How can the terms of an employment contract be varied?

Authored by the LexisNexis Legal Writer team.

Can the parties change an existing term of an employment contract?

The employment contract may be varied at any time by mutual agreement between the parties.

Generally speaking, parties cannot unilaterally vary the employment contract unless the original contract of employment, an applicable industrial instrument or legislation expressly provides for such.

In the absence of an express right to vary a contract, an employer will need to seek the agreement of the employee to avoid breaching the contract by unilaterally varying it. See, eg Precedent: Letter to vary employment contract in absence of an express contractual term.

Practice Tip: Employers should include express clauses permitting variations of relevant terms in the employment contract. For example, to allow them to vary the location, scope, duties, or hours of work for their employees. For guidance around how to draft these clauses, see Guidance Note: Issues to consider when advising on an employment contract.

Unilateral variation may lead to legal claims

Should an employer try and change a term of the employment contract unilaterally, the courts may consider this to be a repudiation of the agreement, affording the employee an opportunity to end the employment relationship and sue their employer for damages.