accept the refusal and continue on the existing terms
- Impose the change — this is a breach of contract and carries significant legal risk
- Dismiss and re-engage — terminate the existing contract with proper notice and offer re-engagement on new terms. This is the "fire and rehire" approach and is subject to strict legal requirements
The Employment Rights Bill will make fire and rehire automatically unfair in most situations, so employers should seek alternatives wherever possible.
If you need to change contract terms and are facing resistance, our employment law team can advise on the safest approach. Speak to us today.