Contract Variation Letter

An employment contract sits at the heart of the relationship between an employer and its employees. In addition to meeting legal obligations, an employment contract will cover company expectations, legal issues, and core procedures - but what happens if it needs changing? Enter, the contract variation letter - used to amend the terms of an existing employment contract, with the consent of the employer and employee.

When would I use a contract variation letter?

Variation letters are most commonly used when there is a change in terms originally outlined in the employment contract. Such as; salary adjustments, working hours, place of work etc. A variation letter may also be required where there is a change to employment law or regulations that impact the contractual terms of employment. It's important to note that variation letters come by way of mutual agreement between employer and employee.

Why would I use a contract variation letter?

Using a contract variation letter rather than issuing a completely new employment contract can be practical and beneficial in certain situations for both employers and employees. A variation letter allows for changes to be made to specific clauses or terms of an existing contract without completely rewriting the entire agreement - which is less disruptive and more straightforward for both parties.

If the employment relationship is generally positive and the changes are relatively minor, using a variation letter helps maintain continuity and a sense of stability. It acknowledges the existing employment relationship while making necessary adjustments. In situations where the changes are straightforward and there is little room for negotiation, a variation letter can be a more efficient way to communicate modifications without initiating a potentially lengthy negotiation process that may accompany drafting an entirely new contract.

A variation letter provides a clear and specific communication regarding the changes being made. It can outline the modifications to terms and conditions in a concise manner, minimising the risk of misunderstandings. Employees may be more receptive to changes when they understand that their existing rights and entitlements are being preserved, and only specific terms are being adjusted. This can help maintain a positive employer-employee relationship.

What should a contract variation letter look like?

When writing your contract variation letter, the introduction should provide a clear statement that the purpose of the letter is to communicate changes to an employees employment contract. You should clearly outline the specific changes to the terms and conditions. This could include changes to working hours, salary, benefits, or any other relevant details. You'll also need to specify the date on which the changes will come into effect - ensuring that the employee has sufficient notice of the changes.

You should aim to briefly explain the reasons behind the proposed changes. This could be due to business needs, restructuring, legal requirements, or other justifiable reasons. However, you'll also need to clearly express that the changes are subject to the employee's agreement. Request the employee to confirm their acceptance of the new terms in writing or by way of signature.

If there are significant changes, consider attaching an updated contract or a document outlining the revised terms for the employee's reference.

How can we help?

If you need help ensuring that your proposed changes comply with employment laws and regulations or help preparing a letter for your employees - our team can help, just get in touch!

How to get started

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