Terms and Conditions of Employment

Learn how to create terms and conditions of employment contracts for new starters and current employees. And what happens when they don’t agree with your terms.

First published on Wednesday, Aug 25, 2021

Last updated on Friday, Jun 07, 2024

Most employees join a new job after agreeing to the terms and conditions set out by a business.

Employment terms and conditions normally include information on rights, responsibilities, duties, legislations, and work benefits.

You must clearly and fairly set them out, especially if you decide on changing them.

Without following the right procedure, you could end up facing an employment tribunal. Where you might have to pay out compensation and have your decision reversed.

In this guide, we’ll define exactly what terms and conditions of employment contracts are. And what are the correct steps you need to take when changing these.

What are terms and conditions of employment?

Terms and conditions of employment relate to the requirements set out in an employee’s contract. These outline the rights for both the employee and the business.

Employment terms and conditions of businesses can include rights, responsibilities, duties, and job speculations.

The right employment contract will depend on your company. Terms and condition for a small business will be drastically different to larger enterprises. But in the end, having the legally correct form is vital for all business owners.

Employment legislation

The main law which protects terms and conditions of employment come under the Employment Rights Act (1996).

The act protects employment matters like:

Where can you find terms and conditions of employment?

Terms and conditions of a business are often found through written contracts. But they can also be found through:

  • Written statement of employment.
  • Verbal agreements.
  • Offer letters.
  • Employee handbooks.
  • Business manuals.
  • Legal regulations.
  • Implied agreements.
  • Collective agreements.

You should be cautious when using non-documented agreements, like verbal contracts. As they can easily lead to disagreements and legal issues.

Employers should recognise the importance of terms and conditions through written documents. You can reduce any chances of being held liable if your contract terms are written. It’s especially important if you face unfair claims and tribunal hearings.

They can enhance clarity for your terms, as well as reduce any chances of being held liable.

How are terms and conditions of employment regulated?

A combination of marketplace awareness and governing laws can help regulate terms and conditions for employment.

To attract new candidates, HR representatives should aspire to make their business look appealing against other competitors.

Terms and conditions within legal means often concerns matters like, workplace safety, healthcare, and equal rights policies.

Examples for terms and conditions of employment

General terms and conditions can sometimes be negotiable between employer and employee. But some might be applied across the entire business, to set a standard or keep legal compliance.

Examples of job-specific terms and conditions:

  • Job specifications and roles.
  • Working hours and days.
  • Exempt and non-exempt conditions.
  • Benefits and compensations.
  • Non-compete clauses.
  • Dispute resolution processes.

Examples of company-wide terms and conditions:

  • Dress code policies.
  • Payment schedules.
  • Basic employee benefit information (like healthcare, retirement plans, etc).
  • Absence, holidays, leave procedures.
  • Performance and probation policies.
  • Disciplinary procedures.

Can you change the terms and conditions of an employment contract?

Employers can change terms and conditions of employment, but they must do it lawfully. Some common reasons for changing terms can be reducing salaries, changing work hours, applying promotions, etc.

However, for written employment contracts, they must be agreed upon by both parties before actioning any change. Otherwise you could be held liable and risk facing employment hearings and compensation penalties.

This is necessary for anything with contractual force, not just the written contract. For example, if the employee handbook is contractual, changes to terms must be agreed.

How to change terms and conditions of employment contracts?

When you decide to change the terms and conditions of your staff’s contracts, aim to include these steps:

  • Present your changes (in person and through written documentation).
  • Demonstrate how your changes are reasonable.
  • Discuss the decision with the employee and listen to their concerns.
  • Provide appropriate notice before beginning anything.
  • Present an action plan for the changes.
  • Support employees who could be struggling through the process.

What if the employee doesn’t agree with changes to their terms and conditions?

An employee doesn’t have to agree to your contract decisions. They could be a new employee or a current one who doesn’t agree with your changes.

But whatever their reasons are, hold open discussions so you are aware of their concerns. Once they’ve aired their view, you can decide on an alternative agreement or a compromise.

If you cannot come to an agreement, you might decide to dismiss and rehire them. Or ‘re-engage’ them under a new contract. However, this should be done cautiously and only as a last resort (after discussing it with them).

Get expert advice for terms and conditions of employment

With a strong agreement on the employment terms and conditions, you can significantly grow rapport with your staff and wellbeing.

Without fair terms or clear conditions, you could face serious legal issues. Remember to only action changes to employment contracts after discussions and agreement is met.

BrightHR’s HR management software can assist with your investigation. Our unlimited HR document storage will keep all of your documents securely stored in the cloud.

Our expert HR consultants ensure you comply with UK employment law and can offer help creating contracts that fit your business needs.

Book in a free demo today to see just how easy it is to manage HR with our app. Give us a call on 0800 783 2806.

Alan Price

CEO, BrightHR and Group Chief Operating Officer

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